Over the last few years, I’ve observed that people are increasingly interested in making a difference and leaving a legacy in their communities. Below are 4 ways that you can donate to your favourite charity.
1. Gift Money Immediately – This is the most common approach and we’ve all done it for modest and, perhaps, even larger amounts. You donate the funds immediately and you receive a charitable receipt. This receipt can be used in the current or following 5 taxable years. What’s nice about this approach is how easy and straightforward it is.
2. Gift Money in Your Estate – Here, you layout how you would like charitable focused funds distributed on your death. Money can be left in dollar terms, say $100,000, or percentage terms, say 10% of the estate. There are pros and cons to each approach – which we are happy to discuss further. In terms of charitable receipt, your estate receives one which is factored into your estate’s final tax return. In this scenario, what’s nice, is that you maintain access to all of your funds during your life.
3. Buy an Insurance Policy – In this approach, you purchase a life insurance policy and name a charity as irrevocable beneficiary and owner of the policy. Irrevocable beneficiary means that the beneficiary cannot be changed. On your death, the charity gets the death benefit while you receive charitable receipts for the paid premiums during your lifetime. You can also take an existing policy and reorganize it for the charity’s benefit. What’s nice about this approach is that you and the charity know that they’ll receive a large lump sum in the future and it helps you immediately tax-wise.
4. Donate Securities In Kind – This one is a little more finicky. In this case, you donate non-registered securities ‘in kind’ or ‘as is’ to a charity. By donating securities in-kind the CRA grants you relief from paying capital gains tax and the charity still issues you a receipt for the full amount. This can be beneficiary for folks that have held stocks for many years. The trouble is that many local charities do not have the infrastructure to accept securities. Assante has an answer. Assante has partnered with a company called Benefaction which allows you to move transfer your securities into an account that can be donated to over 1,000 charities across Canada. And, if you like, you can distribution the funds over a series of years without be committed to one charity. You can also do it anonymously if you want to stay off the radar.
I’ve given you a high level view of 4 ways to financial support charities in your community. If any of them resonate please let me know and we can talk more.
