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  • Financial Planning
  • General Interest - Personal

Philanthropic Giving and Estate Planning

November 15, 2021

Today is National Philanthropy Day in Canada. National Philanthropy Day celebrates and highlights the accomplishments that philanthropic endeavors (which include giving, volunteering, and charitable engagement) make to our communities. The impact of philanthropy in Canada is tremendous. Just consider these statistics courtesy of Imagine Canada’s 30 Years of Giving in Canada report:

  • Individuals contributed over $14 billion to charities in the last year of reporting available (2014), and organizations contributed $4.2 billion;
  • Canada comes in third place globally as far as contributions as a percentage of Gross Domestic Product at 0.77% (coming in just behind New Zealand at 0.79% and the United States at 1.44%);
  • Giving has increased significantly in recent decades, with annual donations seeing a 150% increase from the 1980s

National Philanthropy Day takes on a special significance in 2021, as we are finally starting to ease back to normal after nearly two years of COVID-related health and economic hardships.

COVID-19’s impact on the charitable sector

Every single industry and sector was touched in some way by COVID-19. Some have experienced significant growth during the pandemic (we’re looking at you e-commerce, remote working software, and supply chain management). Some were devastated (airlines, restaurants, and auto parts being three such industries). On the whole, the charitable sector has definitely taken a hit these past eighteen months. Almost half of Canadian charities have reported a heightened demand, and a reduced capacity to meet this demand (due to fewer staff and volunteers). And while there has been increased government support during these challenging times, charities have experienced, on average, a 43% decline in revenues. Many charities have had to draw on reserve funds and sell assets in order to stay afloat. Needless to say, Canadian charities could use philanthropic support now more than ever.

Building philanthropy into your estate planning

With $1 trillion forecasted to be changing hands in the coming years in Canada via the Great Wealth Transfer, post-humous philanthropic giving options have been getting more and more consideration. And with good reason: charitable giving is a tremendously impactful way to make a difference for a cause that is near and dear to one’s heart. Here are four ways to build charitable giving into your estate planning process.

Planned giving

Planned giving allows for donors to leave a charitable gift for the charity (or charities) of their choice in their will. While some may resist doing so for fear of minimizing the money they plan to leave to their children, by working with an estate planning specialist they may be able to leave money to a charity that would otherwise have gone to the Canada Revenue Agency for taxes. Donors not only have the ability to select which specific organizations they wish to support with planned giving, in working with the charitable benefactor directly, they may also stipulate how the funds should be allocated within the organization.

Gifts of securities

Charities will also accept gifts of qualifying securities. Qualifying securities include:

  • Shares listed on a prescribed stock exchange;
  • Shares of a Canadian public fund mutual corporation;
  • Units of a mutual fund trust or interests in a segregated fund trust; and
  • Bonds, debentures, or notes of provincial or federal Canadian governments.

Again, there are tax advantages to doing so that can be further discussed with your estate planning specialist and CPA.

Gifts of insurance

It’s even possible to donate your life insurance to a favored charity. The charity in question can be named as the beneficiary on an existing policy – an option some turn to when their family no longer requires the insurance proceeds for financial stability. It is also possible to take out a new policy in the charity’s name. In doing so the donor receives a charitable tax receipt for the cash value of the policy as well as for any premiums paid.

Additional giving options

Similar to naming a charity as a beneficiary of a life insurance policy, a charity can also be named as a beneficiary to an RRSP or RIF.

Furthermore, donations of fine art, real estate, jewelry, even cryptocurrency can all be gifted.

If you would like to further understand how to incorporate philanthropy into your estate plan, connect with a member of your integrated advisory team (your financial advisor, CPA) to discuss next steps.

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All About GivingTuesday

Also on the philanthropy radar this November? GivingTuesday, which falls on Tuesday, November 30th this year.

GivingTuesday was launched in 2012, as a complementary day to its much less philanthropic-minded counterparts, the consumer-crazed madness that is Black Friday and the online shopping extravaganza that is Cyber Monday.

The story behind GivingTuesday is as follows:

GivingTuesday was created in 2012 as a simple idea: a day that encourages people to do good. GivingTuesday was born and incubated at the 92nd Street Y and its Belfer Center for Innovation & Social Impact in New York City. GivingTuesday is now an independent nonprofit and a global movement that inspires hundreds of millions of people to give, collaborate, and celebrate generosity.

Coined as the ‘opening day’ of the giving season, GivingTuesday is a time for communities, organizations, and individuals to come together in support of their favorite causes. While originally launched in the United States, GivingTuesday has gained traction in Canada in recent years, coming in as the third largest day of the year for donations (after December 30th and December 31st).

To find out more about GivingTuesday, and the various ways that individuals and organizations can support this special day, visit their website at https://givingtuesday.ca/.