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Giving Securities: Good for the Community – Good for You!

By: Susan Milburn, Financial Advisor, Raymond James, and former Chair of the Saskatoon Community Foundation.

A donation to your favourite charity is good for our community, but you can also make that charitable donation do double duty by making it good for you!

As both a long time donor to the Saskatoon Community Foundation and a financial advisor, I always follow these simple steps – whether for my clients or for myself.

If you are a donor, and also an investor, you may already know that making an in-kind donation makes sense. If you donate one of your investments, you won’t pay capital gains tax on that investment. You’ll receive a donation receipt for the full value of the shares or mutual fund, and Canada Revenue Agency allows you to forever avoid paying tax on the capital gain. I have used this strategy many times, and am always happy with the results when I complete my tax return.

Start by reviewing your portfolio with your advisor, looking for an investment with a large capital gain. Make sure you select an investment that can easily be transferred to the charity (because you cannot sell the investment before you donate it). The shares must be delivered to the charity, intact, for them to sell. I always choose a well- known share or mutual fund to make my donation. Another reason for choosing a well-known investment is to ensure the value of your donation is correctly identified, and your receipt issued.

When selecting the shares you will donate, work with your advisor to also ensure your portfolio remains properly diversified to meet your investment needs. After all, you may want to repeat the donation process next year!

Consider the timing of your donation to see if you can take advantage of seasonality in the investment markets. We often find markets in a good mood toward the end of a calendar year as they participate in a year-end rally. This will mesh nicely with your donation time frame as we most often find donors like to make a donation close to year end once they know what impact it will have on their incomes tax. Don’t wait too long – the processing of a donation from your portfolio takes more time than just writing a cheque. Be prepared to have made your decision, selected your investment, and set the donation in motion by mid-December.

The last piece to make your donation a success is to connect with your charity to let them know the donation is on its way. This allows for a smooth processing of your donation shares, the proper value assigned to your donation, and a receipt issued ~ all in good time!

The tax advantages of donating shares or mutual fund units far outweigh a cash donation. Donors I work with prefer to first search their portfolios to meet their donation goals – it helps with their tax situation, and it does not require drawing down their cash reserves. These are two good reasons to use your investments to fund charitable giving.

Any donation is good for our community – advance planning of your donation makes it good for you!

DID YOU KNOW?

Many small charities cannot receive donations of securities because they do not maintain a brokerage accounts. The Saskatoon Community Foundation can receive your donation of securities and forward the proceeds to the charity of your choice!

( Article excerpt from Promise Magazine Winter 2018/2019 )