Planned Giving: What is it and how does it work?

by | May 24, 2023 | Financial Tips | 0 comments

May is Leave a Legacy Month! So we figured, what better time to share some information on Planned Giving – what it entails, and why it may be something you want to consider. 

What is Planned Giving?

Planned Giving is a way for you to integrate your personal tax planning alongside your philanthropic wishes. The starting point for this program is first and foremost your philanthropic wishes. So the program seeks to serve the needs of both you as a donor, and your charity of choice.

Canada Helps describes it as being “planned” because it’s important to plan ahead and consult a lawyer and financial planner about this type of giving. The easiest way to participate in Planned Giving is through your Will. 

What are the benefits for the donor and the charity?

For you as a donor, there are a few important benefits to make note of:

  • Tax effects
  • Present and future personal savings
  • Estate tax savings
  • Knowing causes you care about are supported during your lifetime and in legacy
  • Leveraged value of charitable gifts beyond what is possible by a traditional donation
  • A gift in your Will can allow you to give in a way you couldn’t afford to while alive

The article from Canada Helps also shared a helpful quote from Colleen Bradley, who works at PGgrowth and is a lifetime specialist in Wills and estate planning. She says Canada’s tax regulations are set up in such a way that you can give money to a charity that would otherwise go to the Canada Revenue Agency in taxes. In addition, your executor could claim a rebate against your previous year’s income if your net income during the year of your death is lower than the amount you donate. So your giving wouldn’t necessarily impact what you leave for your family.

For the charity you choose:

  • Increased absolute dollar gift value
  • Cost-effective, streamlined fundraising
  • Facilitated budgeting for operations and capital
  • Comfortable expectation that intended legacy donations will be fulfilled – usually guaranteed
  • Unfettered control of received funds

You can discuss with your charity of choice how you would like your funds used as well.

How does Planned Giving work?

There are a few ways that you can participate in leaving a legacy through Planned Giving. One, as already mentioned, is to leave a gift in your Will. Other options can include a charitable gift annuity, life insurance policy, or RRSP/RRIF. Our friends at Empire Life have a helpful graph to demonstrate who the owner of the policy would be, who pays the premium and what the tax benefits are. You can check it out here

If you’d like to leave a legacy through Planned Giving, contact our office today and we’d be happy to help you find what works best for you and your family.