Increase Your Charitable Giving Without Increasing Your Headaches

May 22, 2019

 

Many affluent Canadians actively give to charities, in fact, Canada is a respected world leader in charitable giving. According to the Charities Aid Foundation’s Most Generous Nations Ranking, Canada is the world’s fourth most giving country over the trailing past five years and seventh in 2017. Canadians give on average 1.5% of their income to charity and as a whole donate close to $10 billion to charity in a year. Have you considered making your giving process easier, more effective, more secure, and more tax efficient? The Donor-Advised Fund is the answer.

The Donor Advised Fund

Although the first Canadian Donor Advised Fund (DAF) was created in 1952, they have grown in prominence in the past decade. A DAF offers multiple benefits over the traditional Family Foundation, including:

  • Simplifying charitable giving through a single Foundation
  • Offers a private foundation without the startup and maintenance costs
  • Permits donors to recommend grants to their charity of choice*
  • Donors receive clear tax receipts for all of their giving
  • Provides for Intergenerational transfer of authority to a successor
  • Invested donations grow tax-free, increasing the potential amount of giving

The donor can name the fund, give to a wide variety of registered charities in Canada and other eligible recipients from Canada’s Income Tax Act and benefit from professional advice and management of the foundation without the headaches of running a foundation and meeting legal and tax paperwork requirements.

Gifting Your Way

Another great benefit of a DAF is the ability of the donor to donate several different assets to the fund, including:

  • Cash and equivalents
  • Publicly traded securities
  • Private equity
  • Mutual fund shares
  • Gifts-in-kind (art, etc)
  • Real estate
  • Hedge fund interests
  • Life insurance policies
  • Registered accounts, (RRSPs, etc)
  • Bequests
  • Residual interest gifts

The DAF allows you to gift what you want when you want and to your charity of choice. The simple flexibility of the DAF provides one of the best vehicles for charitable giving.

Tax-Advantaged Giving

Besides the ease of managing your giving through a DAF, it also maximizes your tax mitigation through giving. Each asset class as described above must use it’s ‘fair market value’ for allocating its tax amount, offering you the ability to gift an asset such as a work of art or a held property at its current value, instead of its purchase price. This makes the DAF a great way to maximize tax-advantaged giving.

The Echelon Donor Advised Fund is now accepting donations and is a fully-registered charity under the regulations for donor-advised funds. If you are looking to make a lasting commitment to philanthropy and want a vehicle that cuts down on wasteful expenses, increases your giving potential, yet still has the flexibility to meet your demands, the DAF is a smart choice.

If you are interested in opening an EDAF account, consult with author Steve McBride, Investment Advisor, Echelon Wealth Partners for full details.

*Choice of charity donations must meet Canada’s Income Tax Act Eligible Recipients criteria and Canadian law requires all decisions on donations are made by the Board of Directors of the Foundation.

 

Disclaimers

This blog is solely the work of Steve McBride for the private information of his clients. Although this author is a registered Investment Advisor with Echelon Wealth Partners Inc. (“Echelon”) this is not an official publication of Echelon, and this author is not an Echelon research analyst. The views (including any recommendations) expressed in this newsletter are those of this author alone, and they have not been approved by, and are not necessarily those of, Echelon.

Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by authors. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.

The opinions expressed in this report are the opinions of this author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute this author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.

These estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements. Echelon Wealth Partners Inc., its divisions, subsidiaries, and affiliates, do not provide any income tax advice and does not supervise or review any income tax returns. Please consult your accountant.

Source: 

https://www.cafonline.org/docs/default-source/about-us-publications/cafworldgivingindex2017_2167a_web_210917.pdf

https://www.canadahelps.org/en/the-giving-report/giving-facts/

https://giftfunds.com/site/templates/brochures/What_Donor_Advised_Fund.pdf