quarterly.exchange | May 2019 Table of Contents

May 2019 - Intelligent Philanthropy

The benefits of donating securities
An option for savvy donors
by Sherri Grosz

Many donations made to charities are in the form of cash. However, savvy donors see the benefits of donating publicly traded securities (stocks, bonds or mutual funds) as a more tax effective way to donate versus giving a cash gift.

If you own publicly traded securities, outside of a registered account (RRSP, RRIF, TFSA), that have increased in value since you purchased them, and you donate them in-kind to charity, you’ll realize even more tax savings than you would with a cash gift.

When you sell the securities and donate cash, 50% of the capital gain becomes taxable income. However, if you donate the securities in-kind, the taxable capital gain is avoided, and you will receive a charitable receipt for the market value of the securities. Abundance Canada, a public foundation, has extensive knowledge and experience in assisting individuals with these types of charitable donations.

Unlike other Foundations, who will usually provide a charitable receipt on the day the funds arrive in their accounts, Abundance Canada will date the charitable receipt on the day you sign the paper work and initiate the transfer.

In addition, you do not need to complete separate security transfers with each charity you want to benefit. This means less paperwork and hassle for you. At tax time, you only have one donation receipt to process and that one donation has benefited multiple charities.

For example, a donor has 1,000 shares of Royal Bank to donate to four charities. The fair market value of the shares is about $100,000. Each charity is to receive $25,000. If the donor chooses to use Abundance Canada to process the gift of securities, they complete one transfer form for the 1,000 shares and they will receive one donation receipt from Abundance Canada.

If the donor does not use Abundance Canada to process the gift-in-kind, they will need to send each charity 250 shares of Royal Bank, which means four transfer processes and four donation receipts.

Which securities should I donate for maximum tax savings?

You should donate securities that are held in a non-registered investment account. Investments held in a registered account, such as an RRSP or RRIF, do not qualify for these tax savings.
Consult with your tax advisor or professional advisor on which stocks, bonds or mutual funds present the best gifting opportunity. Donate the securities that have the largest capital gain to maximize the tax savings for zero capital gains inclusion for the donated securities.

Capital gains on investments held in a tax-free savings account (TFSA) are already tax exempt. Donating these investments will not generate the same tax savings as donating securities held in a taxable investment account.

What if my charity of choice cannot accept donations of publicly traded securities?

Many charities don’t have brokerage accounts or the expertise to process donations of securities. Abundance Canada will process the donation of securities, sell them and distribute the proceeds to the charities you wish to support.

You can disburse the proceeds immediately or over a period of years. This works well if you want to receive the tax benefit in one year but fulfill a longer-term pledge.

Even if one of the charities you want to support is willing and able to process these types of donations, using Abundance Canada means that with one transaction you can distribute the proceeds to multiple charities.

Talk to our team

Abundance Canada makes the process of donating publicly traded securities easy!

Charitable giving via gifts of publicly traded securities is a wonderful way to support your favourite charities plus realize additional tax savings over donating cash.

To learn more, visit abundance.ca or call 1.800.772.3257 to meet with a gift planning consultant for a confidential meeting, at no cost to you and with no obligation.

Sherri Grosz, CFP, is a gift planning consultant with Abundance Canada. Since 1974, we have helped individuals to be smart with their generosity to charity, during their lifetime and through their estate.


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