News Story

The StarPhoenix (Saskatoon)
Friday, February 1, 2008
By Murray Lyons
The StarPhoenix 

Community Foundation gift keeps on giving

January's downturn in the stock market, like all market downturns, can get people who are retired and living partially off their investments nervous. Nevertheless, the fact remains there is a lot of accumulated wealth out there.

While people are always happy when an investment pays off, they are often not so thrilled about cashing in on their success when 50 per cent of the capital gain becomes taxable income immediately. For years, the options for many people were limited. They could cash out and pay the capital gains themselves or have their children deal with the tax issues in the estate.

But almost two years ago, the government in Ottawa finally made another option possible and that is to allow a tax receipt on the value of shares that individuals donate to charity. Experts say this is already making a difference in charitable giving in Canada and Saskatoon has been part of it.

For a charity such as the Saskatoon Community Foundation, there is a new path ahead for long-term growth, thanks to the tax change made in May 2006.

ENDOWMENT GROWING STRONG

Trevor Forrest, the executive director of the Saskatoon Community Foundation, says in less than two years the foundation's endowment has grown by several hundred thousand dollars through donated stock. "We've had some pretty significant donations so far in terms of size," he said this week.

Forrest sees huge potential for the foundation's general endowment to grow. The short-term goal for the foundation is to have enough capital on hand by 2010 to have an annual dispersal of $1 million -- about 30 per cent higher than what the foundation allocates now.

The tax change, strangely enough, came about largely due to one man's dogged persistence. Just this past December, The Globe and Mail recognized Don Johnson, the Ontario man who had ran a one-person lobby campaign, as the newspaper's Nation Builder for 2007.

Johnson got interested in the issue after being part of the fundraising for the National Ballet of Canada. As a deal maker on Bay Street, Johnson recognized he and many of his clients are much richer in securities than they are in cash. But few wanted to cash in securities and give to charities because of the tax hit.

The long and short of it is Johnson's lobbying of finance ministers Paul Martin, Ralph Goodale and Jim Flaherty to recognize the advantages to the country's charitable sector -- and ultimately to society -- paid off.

Locally, the growing importance of stock donations to the Saskatoon Community Foundation is equally true of our other big charities such as our local hospital foundations or the various University of Saskatchewan endowment campaigns.
As one who has observed the thought processes involved in the foundation's granting process up close, the Saskatoon Community Foundation is certainly a worthy repository of the legacies so far left for it to manage.

Like most such entities in Canada, it is modeled after the Winnipeg Foundation which was Canada's first community foundation in 1921 and remains the country's second largest community-based granting organization. Its accumulated capital can now be tapped to grant $18 million annually to 680 charitable organizations.

WHAT A LEGACY

In Saskatoon, we were relatively late bloomers. It was almost a half century after Winnipeg's start when our community leaders got the ball rolling thanks to an initiative in 1969 by Senator Sid Buckwold and a small group of his friends in business and the professions. But for its first 20 years, the Saskatoon Foundation was a low-key operation and capital accumulation went slowly.

"It wasn't until the early 1990s they actually hired any staff people," Forrest pointed out. "In 2002, we were at less than $6 million."

The 2007 annual report, however, shows the total accumulated endowment has grown to more than $17 million. Forrest is optimistic there will be more even more rapid growth in donations from here on in as more people realize the benefits available to them in donating stock.

For the record, the Saskatoon Community Foundation is not in the business of sitting on stock donations and speculating. On the day an individual donates their securities to the foundation, the donor is given a tax receipt based on that day's market value of the securities and the foundation turns the security over to its broker. The stock is sold immediately.
For an individual, donating cash or part of a stock portfolio to a charity that operates as a perpetual endowment makes it possible to see one's money doing good work immediately while gaining satisfaction that the gift will survive long after one is gone.

It has taken a while, but organizations such as the Saskatoon Community Foundation can get people thinking long term about charity.

"We've been a province or a community in Saskatchewan that has been used to dealing with crisis situations," Forrest observed. "But more and more donors want to make their gift last forever and we're the people who can do that."

mlyons@sp.canwest.com

Reprinted with permission of the Saskatoon Star Phoenix