A charitable giving plan is your opportunity to donate to the causes closest to your heart. Engage the entire family to share the importance of helping others.
Have you considered the following questions?
- Are you aware of the various ways that you can maximize tax savings while doing good?
- What societal issues do you want to support, if any?
- Are you and your beneficiary aligned in your social conscience and your role in social movements?
- What is your charitable mission statement?
- How will you react if your beneficiaries use their inheritance to support a social cause?
- How can you transfer your values of generosity to the next generation? What does generosity mean to you and to your family – are you aligned in its definition?
- What charitable organizations do you want to support, if any?
Wealth accumulation can create the opportunity to donate and give back to causes close to your heart. Engaging the next generation and the entire family in this process can be a powerful way to demonstrate family values and action. This can provide a legacy and fulfill your philanthropic goals. Research shows that millennials differ in what legacy means to them as compared to their parents. Specifically, legacy was viewed differently by males, females and different ages. Examples of legacy included professional accomplishments, financial impact on the world, social impact on the world and financially supporting family or friends.[1] Be sure to communicate with your beneficiaries and be aligned in your definition of legacy.
Canadians are a generous and caring group. We are concerned about the quality of life of others in society. Canadians donate time and funds to strengthen the communities in which we live and love. There are several charitable giving options that you may want to consider. Each may have different implications to the overall impact of your donation, as well as the overall impact to your family's wealth. Charitable gifting considerations include: donating during one's life time vs. one's death, donating through one's business vs. personally, establishing a private foundation or charitable trusts for the donations, donating cash vs. donating other assets. Via any of these means you can support children and youth; animals; healthcare; sports; education and scholarships; arts and culture; community betterment; human trafficking; international development; and global needs. The list is endless.
Steps on assessing appropriateness of charitable giving for you:
- Seek advice from your accountants to see if charitable giving is financially beneficial for you?
- Determine how much you want to donate and in what way. Different strategies have different tax-implications and outcomes.
- Understand and maximize the potential tax benefit of your charitable giving. Your advisors should be able to guide you as to what is best for you - lump sum vs donation over a period.
- Define the values that are driving your philanthropic goals. This is an important step to ensure that your family understands what is behind your motivation. From a multi-generational standpoint, this is an opportunity for the involvement and education of younger generations about the role and value of philanthropy, and to gain their insights about what they are passionate about when it comes to making a difference in the community.
- List the societal causes you want to support. You and your family may have multiple causes that you want to support.
- Understand how the charities will use your donation. This is an important consideration as each charity has their own approaches of how they will use the funds.
- Ensure your charitable intensions are clearly reflected in your family's financial and estate plans.
If you want to learn more, here are some useful links:
[1] The Economist Intelligence Unit. The new face of wealth and legacy: How women are redefining wealth, giving and legacy planning. RBC Wealth Management, 2018.