Some might criticize us for focusing on the tax incentives of giving, but we feel strongly that if more people better understood these they might well give more to the charitable causes that so desperately need the money. There’s a reason they’re called ‘incentives’, so we’re not alone in our tax-based thinking.

For example, someone giving $10K cash could instead gift $15K of securities, avoid paying capital gains on the growth, get the full charitable tax credit, and end up no worse off financially than with the cash gift, except the charity would get 50% more funding.

Charitable bequests, or gifts made through the will, are the most common form of planned gifts for average Canadians, but there may not always be sufficient taxes owing to fully utilize the charitable credit, meaning either the donor or the charity is losing out. By life-insuring the bequest, donors could double their gift, lower their costs and use the tax credit now, to reduce the tax they pay in their retirement years. Alternatively, they could use it to eliminate all the taxes owing on the family cottage.

Now consider our integrated tax approach. Since donors receive credits, rather than just deductions, a retiree’s tax may be lowered not just by tax of about 45% but also by reducing the claw-back on their Old Age Security (another 15%) for a total benefit of 60%. Using the example above, a couple aged 65 could plan a bequest of $100,000, insure it for $20K, and yet be only $8K net out of pocket. Alternatively, they could pay the 20K, but eliminate a $200K gain on the cottage.

Let’s look at this from a charity’s perspective for a moment. Their plight, and need for funding, may never go away, so future gifts (‘expectancies’) are always important. But the assurance of future dollars to replace long term reserves may in some cases make it possible for them to reallocate those funds to current use, providing enormous immediate financial relief, and allowing them to initiate the causes most necessary, beginning today. Indeed, a five year campaign to raise 20 similarly insured bequests each year could create an Endowment Fund for the charity worth ten million dollars. That is a powerful gift.

There is no way we could even begin to do justice to the field of planned giving in an article as short as this. The goal here is simply to attempt to demonstrate, by way of a few examples, the opportunities now available to donors and charities in Canada.

By understanding the objectives of our clients, be they donors or charities, and armed with a good understanding of the Tax Act, and working co-operatively with numerous affiliated specialists, we are able to assist those who are trying to help others. Our goal is to facilitate the achievement of objectives to the best of our ability, and maximize the benefits available to donors and their families, and to charities and their goals.