Maximizing Your Charitable Impact: Unlocking Legacy Giving Potential

When it comes to charitable gifting, donors often overlook the wide array of options available beyond cash donations. Canada has a strong tradition of supporting charities, with even a basic cash gift offering taxpayers up to 53.5% in tax savings. However, by exploring additional strategies, individuals and businesses can maximize their philanthropic impact while unlocking significant tax savings.

Farzin Remtulla, a senior financial advisor at ZLC Financial, reveals lesserknown charitable giving options that empower donors to leave a lasting legacy while optimizing their financial planning strategies.

One of the most commonly overlooked options is gifting publicly traded securities. Donating securities with unrealized gains allows donors to avoid tax on those gains while receiving a charitable receipt for the fair market value of the shares donated. This strategy minimizes after-tax costs and maximizes contributions.

Life insurance presents another powerful strategy. Donors can designate a charity as the beneficiary of a policy, ensuring that the insurance proceeds benefit the charity upon the donor’s passing, entitling the donor’s estate to a donation tax receipt. Alternatively, donors can transfer ownership of a policy to a charity during their lifetime, most often receiving a donation tax receipt equal to the fair market value of the policy. Ongoing premium payments also qualify for additional tax benefits. It’s worth noting that the tax-exempt status of life insurance policies can enhance an individual’s ability to make gifts.

For high-income earners, mining flow-through shares offer a highly tax-efficient means of making a gift. This strategy is not commonly on most donors’ radar, but for individuals with large amounts of personal taxable income it should absolutely be explored with a financial advisor. Uniquely, mining flow-through shares come with tax incentives from the federal and provincial governments, minimizing the after-tax cost of the gift. Structured flow-through share arrangements can further enhance this strategy by eliminating market risks related to share ownership.

Corporate gifting is another avenue to explore. Determining the optimal approach requires evaluating circumstances on a case-by-case basis, but corporate gifts rather than personal gifts might be beneficial in some situations.

Finally, donor advised funds (DAFs) are gaining popularity as a private foundation alternative. Contributions, cash or otherwise, are made to a public foundation, which then converts them into an investment account. Similar to an endowment fund, donors can allocate income and principal to chosen charities over time.

Integrating charitable giving into financial planning is essential. Starting early and developing a comprehensive plan enables individuals to evaluate their ability to give and clearly articulate their philanthropic vision.

Visit zlc.net to learn more.

ZLC Financial is a boutique financial services firm that has been providing independent advice to high-net-worth individuals, families, entrepreneurs and successful business owners, within the Vancouver community for more than 70 years.