Common Cents – Leaving a Legacy: Strategic Philanthropy Can Make a Meaningful Difference

by Jessica O’Brien Cameron, Portfolio Manager  | Wealth Advisor, CIBC Wood Gundy – 

For many Canadians, charitable giving is an important part of our lives. With proper planning your generosity can go a long way in creating a meaningful legacy for the future.

Creating your own private foundation can be costly to set up and maintain. There are alternative strategies to consider, like naming a charity in your will or as a beneficiary on your registered investment account, or creating a Donor Advised Fund (DAF).

What is a Donor Advised Fund (DAF)?

A DAF is an alternative to a private foundation. It’s like having your own charitable foundation, but it’s less complex with significantly lower costs. A DAF is an existing registered charity, which places your donations in a separate account. Most DAFs allow you to name your account on behalf of yourself, a family member or a loved one. You then “fund” the account by making a donation in cash or securities. You receive a tax receipt upon transferring the funds (or shares) to your DAF and the assets grow tax free within the account so the designated charities may benefit from larger gifts in the future. Keep in mind the additional tax benefit of donating securities with capital gains since the capital gains tax is eliminated with an “in-kind” donation.

The Benefits of a DAF:

Although you receive the tax benefit immediately after transferring the funds to your DAF, you don’t need to direct the entire amount immediately to a charity. The funds can grow tax-free and each year you can recommend distributions to be made out of your DAF to registered charities of your choice. You can change the charities at any time and even appoint a successor to the account, such as your children, so they can continue in the same role after you’ve passed.

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Jessica O’Brien Cameron is a Wealth Advisor with CIBC Wood Gundy in Victoria. The views of Jessica O’Brien Cameron do not necessarily reflect those of CIBC World Markets Inc. Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.

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