Philanthropy: The gift that gives back

The Fall and Winter are often charitable giving seasons in Canada. It is the time of year that sees a lot of activity around charitable donations from those who are, after having put it off until the last moment, scrambling to meet the December 31 deadline to make charitable donations for the given tax year.


The timing couldn't be better for Jo-Anne Ryan, vice-president, philanthropic advisory services, TD Waterhouse Canada, to examine various philanthropic ways high-net worth (HNW) clients can, and in many cases do, minimize tax implications of their wealth.

"Charitable giving is becoming more and more important with our boomers," said Ryan during a presentation at the Strategy Institute's 12th annual Marketing Wealth Management Services to High Net Worth Individuals Summit. "They are changing the face of philanthropy, just like they are changing everything else."

They look at their charitable donations as an investment. "They look at what types of results (their donations) are going to get them, which can be anything from how many people are going to come off welfare, to how many lives they're going to save."

Philanthropic giving is increasingly important in the financial and estate plans for clients. Boiled down, charitable gift planning is the process of creating a complete and balanced approach to philanthropy that addresses estate, tax and financial planning objectives enriched by personal philanthropic hope and dreams.

Yet until recently, there seemed to be little or no strategy around much of the charitable giving taking place in Canada. By the end of each year, clients could be found saddled with a pile of tax receipts that represented a mishmash of charitable causes not necessarily representing values that are important to them.

Things are getting better, though. Donors are becoming increasingly savvy by learning the importance of strategic philanthropy. "People want to become much more strategic with their philanthropic giving having an impact," said Ryan. "We want to really be working with our clients, understanding those values, helping clients to articulate them, and put a plan in place."

This sort of strategic planning is especially relevant in Canada, one of the most charitable countries, according to the first ever World Giving Index (WGI). Published by UK-based Charities Aid Foundation, the index ranks Canada third — behind Australia and New Zealand — in "global generosity" among 153 countries comprising 95% of the world's population.

There's no denying that tax, although only one of the many motivations for giving, is an important consideration. "Most people want to give it away to maximize the tax benefits (and) give in a very tax effective manner," said Ryan.

In the absence of strategic planning, the client's capital will make its way to the government, which decides how to allocate those dollars. "Of course, charities are a very small proportion as to how those dollars get allocated (by the government)."

With strategic planning in place, however, donors take control of that capital and can direct it to causes in which they most strongly believe, while taking advantage of tax credits.

"It's really redirecting what's already going to the government, to things that are important to you," said Ryan. "Most people would want to minimize what the CRA inherits and maximize what family, friends and charity receive."

Ryan wasn't short on tips on how that can be achieved. The first on the list was donating securities as opposed to making cash donations. "You're always better off giving securities with appreciated gains versus selling the stock and donating cash."

For those who expect further upside from their stock, she recommends they can still donate, eliminate the capital gains, and buy it back immediately. The temptation to market time donations, however, must be resisted at all costs, she said.

Another equity-based idea: donate stock from a holding company. "When you donate from a corporation you get a tax receipt that gives you a deduction (which) reduces income," she said. "You also eliminate the capital gains taxes when you donate a stock from a holding company."

Ryan also offered one of the best kept secrets of charitable giving. "The full capital gain that is eliminated gets credited to the corporation's capital dividend account which allows the shareholder to withdraw money tax-free."

These tax-free withdrawals drive down the value of the corporation, reducing estate taxes, by lowering the value of corporate shares at the time of death, which triggers a deemed disposition.

Charitable giving of employee stock options is another great way to slough off unwelcome taxes. When sold, these generate returns which, despite technically being employment income, are taxed as capital gains. "If you donate the stock within 30 days and in the same calendar year, you can totally eliminate that tax," said Ryan.

Using up tax credits and donating RRIF income to charity are also good ways to minimize what will invariably land in CRA's coffers.

Incorporating philanthropy as part of the overall financial and estate plan is a great way to find the happy balance between what is bequeathed to the next generation and what goes to charity, she said.

(10/29/10)

Filed by Vikram Barhat, Senior Writer, Advisor.ca


About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly.   Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses.  In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.

On Community and “Oneness”

We as a community – are all an important components that make up one functioning body. It may be easier to understand this concept in the physical sense of our own bodies: Try to have a good day when you have a toothache, a headache or your feet are bothering you. No part is more important that than the others; each has its own role and relationships. When each part is fully functioning and flourishing, the entire body is fluid and able to achieve its purpose.

This concept, once deeply rooted in understanding, affects the way we treat everyone around us – in our communities, our friendships and our families. There is no room for pride or posturing once we realize that we cannot function at our best if we don’t want the best for everyone.

- Excerpt from Kristin Armstrong, Living Faith

About me: I give Economic, Social and Global trend briefings from some of the world's brightest minds at my blog http://saveriomanzo.com/ and http://saveriomanzo.blogspot.com/. I also provide true and tested financial planning and wealth advice. Most recently, over the past few years, I have become socially conscious and have been attempting to practise ways in which I can live my life more environmentally friendly.   Along with some truly exceptional friends, we provide consulting and business development for small-medium sized businesses.  In addition, I truly believe in being philanthropic, giving and doing unto other as we would have them do unto us. Some of my fondest resources are from Barry Ritholtz of The Big Picture, David Rosenberg and what Warren Buffett of Berkshire Hathaway is up to behind the scenes, as an example.

Strengthening Ontario's Not-For-Profit Sector

Strengthening Ontario's Not-For-Profit Sector

October 19, 2010
McGuinty Government Passes Not-For-Profit Corporations Act
Ontario is making it easier for not-for-profit corporations to operate and do business in today's marketplace while strengthening the economy and creating jobs.

The province's Not-for-Profit Corporations Act passed third reading today in the Ontario Legislature. Upon Royal Assent the new legislation will provide Ontario's 46,000 not-for-profit corporations with a modern, legal framework to:

* enhance corporate governance and accountability
* simplify the incorporation process
* give more rights to members
* better protect directors and officers from personal liability
* allow not-for-profits to engage in commercial activities where revenues are used by the corporation in support of their not-for-profit purposes


The Act is based on extensive consultations across the province. This includes three consultation papers, a web advisory panel and regional workshops in Ottawa, London, Toronto and Thunder Bay attended by more than 200 organizations.

The nonprofit sector employs more than 16 per cent of Ontario's paid workforce. Supporting Ontario's non-profit organizations is an important part of the government's Open Ontario plan to grow key sectors of the economy and create a climate where business can thrive.
QUOTES

"Almost eight million Ontarians volunteer their time and effort to help not-for-profits relieve poverty, advance education, strengthen medical research, share faiths and build communities. The Not-for-Profit Corporations Act will strengthen a sector that offers so much to so many."

– John Gerretsen
Minister of Consumer Services
QUICK FACTS

* The previous Corporations Act, which governed not-for-profit organizations was enacted in 1907 and last substantially updated in 1953.
* Ontario's volunteers contribute over 800 million hours a year.

Help Someone and Help Yourself

Despite all the sarcastic remarks about do-gooders and the endless jokes about Boy Scouts helping folks cross the street, helping others is what makes the world go round. For one thing, helping another person makes the helper feel good. We were designed to feel better when we cooperate. This is how societies hold together, how children get nurtured and how victims make it though to better times.

Helping someone can be especially helpful when you're becoming obsessed with your situation. Sometimes you can't get out of your funk because all you can think about is how everything is not going well for you. The cardinal rule is that its going even worse for someone else, somewhere. You never have to look very far to find a person in need of help.

Written by Vinita Hampton Wright
Simple Acts of Moving Forward






.
-Saverio Manzo
http://saveriomanzo.com/

on encouragement

We all have 'tough days', tight spots where things go wrong, at times, for everyone.

But what if today we were to take up an attitude of encouragement, purposely looking for what's going right and taking the time to affirm it? Can we open our eyes and hearts today to all the strengths and virtues present in ourselves, in others, in the workplace, in our community and country?

Just imagine how this would change - us, others, our lives.

Claire J. King


.
Saverio Manzo
saveriomanzo.com

How to Give Big Without Writing a Big Cheque

If there was ever a time of year to get serious about managing your finances, the holidays is it! Here are some fun ways to give meaningful gifts without maxing out your credit card. The trick is to focus on creating memories rather than loading up your loved ones with more stuff they don't really need.

* Quality time: Print out a "Quality Time" certificate redeemable towards a specified number of hours doing something fun with a loved one on a weekly or monthly basis.

* Acts of service gift certificate: Print a certificate that promises window washing, tax preparation, garden weeding, etc.

* Bake up a storm: Make big batches of favourite cookies and treats, then wrap up a generous sampling for each person on your list.

* Decorate the family tree: Do some research into your family's genealogy, draw up a family tree and frame it.

* Comfort food: Collect your mom's favourite recipes and print them in a book form as a way of preserving all those heart warming flavours.

* A gift to remember: Write down or make an audio recording of all the favourite memories you've shared with that person.

* Wrap up your expertise: Make a gift of your skills: weekly lessons in yoga, furniture refinishing, sushi making, computer training, massage, etc.

"Lost time is never found again"

Benjamin Franklin

quote from Dr. Martin Luther King:

"Life's most urgent question is: what are you doing for others?"


Martin Luther King, Jr.



Saverio Manzo