Maybe it's the places I've worked, and the adventurous spirit of those who live in the small towns of central B.C. and the Kootenays, but in my 28 years as a financial professional some repeated themes have crystalized.
These speak to the remarkable core qualities of those who have bucked the world-wide trend of mass urbanization, and headed toward quieter places in God's Country to make their way.
Here are a few of my observations:
Most of the financially-settled citizens of our region didn't come from money, and very few of them wear their wealth on their shirtsleeves.
The pretentious pretend, but these are the real thing, and you probably couldn't pick them out of a crowd.
Their adult children may or may not have the same appreciation for their parents' journey from rags to riches. The gift of that journey is dangerously out of reach to the next generation, precisely because of the success of the parents.
Generosity toward the community is one of the natural outcomes of this.
Here is part two of my advice on support worthy causes:
Some tax incentives encourage Canadians to give charitably. A charitable gift to a registered charity produces a donation receipt for the fair market value of the donation, net of any benefit received, (for example, the cost of the meal at a charity dinner). You will probably then be able to claim a donation tax credit, in the year of the gift. Caveat: The amount of the donation tax credit cannot exceed 75 per cent of that year's net income, except in the year of death and the year immediately preceding death, when the limit is 100 per cent. Donation credits can be carried forward for up to five years.
When a donation is made to a registered charity under your will, your executor may have some added flexibility in their use of the donation tax credit.
Options and timing
Some approaches offer immediate tax benefits, and others more long-term. Other more structured giving options help fulfill your charitable intentions throughout your lifetime and even after death, with attractive tax benefits dripping along the way and accruing to your eventual estate. This is the stuff of legacy, and may be preferable to the less desirable legacy of "rags to riches to rags in three generations."
For example, while donating cash is the most widespread and straightforward form of charitable giving, it's also possible to donate non-cash gifts, including capital property, marketable securities, Don Cherry Bobble-heads, art and other collectibles, eco-gifts, private company shares or even life insurance policies. In particular, donating publicly listed securities may present a tax-efficient opportunity for some, as donors may benefit from the elimination of tax on any accrued capital gains, as well as the donation tax credit.
As mentioned above, there are options for making charitable bequests in your will, whether it's a residual gift (a percentage of what is left of your estate after other gifts and debts have been paid), a specific gift (a fixed sum of funds), or a specific item of value (such as art, antiques or jewelry). It's also possible to make a gift on your death by naming a registered charity as the beneficiary of your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), Tax-Free Savings Account (TFSA) or your life insurance policy. Leveraging an insurance policy is perhaps the most valuable way to give, at little or no extra cost to you. More on this in a later article.
Those who may be interested in creating an ongoing endowment, or who wish to build a more personalized approach may want to consider either a private charitable foundation or a charitable gift/donor-advised fund.
Private Foundations: Generally speaking, private charitable foundations can work if you are willing to treat them more like a project than a purchase. These require passion, a greater time commitment and devotion of additional time and money.
Donor-advised Funds: On the other hand, donor-advised funds will appeal to those who want to donate to a cause without the time and monetary commitments required for a private foundation.
Given the wide range of options, your qualified tax advisor is an invaluable resource to help navigate through the restrictions, taxes, advantages and drawbacks of the type of gift that feels right to you.
Planning your legacy
If you establish a charitable gift fund with a public foundation, you can recommend the criteria for grant-approval from your donated assets. Also, give some thought in advance as to how you want grants to be distributed if you were to become incapacitated or upon your passing, and this can be accomplished through completing a Legacy Intention Form or by writing a letter of intentions. This information can provide insight into your charitable intentions, including identifying specific grant recipients, programs or purposes.
In general, it provides an opportunity to clearly state your overall charitable priorities and interests, and makes clear the fact that you will haunt them personally from the great beyond if they mess it up. More next week.
Mark Ryan is an investment advisor with RBC Dominion Securities Inc. (member - Canadian Investor Protection Fund), and these are his views, and not those of RBC Dominion Securities. This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. See Ryan's website at: http://dir.rbcinvestments.com/mark.ryan.