Philanthropy is the “love of humankind.” It allows donors to align the value of their assets with the values that are important to them. People give because charities have affected their lives - those charities may have helped along the way, educated, or inspired. Many give for personal reasons - what matters to them, and what impact they want to have today - and in the future.

After considering what one has and needs during his or her lifetime, and what to leave behind in an estate, there are many ways to support causes and concerns in the community. This type of giving is often called planned giving.
 
What is a planned gift?
A planned gift is usually a charitable gift from assets, rather than income, and it is part of a long-term financial and estate plan. It is easy to do: simply call a legal, accounting or financial advisor and/or a favourite charity and talk about the possibilities.

Getting started
People often say "I don't want to think about doing a will" or "I don't have an estate" or "I'm not wealthy - this doesn't apply to me." If a person has a bank account, a house, or any other financial assets, he or she has an estate. It is important to make plans, so the people and the causes the benefactor cares about are looked after. A philanthropist doesn’t need to be wealthy. Everyone can make a meaningful contribution.

Advisors will know about giving options and can help integrate charitable giving into financial and estate plans. They can work with the selected charity or charities to make sure wishes are met and the gift is made in the most effective way. Charities have information about their programs and services, how to make a gift and how that gift will impact them.

Ways of giving
Anyone who can make a will can make a gift to charity. Start fresh or add a provision to an existing will by signing a codicil. A certain dollar amount can be set aside, a percentage of the estate or any assets left over after the family is provided for. 

A gift is revocable - terms can be altered as circumstances change during the donor’s lifetime. This gives some flexibility in planning financial matters because the gift is not received until the estate is settled.  

Make sure the name of the charity is correct in a will - ask the charity for the legal name and have a lawyer or notary public prepare a will. The Canada Revenue Agency website (www.cra-arc.gc.ca) has a list of all registered charities in Canada and helpful information about donating to charities.

There are other ways to give through estate planning using assets such as an existing or new life insurance policy, or proceeds from a registered retirement savings plan, registered retirement income plan or a tax-free savings account. These gifts involve designating the charity as a beneficiary of the policy or plan, and can result in significant personal tax benefits.

Anyone with an investment portfolio can benefit from making a gift of publicly traded securities. Where the securities are transferred directly to public charities and foundations, there is no tax payable on the capital gain. The tax receipt equals the fair-market value of the securities on the date of the gift, and the resulting tax credit offsets other taxes that may be payable. 

For those interested in ensuring long-term funding for a charity, think about creating or contributing to an endowment fund. An endowment fund is one where the capital is held by the charity in permanence, and invested to provide a steady return. A portion of the return is distributed on a regular basis and used by the charity to carry out its work. The balance of the return is kept in the fund to hedge against inflation.

A donor advised fund is a type of endowment fund. The donor receives an income tax receipt for any gifts of capital and continues to be involved as an advisor in determining where the annual returns will be granted each year. These annual grants are paid out to federally-registered Canadian charities. A donor advised fund provides the donor with flexible, personal involvement in his or her philanthropy. Donor advised funds started with community foundations. In recent years, financial institutions have also offered this opportunity to their clients. 

Talking to the charity
When planning a gift, talk to the charity. Let them know how their good work will be supported in the will or estate plan - the size of the gift doesn’t need to be disclosed. More donors are choosing to designate their gifts to specific programs, equipment or other capital projects. The charity can check the specific wording in a will and make sure they can carry out the donor’s intentions.

Charities would like to thank supporters now and let them know about the impact of their gift on future generations. Many charities have created recognition societies to honour planned giving donors during their lifetimes. Donors are invited to events, receive publications and learn more about the organizations they support. There is always the option to remain anonymous, knowing the charity is grateful for the support.

Most often, philanthropic decisions are made with making an impact in mind; a charitable contribution should maximize social good while reflecting a person’s values in creating a legacy for future generations.

For more information about planned giving, contact Sara Neely, Director of Philanthropic Services at the Victoria Foundation, 250-381-5532 or sneely@victoriafoundation.bc.ca

NOVEMBER 2011 SENIOR LIVING MAGAZINE VANCOUVER ISLAND