Creating Your Enduring Legacy -- utilizing a DAF or a Private Foundation. [and other gift planning matters of interest]

2. Creating Your Enduring Legacy --utilizing a DAF or a Private Foundation.[and other gift planning matters of interest] Christopher JK Richardson, FCA Charitable Gift Planning Consultant and Philanthropy Advisor, Vancouver. Estate Planning Council of Abbotsford Wednesday, February 16th, 2011 [noon]

3. 3 Overview opening comments � your place � the choice(s) � background, terminology and definition. historical perspectives. recent experience. a variety of choices - categories. - components.

4. 4 Overview (2) a variety of choices - categories. - components. one gift planner�s view � the answer, trends learnings and the ultimate learning, the numbers, what�s next everything else concluding remarks, questions and comments.

5. 5 Overview (3) additional materials � the gift option continuum, list of DAFs ( current list, available on request ) �donor-centred� holistic approach, decision-tree, matters to consider,

6. 6 Opening Comments how times change but needs do not, �smart� (comfortable) fundraising is even more important, when you ASK for money� you get advice � key now is stewardship of donors and friends --- ASK for advice and you are liable to get money. LET the journey begin � � � � � �

7. your place � � as a trusted advisor it is imperative that when dealing with each of the various transactions with each of your clients that you look & listen for the obvious and subtle �charitable hints� and philanthropic �door openers� �.. 7

8. the choice(s) � direct giving, indirect giving utilizing a donor advised fund (DAF) and / or a private foundation. Remember � when in doubt, we do nothing � 8

9. 9 DAF Background --Terminology BEWARE -- depends upon who you are � donor-advised funds = DAFs ? traditional term, preferred by community foundations (cfdns) charitable gift funds = CGFs ? preferred by new non-cfdns �commercial� gift funds = CGFs ? used by �some� to refer to recent offerings.

10. 10 Background -- A �working� definition a �separate� fund operated within a public foundation that permits advise on distributions / grants to other charities [qualified donees], 3 areas of advice / recommendation � advice on grant distribution, ability to name advisor, ability to advise on asset mix or other matters such as succession.

11. 11 Background -- A fine line � � according to CRA, �primary concern with DAFs is that , if too much control is retained by the donor, they will not be considered a gift-at-law, and could not be receipted�, �� need to be careful and warn donors that input by the donor is of an advisory nature only�,

12. 12 The American Experience DAFs began as an offering of Cfdns, Fidelity established in 1965 and by mid-90�s impact caused calls for definition & regulations, overall, emerging positive and accepting attitude towards DAFs, DAFs removed from IRS �Dirty Dozen� List of Tax Scams, Impact to some = successImpact to some = success

13. 13 The American Experience (2) short-fall seems to focus on lack of �localized� granting advice, reductions in fees and reduced �entry� amounts have occurred recently to continue growth.

14. 14 The Canadian Experience Community Foundation (Cfdns) and other DAFs have existed � most religious, initial �apoplectic� response to possible �Fidelity North� replaced by one of cooperation, initial response by CRA-CD to DAF was �cautious�, new DAFs identified in the last 24 months, and on-line option now in beta -- CHIMP.

15. 15 Categories of DAFs (1) charities community foundations (geographical), faith-based, example various Jewish cfdn (geographical), national specific, ex. SickKids, Toronto General and Western Hospital Foundation, specific �area of interest�, ex. environmental, social justice, medical and women, financial institutions, �pure� DAFs and other �alliances� / �private label� /�white label� and �referral� arrangements, investment dealers, investment counselors, other independent �enablers�, and a recent on-line option.

16. 16 Categories of DAFs (2) another way to classify � general, retail, �boutique� / �specialty� / �targeted�. �longevity� � endowment / gift fund / hybrids. another way � �motivation� � �philanthropic service�, or �product�.

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18. 18 Main Components of a DAF and a private foundation A variety of options exist � establishment, investments � what and by whom, granting and administration, stewardship, fees and compliance and philanthropic advice.

19. 19 Key Components initial capital additions, restrictions upon treatment of contributions -- no longer apply � was flow-thru and 10-year, ability to choose advisor, ability to �influence� investment mix, availability of �localized� granting advice, distribution rate, minimum grant amount, ability to grant capital,

20. 20 Key Components (2) transfer now or later to charity or private foundation, succession � limited or not, �default� use of funds, various fees, reporting, newsletters and briefings, availability of philanthropic advice, governance.

21. it depends � are the initial and on-going costs justifiable ? quantum, timing and type of asset(s) to be gifted, other motivations � desire to be involved with the details � 21 the answer

22. 22 Trends increased flexibility as rigid limitations are being re-examined, increased communication and stewardship - newsletters, fees are being reexamined -- �ala carte�, some �nuisance� and some posted �fees� are not being implemented, transitional flexibility being offered to allow for future and change of circumstance.

23. 23 Learnings continued growth -- attracting new funds, attracting philanthropic, �self-reliant�, �tax-avoidance� individuals, opportunity to expose philanthropy to new individuals, some cfdns are offering to permit you to retain existing advisors, call for flexibility is causing some to reexamine business model to avoid any �shaking out�.

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25. 25 the Ultimate Learning the proliferation of DAFs has served as a �door opener� �� for charities, to advance / begin an on-going relationship. for financial institutions / investment dealers and counselors and others, to enhance on-going relationships.

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27. 27 the numbers THE main difficult issue with DAFs is (still): ? Fees no it is Commissions, and their impact upon allocatable / spendable amounts. once the issue of remuneration is resolved the question is whether the net distributions to charities will provide a sustainable �business model� for all the DAFs?

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30. 30 What�s NEXT undoubtedly MORE retail DAFs in the longer-term, increased flexibility to address personal interests of donors (now and in the future), after initial period, lower fees and lower minimums to sustain growth in the �retail� sector, need to measure actual impact of DAFs -- by whom,

31. 31 What�s NEXT (2) creation of �strategic� partnerships to obtain necessary community linkages, face-to-face opportunities to assist and complement on-line resources, strong attempts by commercial DAFs to demonstrate relevance & cost/benefit (defensive). And maybe a �back-room� private foundation service-provider.

32. 32 Everything else the end of the �downturn� and its impact as we move forward � what did we learn � time for long suggested donation �stimulus� provisions ?, 2010 budget and impact of reduced dq requirements, and the new T3010 A, B and -1 new(ish) audit regime, on-going CAGP*ACPDP CRT proposal to Finance, a charity flow-through ltd ptnership � �to not audit�, other stuff �.

33. 33 Concluding comments, questions and input �� Thanks. philanthropic exposure is always good as long as it is based upon knowledge and results in a positive experience for the donor, the charity and the community, ONLY TIME WILL TELL��. thank you. as we move forward �. how can I / we improve this �journey�.

34. 34 Christopher JK Richardson, FCA Charitable Gift Planning Consultant & Philanthropy Advisor, 2792 West 15th Avenue, Vancouver BC V6K 2Z8 ? Telephone: (H/O) (604) 739 � 4756 (H) (604) 731 � 4781 (Cell) (604) 218 � 0981 ? FAX: (604) 731 � 4721 ? Email: chrisgiv@direct.ca

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36. 36 Additional materials -- These slides are not included as part of the actual presentation but may be referred to��

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38. 38 A DAF within a �donor-centred� holistic approach Hopefully, discussions will be � creative, comprehensive within a comprehensive investment / estate �plan�, realistic, timely ( donor�s time ), professional, tax-effective (as distinct from tax minimized), understandable and with integrity.

39. 39 The decision-tree = the gift planners �value-added� without a thorough examination of the donor�s circumstances along with an identification of future possibilities MATCHED with a thorough knowledge of the features of each gift �structure�, -- an informed decision cannot be made.

40. 40 Matters to Consider in summary � ability to create personal / family foundation, any overriding decision factors, timing of recipient identification decision, necessary comfort level, timing of impact of gift � now, over time, quantum of giving, now and later,

41. 41 Matters to Consider (2) type of assets available to be gifted, how involved do you and your family want to be, now and later? how much guidance do you need in the areas of � investment decisions, granting and philanthropic advice, and compliance support, what �structures� would be acceptable,

42. 42 Matters to Consider (3) costs, fees and expenditures, contact(s) -- DAF people, investment advisors & reps, salesmen and gift planners, face-to-face access to knowledge and experience with your �local� charitable community, the paper work and compliance.