1               Planned Giving in a Small Shop: It CAN be Done!                                      AFP-Toronto Congress ...
26. Answer true or false to this statement:Your organization might consider partnering with a local community foundation s...
3                                               The cause      1%                                                         ...
4There are three types of bequests with sample wording:1.   Specific bequest or legacy“My Trustee/Liquidator/Executor shall...
5Prospects:•    Individuals who purchased policies years ago to provide family protection when their     children were sma...
66. Charity as the contingent beneficiaryThe charity may still receive a gift. The donors clearly still requires a policy f...
7There are other planned giving vehicles but these are the most commonly used.Getting startedHere’s a little advice ....1....
8E.    If a charity appears to meet the criteria for establishing a gift planning program, what steps      shout it take? ...
9J.   How should the various types of planned gifts be counted and recognized?•    Realized bequests (distributions from e...
10Office Supplies/Materials•     Letterhead•     Postage•     Business equipment•     Files/Folders•     FurnitureTrainings...
11Marketing your planned giving programDespite having a small or non-existent budget, you can market planned gifts to your...
12Events     •   Host a series of seminars (afternoon tea) for donors, prospects, and friends of the         organization ...
Canadian Charitable Gift MatrixType of Gift          Benefits to Charitable          Benefits to the Donor                ...
Canadian Charitable Gift MatrixType of Gift      Benefits to Charitable            Benefits to the Donor              Gift...
Canadian Charitable Gift MatrixType of Gift            Benefits to Charitable               Benefits to the Donor         ...
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Planned Giving for Small Shops-handout

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Handouts for the Planned Giving for Small Shops: It CAN Be Done! during AFP-Toronto congress on November 28-30, 2011.

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Planned Giving for Small Shops-handout

  1. 1. 1 Planned Giving in a Small Shop: It CAN be Done! AFP-Toronto Congress November 28-30, 2011Let’s begin with Charity Village’s planned giving self-test. Please take a couple of minutes toanswer these questions.1. The definition of planned giving is making a gift with the right asset, in the right way, at the right time for the right purpose. True False2. From the list below, pick out the correct statement about planned giving. Tax and financial benefits are the main motivating factors in planned gifts A planned gift is always made later - after a person’s death The most common type of planned gift is a bequest by will3. When assessing your readiness to start a planned giving program, you should look at your current donor base. Before starting your planned giving program, a rule of thumb is that you need a minimum of: At least 100 donors who have given to you every year for the past three years, and at least 1000 donors over the age of 50 Experience soliciting major gifts If not a planned giving staff person, then at least a lawyer and an accountant on your board A minimum of five years with an active fundraising program4. You should set realistic goals for each phase of your new planned giving program. Which one of the following goals would not make sense for year one. Create your case for support Develop your basic policies and procedures Solicit the board to give their own planned gifts Raise $100,000 in new planned gifts Develop and begin to implement your marketing plan5. When it comes to planned giving, it’s important that your ‘behind the scenes’ administrative systems are in order. Pick out the most important element that should be in place. Maintain a tickler system allowing you to follow up with your donors in a timely and appropriate way Ensure all gifts can be receipted and acknowledged promptly Call members of your planned giving advisory committee on a monthly basis Have your planned giving policies and procedures reviewed by a lawyer Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  2. 2. 26. Answer true or false to this statement:Your organization might consider partnering with a local community foundation so you can haveen endowment fund. All community foundations share these features:- They are public charitable organizations- They hold permanent endowment funds- They support community organization within a defined geographic area- Can legally hold endowment funds for other registered charities True FalseWhat is planned giving, gift planning or legacy giving?The CAGP-ACPDP definition is as follows:Gift planning is the donor-centered process of planning charitable gifts, whether current or futuregifts, that meets philanthropic goals and balances personal, family, and tax considerations.ObjectiveTo maximize the financial, tax and philanthropic benefits of the gift.Characteristics• Mostly future gifts• From assets vs. revenue• Highly personal gift• Donor-driven (timing and type)• RevocableTime and vehicle determines the gift, not the tax savings = IMPORTANT TO UNDERSTAND!!Some key figuresImportance facts about planned gifts:• Wealth transfer over next 30 years estimated at $14 to $44 billion• 77% of wealth held by persons aged 50+• Not just for the wealthy Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  3. 3. 3 The cause 1% 2% 20% 77% Your personal values 2%4% 29% 65% The charitable organization 2% 5% 26% 67% Tax savings 7% 16% 47% 29% The timing of the charitable request 16% 29% 41% 14%Personal control or advisory role in use of donation 26% 33% 28% 14% Personal/family legacy for the future 31% 32% 22% 15% Long-term giving through a private foundation 41% 40% 15% 4% Public recognition 60% 29% 9% 2% Not at all important Not too important Somewhat important Very important The timing of the charitable request Personal control over, or an advisory role in the use of the donation Personal/family legacy for the future Long-term giving through a private foundation Public recognitionSource: Scotia Private Client Group survey, June 2006.There have been over 20 new incentives in the Income Tax Act to encourage gifts of assetsfrom individuals since 1996, such as:• Contribution limit for lifetime gifts = 75% income• Contribution limit at death = 100% of income• Elimination of capital gains on gifts of publicly-listed securities, employee stock options, ecologically sensitive options• Direct designation of RRSP/RRIF assets and life-insurance benefitsStatistics Canada came out with a study on the ageing population:• The number of people 65 years old and over went from 2.4 million in 1981 to 4.2 million in 2005.• They estimated this would increase to 4.3 million in 2006 and 9.8 million in 2026.What are the different planned giving vehicles out there?These are presented in order to importance. See chart of planned giving vehicles with benefitsBequestsA bequest is a gift of real or personal property under a will which is directed to a specificbeneficiary or beneficiaries. Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  4. 4. 4There are three types of bequests with sample wording:1. Specific bequest or legacy“My Trustee/Liquidator/Executor shall pay or transfer (description of the property) to XYZ Charity(proper legal name and charitable number) the sum of (amount).”2. Residual bequest"My Trustee/Liquidator/Executor shall pay or transfer to XYZ Charity (proper legal name andcharitable number) all (or stated percentage) of the rest, residue, and remainder of my estate."3. Contingent bequest"If (name/s of primary beneficiary/ies) do/es not survive me, or shall die within ninety (90) daysfrom the date of my death, or as a result of a common disaster, then my Trustee/Liquidator/Executor shall pay or transfer to XYZ Charity (proper legal name and charitable number)(describe amount of cash, property, or percentage of residual estate)."Key to success:• Sample bequest language - make it very accessible• Policies and procedures• Tracking confirmed bequests• Valuation of bequest expectancies and reports to the Board• Marketing plan with implementation• Recognition program• Integrated strategy with development colleaguesLife-insuranceNot all life insurance plans are created equal. There are different products out there.Term insurance: covers a specific period and pays death benefit during that period. No cashvalue is built up.Term to 100: it’s a low cost life insurance policy with no cash value, premiums remain constantfor life and is paid-up at 100.Whole life insurance: policy with death benefit and cash value.Universal life insurance: it’s a combination of term insurance or term to 100 insurance and a tax-deferred investment account.Critical illness insurance: pays face amount if insured develops one or more of named illnessesand is paid out during lifetime, not after death.1. Transfer the ownership of a paid-up policyIt is the equivalent of an outright cash gift. The charity may retain the policy and eventuallycollect the death benefit, OR cash in the policy. The charity will need to have the policyevaluated to establish the fair market value of the cash surrender value (it costs approximately$2,500 for an actuary to do this). Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  5. 5. 5Prospects:• Individuals who purchased policies years ago to provide family protection when their children were small• Policy has out-lived original purpose• Becomes an idle, but valuable asset2. Existing policy with premiums owingFrom the moment the donor gives the policy to the charity, he will get a tax receipt for the fairmarket value/cash surrender value upon the transfer and for subsequent premium payments.Assuming the donor continues to pay the premiums, the cash value will increase each year andthe charity will eventually collect the death benefit.Prospects:• Individuals with sufficient insurance for family• May be the best way to give while preserving other assets for the family3. Donation of a new policyDonor designates the charity as owner and beneficiary of a new policy. It is a significant gift forsmall outlay of funds. Donor receives a tax receipt in the amount of the premiums (get proof ofpayment from insurance company) and make sure the policy will be paid within 10 years.Example• Female donor, non-smoker, aged 32 years old• Purchases a life insurance policy and transfers ownership to the organization• Premiums are of $420 per year for 10 years• The organization will receive death benefit of $25,000• Net cost of this gift, after tax savings = $2,470 Gift to the organization as owner and beneficiary (death benefit of the policy) $25,000 Annual premium payment (payable over 10 years) $420 Charitable tax receipt $420 Annual tax savings (tax credit of 48%) $173 Net cost of annual premium (after tax savings) $247 True cost of gift ($ 247 X 10 years) $2,4704. Name the charity primary beneficiary of a policyIf the owner keeps the policy in force and does not change the beneficiary, the charity willeventually receive the death benefit. The beneficiary can be changed so you’ll have to stewardthe donor very well! The tax receipt will be issued to the donor’s estate.5. Name the charity co-beneficiary of a policyOther beneficiaries may be individuals or other charities. This happens when you;re dealing withan individual with other charitable commitments. The tax receipt will be issued to the donor’sestate. Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  6. 6. 66. Charity as the contingent beneficiaryThe charity may still receive a gift. The donors clearly still requires a policy for family financialsecurity. Show gratitude, the situation may change in the future.SecuritiesWhich securities are eligible for charitable gifting?• Appreciated stocks, bonds, and mutual fund shares and units listed on major exchanges or have regularly published values• Stocks, debt obligations, rights listed on major stock exchanges (Canadian and US exchanges)• Includes units in listed Income Trusts• Gifts of shares purchased through the exercise of employee stock options in public companiesThe donation much like a gift-in-kind. The tax receipt amount is determined on the closing priceon the day of receipt by the charity. Usually charities sells the stocks immediately but you cankeep them and sale them if you think the price will increase. Gift of cash proceeds Gift of securities Fair market value of stocks $10,000 $10,000 Cost of stocks $1,000 $1,000 Capital gain $9,000 $9,000 Taxable capital gain (based on a 50% tax rate) $4,500 $0 Charitable tax receipt for the donation $10,000 $10,000 Income tax credit for the donation $5,000 $5,000 Maximum tax on the capital gain ($4,500 x 50%) = $0 $2,250 Net financial advantage of the gift ($5,000 - $2,250) = $5,000 $2,750Charitable gift annuitiesAn annuity is a contract that you buy, from an insurance company, that provides income to thedonor. There are self-insured annuities (the charity makes the payments and assumes the risk)and reinsured annuities (the insurance company makes the payment to the donor).Annuities are usually for middle-class donors over the age of 75 who are charitable but cannotafford to relinquish income from capital. Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  7. 7. 7There are other planned giving vehicles but these are the most commonly used.Getting startedHere’s a little advice ....1. As the fundraiser, you need to feel confident that a planned giving program can be managed without being a financial expert, lawyer, or accountant.2. A good planned giving program is built on solid, basic development principles, some of which may already be in place in your charity. This can include a managed pool of prospects, an annual giving and major gifts program, active volunteer leadership, and a willingness to engage in programs that benefit the nonprofit.3. Start by setting very specific personal and program goals. Be realistic about what can be accomplished, taking in consideration other work demands. It’s important to start a planned giving program, however small, because the rewards of such a program are worth the investment of time and resources.4. Most importantly, surround yourself with experts that know thing you don’t know (planned giving professionals, lawyers, accountants, financial planners, notaries, life insurance agents, trust officers, etc.)Establishing a gift planning programSource: Canadian Association of Gift Planners Original gift planning courseA. Who receives planned gifts?Nearly all charities with an established presence can, and regularly do, receive certain kinds ofplanned gifts such as bequests, life insurance policies, and securities. Most of them have notformally established a gift planning program and many of them are reactive rather thanproactive.B. Should every charity establish a gift planning program?Every charity should encourage bequests, life insurance policies, securities and other giftarrangements that require little administration or liability.C. How does a charity know when it is ready to establish a gift planning program?It should meet the following criteria: • Perceived by the community as having a long-term future • Significant number (usually 1,000 or more) of donors and prospects over age 50 • Several hundred donors who have given $100 or more in a single year • Ability to make a current investment for a future return • Committed board, willing to appropriate funds for the program, become familiar with the types of planned gifts, and set an example by making planned giftsD. Is a gift planning program the same as en endowment program?They are not identical because planned gifts can be unrestricted, designated for a current need,or designated for an endowment. However, the majority of planned gifts probably will be forendowment purposes. Many charities have built their endowments largely through planned gifts. Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  8. 8. 8E. If a charity appears to meet the criteria for establishing a gift planning program, what steps shout it take? 1. The board appoints a Gift Planning Committee (or Endowment Committee) 2. The Gift Planning Committee: • Drafts policies and guidelines regarding (a) types of planned gifts to be sought, (b) criteria for accepting gifts, (c) administration of gifts, and (d) recognition of planned gifts. • Consider staffing responsibilities for the gift planning program, and • Develops a proposed budget 3. The Gift Planning Committee submits to the board the proposed policies and guidelines, budget and staffing recommendations 4. Assuming approval by the board, take steps for implementing the program. Here’s a checklist of things to do: • Terms of Reference for Gift Planning Committee • Procedures for administering various types of gifts • Endowment policies (if necessary and if they don’t already exist) • Prototype endowment agreement (if necessary) • Sample bequest language to give to donors and lawyers • Plan for funding the program • Procedures for recognizing gift planning donors - possibly establish a heritage society • Comprehensive marketing plan • Creating in-house or purchasing gift planning literatureF. Who should be appointed to the Gift Planning Committee?The chairperson of the committee should be a member of the board, and other board membersmay also be appointed. However, not all committee members need to be board members. It isrecommended that the committee include some professional estate planners - lawyer,accountant, notary, insurance agent, trust officer - and one or more persons with marketingexpertise. Make it a relatively small, working committee.G. How should the gift planning program be staffed?Ideally, a full-time Director of Gift Planning but in a small charity, that won’t likely be possible. Ifyou are the sole fundraiser in your organization, make sure you set aside a few hours per weekto work the program, either by identifying new prospects, calling potential gift planningprospects, or setting up the program.H. If a charity foes not meet the criteria for establishing a gift planning program, what should it do?Become more proactive, especially in seeking bequests. Any charity can implement a bequestprogram, even with limited resources. Create some basic marketing material (even off thecomputer) or purchase Leave A Legacy marketing material. Eventually, the charity will evolve tothe point where it is appropriate to establish a program.I. How should a gift planning program be funded?Board members must be willing to invest current dollars for a future return. Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  9. 9. 9J. How should the various types of planned gifts be counted and recognized?• Realized bequests (distributions from estate) Counted: full amount in gift totals Recognition: listed in annual report, donor wall, listed endowment (if applicable), and publicity• Bequest expectancies Counted: do not count in gifts totals. Amount, if known, may be recorded in expectancies report. If the amount is unknown, an “average bequest amount” may be shown in the expectancies report. Recognition: heritage society• Life insurance (ownership of policy assigned to the charity) Counted: cash value at time of assignment and future premium payments counted in gift totals. Do not count death proceeds in gift totals. Recognition: cash value at time of assigned and premium payments recognized - the same as outright gifts of cash. Death proceeds may be recognized the same as realized bequest.• Life insurance (charity the beneficiary, not owner of policy) Counted: Do not count anything in gift totals when charity is named as beneficiary. Count full amount of death proceeds in gifts totals. Recognition: Heritage Society. Death proceeds may be recognized the same as a realized bequest.• Charitable remainder trusts and other residual interest gifts Counted: present value of residual interest counted in gift totals. Recognition: present value may be recognized the same as an equivalent cash gift and/or Heritage Society. Some charities recognize the future value of the gift.• Charitable gift annuity Counted: only the donation receipt. Recognition: amount retained by the charity recognized same as equivalent gift of cash. Heritage Society.K. How can a consultant assist with the development of a gift planning program?• Initial presentation to the board regarding the potential of a gift planning program (may convince them to take the next steps)• Seminar to acquaint board with the giving instruments• Staff training• Strategic advice to staff on program design and gifts• Donor support• Providing or drafting gift planning policies, endowment policies, endowment agreements, gift agreements, and procedures• Helping draft or review marketing material• Assistance with recruitment of Director• Audit of existing program, or feasibility study for developing a new oneDeveloping your planned giving budgetConsider the following expenses to include as budget items in the plan: Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  10. 10. 10Office Supplies/Materials• Letterhead• Postage• Business equipment• Files/Folders• FurnitureTrainings/Education• Conference• Subscriptions• Professional Memberships• SeminarsTravel• Air• Hotels• Restaurants• Rental carsComputer hardware/software• Planned giving software• Computer laptops• Service contracts• Telephone/FaxProfessional Services• Consultant• Legal services• Financial service fees• Outside administratorsMarketing• Design change• PrintingPrograms and events• Workshops• Recognition program• Events• OutreachSalaries• Director• Planned giving assistantWho are planned giving prospects and donors?Because planned giving often take years to materialize, it’s necessary to build a large pool ofprospects. To build this pool, consider: • Identify donors who have contributed for many years • Identify and meet with existing donors to introduce them to planned giving concepts • Identify and work with 1 or 2 key volunteers who are willing to solicit others for a PG • Get all board members to make a PG and then encourage them to help you identify and solicit their network • Establish a planned giving society Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  11. 11. 11Marketing your planned giving programDespite having a small or non-existent budget, you can market planned gifts to your donorsthrough publications, mailings, events, etc.The four components are part of a marketing program: 1. Continuity: shows the recipient that each individual marketing effort is part of a whole 2. Consistency: the message should be consistent visually and in terms of content 3. Repetition: once the process of marketing has begun, it must be repeated over time with each effort reinforcing and building on the previous efforts 4. Cumulative effect: no single marketing effort is responsible for causing a donor to act or develop a positive impression; rather, all of the marketing efforts have a cumulative effect. This is why marketing cannot be done occasionally. Marketing must be done frequently and regularly to produce the ultimate results.Publications • Draft planned giving advertisements and articles for existing development newsletters or publications • Create a planned giving letter to send to your prospects and donors • Run planned giving, financial planning and estate planning columns in a development or planned giving (death brochure) newsletter • Revise annual fund reply device to include a planned giving appeal • Create a general planned giving brochure to offer to donors and prospects • Identify and publicize organization-wide funding opportunities and needs through various existing publications • Draft and “Inventory of Assets” booklet to help donors with estate planning matters and to identify assets that may be used to make a gift • Create an endowment book that lists existing endowed funds at the organizationMailings • Segment the database to develop a targeted population of donors who have made annual gifts of $25 or more for three or more years to send planned giving mailings • Segment the database to select donors or prospects who are 75 years old or older to send specific PG information, such as information on charitable gift annuities. If the donor’s ages are not known, present a table showing payouts for donors at age 65, 70, 75, 80. • Target donors 30 to 55 years old for life insurance gifts • Select all donors who have given $5,000 or more cumulatively to the organization to receive PG information • Target geographical areas for mailings by selecting donors living in postal codes that indicate wealth • Prior to year-end, send existing PG donors and prospects a year-end tax letter that highlight the benefits of charitable giving and current tax tips • Mail a publication 4 times per year to all PG donors and prospects • Mail a “Ways to Give” brochure to prospects along with a letter showing the benefits of making a PG during retirement Ligia Peña, M.Sc., CFRE Diversa Consultants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  12. 12. 12Events • Host a series of seminars (afternoon tea) for donors, prospects, and friends of the organization to focus on pre-retirement planning, retirement planning, and financial planning to attract people who may be capable of making a PG • Host a luncheon for all donors who have made a PG to the charity • Conduct PG seminars for area professional advisors Ligia Peña, M.Sc., CFRE Diversa Consutlants Tel.: 514.699.6046 ; ligia@diversa.ca ; @lpdiversa
  13. 13. Canadian Charitable Gift MatrixType of Gift Benefits to Charitable Benefits to the Donor Gift Examples Most Appropriate Organizations ForGift of cash • Available for immediate • Donation receipt for full • Cash • Everyone (any age) use amount • Cheque who can afford to • Liquid • Straightforward transactions give up some • Credit Card principal and the • No risk • Satisfaction of seeing gift at • Pre-Authorized interest it would work today Contributions (PAC), otherwise earn usually paid monthlyA Gift of • Immediate Use • Donation receipt for fair • Stocks • Owners (any age) ofPublicly Listed • Liquid market value • Bonds stocks, bonds andSecurities • No capital gains tax other securities who • Little risk • Mutual Fund Units(including can afford to give • Generally simple and low • Satisfaction of seeing gift at • Employee Stocksegregated & the asset and the cost to implement work today Option Sharesmutual fund units) interest or dividends it earnsLife Insurance • Immediate access to cash • Donation receipt for cash • Any whole life policy • Persons (generallyPolicy value, assurance of death value and any future (participating or ages 30- 60) who i)(Charity named as proceeds if policy retained premiums paid universal) have an older policyowner and (Term policies are often • Small current outlay • Term policy no longer needed,irrevocable not retained as donor gets leveraged into larger future (personal) or ii) want to make abeneficiary) older) gift large gift but have limited resourcesLife Insurance • Will receive death • Satisfaction of providing a • Any type of life • Persons (any age)(charity named as proceeds unless donor future gift while retaining full insurance policy whose personalbeneficiary but not changes beneficiary control of policy needs and familyowner) designation • Donation receipt to estate for situation may be full value of death proceeds subject to changeBequest of • Future gift provided • Satisfaction of providing a • Registered • All individuals, butRetirement beneficiary designation(s) possible future gift while Retirement Savings especially singlePlan and/ or bequest wording preserving personal security Plan (RRSP) and persons, andAccumulations are not changed • Gift receipt that offsets tax Registered surviving spouses on distribution of retirement Retirement Income who have made funds Fund (RRIF) other provisions for accumulations heirsBequest by Will • Expectancy of future gift • Satisfaction of providing for • Cash, securities, real • All individuals (any provided that bequest future gift while retaining full estate, tangible age), but especially wording is not changed control of property personal property older persons with • Donation receipt for use with few or no heirs final income tax return • For bequest of listed securities, no capital gain tax, for most other property 50% of capital gain will be taxable but can be offset by tax credit from gift, likely resulting in tax savings to estate.
  14. 14. Canadian Charitable Gift MatrixType of Gift Benefits to Charitable Benefits to the Donor Gift Examples Most Appropriate Organizations ForShares in a • Public charity - Donation • Public charity - Donation • Shares held in • Entrepreneurs whoPrivately- receipt for appraised receipt for appraised market privately-owned are philanthropicOwned market value at time of value at time of gift, issued corporation • VentureCorporation gift, issued immediately (if immediately (if gift to public philanthropists gift to public charity) charity) • Private Foundation - • Private Foundation - Donation receipt issued Donation receipt issued only only when foundation sells when foundation sells shares. Receipt value is shares. Receipt value is the the lesser of amount lesser of amount realized by realized by foundation and foundation and the fair the fair market value at market value at time of gift. time of gift. • 50% of capital gain taxable, • 50% of capital gain offset by tax credit from taxable, offset by tax credit donation receipt from donation receiptGift of Real • Proceeds available as • Donation receipt for fair • Real estate including • Owners (generallyEstate soon as property is sold market value (FMV) principal residence, over 50) of a • Sometimes property itself determined by appraisal vacation properties, principal residence can be retained and used (independently obtained by and investment or investment charity) properties property who do not • Valuation and ongoing • 50% of gain taxable, (unless need the property or maintenance property is donor’s primary the proceeds from considerations can add residence, in which case no its sale complexity to gift administration taxable capital gain), offset by tax credit from donation receiptGifts of • Can be retained or sold • Donation receipt (if • Artworks, furniture, • Owners (generallyTangible and proceeds used for applicable*) for fair market equipment, over age 50) ofPersonal current needs value determined by collections, objects which theyProperty (other • Decisions to retain assets appraisal automobiles, musical no longer intend tothan cultural warrant careful • 50% of gain taxable, offset instruments useproperty) consideration, in light of by tax credit from donation implications for valuation • Satisfaction of seeing gift at and usefulness for work now or in near term charitable purposes, and ability to issue donation receiptCharitable • Irrevocable future gift of • Net income from property for • Cash, securities, real • Persons (generallyRemainder remaining trust assets life or a term of years estate over age 60) whoTrust (CRT) • While often complex to • May result in donation want to make a administer, can be a highly receipt for present value of future gift and effective gift planning the remainder interest issued obtain present tax instrument in selected at time trust established relief but want to circumstances preserve investment • Property not subject to income for • Trust cannot allow probate themselves and/ or encroachment of capital or a survivor guaranteed income
  15. 15. Canadian Charitable Gift MatrixType of Gift Benefits to Charitable Benefits to the Donor Gift Examples Most Appropriate Organizations ForGift of Residual • Irrevocable future gift of • Ability to continue using • Principal residence, • Persons (generallyInterest in real property property for life or term of other real estate, over age 60) whoestate or years artworks otherwise wouldartworks • Donation receipt for present give the property value of residual interest under their will issued at time of gift • Avoidance of tax of a portion of capital gain if donor retains life interest • Property not subject to probateOutright Gift of • Immediately added to • Donation receipt for fair • Artworks, collections, • Owners (generallyCertified collection and available for market value determined by artifacts or historic over age 50) ofCultural display or exhibition appraisal structures certified cultural treasuresProperty • 100% contribution limit by Cultural Property who would like to Review Board preserve the • No tax on capital gain (CPRB) property within • Satisfaction of preserving Canada property of national significanceInterest-free • Provides capital for • Principal is recoverable • Cash and cash • Persons (any age)Loan (normally building or investment • Interest earned on loaned equivalents who have more thanpayable on without interest cost funds not taxable to donor enough currentdemand) • Public Foundations (like income but want to • Satisfaction of helping community foundations) preserve all charity today not currently eligible for principal for their these gifts due to debt own future security restrictions under the and/or heirs Income Tax ActCharitable Gift • Irrevocable gift of • Guaranteed life payments, • Cash or marketable • Oldest donorsAnnuity* whatever principal remains all or substantially tax-free securities (usually 65 and(self-insured) after making required • A donation receipt for a older) who want the payments portion of contribution security of guaranteed income paymentsCharitable Gift • Irrevocable gift of that • Cash or marketable • Oldest donorsAnnuity portion of the contribution securities (usually 65 and(reinsured) retained after purchasing older) who want the commercial annuity security of guaranteed income payments*Note: Only charities designated as charitable organizations (i.e. not public or private foundations) and authorized under provincial law, may currentlyissue gift annuities.Source: Minton & Somers, Planned Giving for Canadians, Third Edition (Adapted and revised)

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