Planned Giving
We’ve all heard about the benefits of charitable giving. For starters, there can be a deep sense of personal fulfillment when you make a meaningful contribution to a cause you believe in. In addition, charitable giving is your chance to make an impact for the future. By supporting organizations that reflect your interests and values, you create an enduring legacy. That’s powerful and empowering.
There are financial upsides, too. Planned giving can offer tax advantages, including reduced estate taxes and potential income tax deductions. What’s more, not only do you not have to be rich to make a planned gift, there is no negative impact on your financial welfare here and now and there’s no downside for your family, either.
In essence, this type of giving involves arranging charitable donations to be made in the future, through your estate or financial planning. Options include bequests, gifts of securities, charitable remainder trusts, life insurance and charitable gift annuities. But the most common way to leave a legacy gift is with a charitable gift in your Will, otherwise known as a bequest.
That’s why working with a lawyer and financial planner can really make a difference, both for immediate peace of mind and for success in achieving your goals once you’re gone.
Before you get to the lawyer’s office, though, do your due diligence to make sure your intended gift will be going to the right place. There are countless places in the charitable-giving realm. And whether your heart is set on supporting research, higher education, an arts organization, a children’s charity or a health organization, different options exist.
For instance, options such as charitable gift annuities and remainder trusts can provide you with income during your lifetime. Planned giving allows you to tailor charitable contributions to your financial situation and personal goals. You get to choose the type of asset you want to donate, the timing and the beneficiary.
Researching the beneficiary is where the due diligence comes in. You can start with the Charities and Giving page, canada.ca/en/services/taxes/charities.html, at canada.ca. It includes the List of Charities and other Qualified Donees, a list of other organizations that can issue donation receipts, as well as details about registered charities and what differentiates them from non-profit organizations.
The Canada Revenue Agency (CRA) registers charities here in Canada and today there are more than 86,000. On a page entitled How can I donate wisely and avoid fraud? there are tips to help you make prudent decisions, as well as warning signs of fraud.
Under the heading Making a donation, various topics are covered, including which organizations can issue official donation receipts, what types of gifts qualify for charitable tax credits and donation tax shelter schemes.
To do a deep dive on your charity of choice, the CRA provides guidance: “Use the List of Charities to find out if a charity is registered, revoked, annulled, suspended or penalized. You can also find a charity’s contact information, general activities and financial information from the T3010 Registered Charity Information Returns filed for its last five fiscal period-ends.” You can also make an informal information request for a charity’s documents.
