Plan now to give later
A planned gift is a documented intention to donate to an organization close to your heart. It’s a way to create and preserve your legacy that can be part of your current financial plan, your will, or your estate plan. It can also be a way to ensure that the things you love and that are most important to you can continue even after you’re gone.
Diane Lambert Shack, leadership and legacy manager for the Salvation Army’s Prairie Division, says a person’s approach to philanthropy can change with the seasons of their life.
“You might decide at 16 to volunteer. Then when you get your first job and start earning money, you make an annual Christmas donation. When you get married, you decide not to have wedding gifts and donating to charity instead. Later it gets even bigger because you meet with your financial planner to figure out what you are going to do later with your estate and your last wishes with your lawyer,” she says.
When Shack talks to potential donors, she takes the time to get to know them individually to understand their interests and motivations.
“You have to give to that cause that touches you and motivates you to make an impact or leave a legacy,” she says.
A planned gift does not depend on the donor’s current wealth: it can come from life insurance, stocks or real estate, for example.
If a donor decides to include The Salvation Army in their plans, Shack will introduce them to a variety of programs and projects they might be interested in supporting, including the many ways they can donate.
Giving in the present is a wonderful way to see the tangible difference your contribution has on an organization. Common forms include monthly or annual giving or memorial giving, where you ask friends and family to donate to the charity of your choice in lieu of gifts.
Planned giving, both in the present and posthumously, can provide material benefits beyond altruism, says MaryAnn Kokan-Nyhof, Certified Financial Planner, Certified Life Insurance Underwriter and Branch Manager at the Kilcona branch of Desjardins Financial Security Investments inc.
“The conversation usually starts with a tax return. I’ll see the receipt for charitable donations and ask, ‘Do these places have special meaning to you?’ and there’s usually a story for everyone. That’s how the conversation starts, and then I jump into the discussion: “Did you know that not only can you give, but there are ways to give charitable way where you can benefit from tax savings?” and a lot of people don’t know that,” she says.
You are probably aware that donations can provide some tax relief at the time of reporting. As your investments mature or you wish to make changes to your portfolio, designating them to charity can avoid additional taxes associated with cashing out or transferring assets.
“If you have a portfolio of stocks that has gone up in value, if you sell those stocks, you’re going to pay tax on your capital gain, but if you donate those stocks, you won’t pay any tax and you’ll get a charitable donation received from donation, so it’s a double benefit,” says Kokan-Nyhof.
Posthumous donations tend to be larger and therefore must be arranged with legal or financial authority to be made as instructed. Some forms of major gifts include bequests, leaving a sum or percentage of your estate to charity; donations of stocks, shares, RRSPs or TFSAs; and purchasing an annuity or creating an endowment or trust through a foundation that will manage your donation and ensure its distribution over time. A planned gift does not depend on the donor’s current wealth: it can come from life insurance, stocks or real estate, for example.
To learn more about planned giving options, contact your preferred nonprofit or financial planner.