Gift of Securities
The 2006 Federal Budget made donating securities a very attractive option for many donors because it eliminated capital gains on any publicly listed securities, mutual funds, and segregated funds of life insurance companies that are donated to registered charity.
Simply put, the larger the accrued capital gains on the security prior to the donation, the greater the tax benefit to the donor. Donors can benefit from this added incentive to reduce the real cost of their charitable giving or increase the amount of their gifts without increasing the cost. The transaction is generally a simple electronic transfer of shares undertaken by the professional advisor but can include gifts of paper shares when that is what the donor holds.
Things to consider when making a Gift of Securities
Before you donate securities to SD43 Education Foundation, make sure you contact our Advancement Office. We will provide you with the information you and your broker need to make giving securities easy. We also need to have a conversation with you about how you would like the eventual proceeds from your gift of securities put to use. The Foundation will issue you a charitable tax receipt for the fair market value of the gift for you to use in your personal tax return. The fair market value will be the closing price of the securities on the date the securities are delivered or transferred to SD43 Education Foundation. Making a gift of securities is easy. Simply have your broker fill out the Gift of Securities form.
Gift Examples
- Publicly listed shares, rights and debt obligations
- Shares of a Canadian public mutual fund corporation
- Units of widely held Canadian mutual fund trusts
Benefits to the Donor
- Immediate donation receipt for fair market value of security, generally determined as the closing price on the day the gift is received by the charity
- Favourable reductions in capital gains taxation
- Gifts can be given during donor’s lifetime or after, through their estate.
Most Appropriate for
- Donors with investment portfolios that include significantly appreciated securities.
If you wish to make a donation of a gift of securities,
please complete the Donation Form, and submit it to the Advancement Office.
Click here for more ways to make donations.
How it works?
The example here compares the possible tax savings for a donation of $50,000 in securities to SD43 against the proceeds from simply selling the shares to make your donation or donating cash.
The benefit of a direct Gift of Securities to SD43
| Donate securities in-kind | Sell your securities and donate the proceeds | |
|---|---|---|
| Purchase price of securities | $10,000 | $10,000 |
| Present value of securities | $50,000 | $50,000 |
| Capital gain | $40,000 | $40,000 |
| Amount of your donation: | $50,000 | $50,000 |
| Subtract your charitable tax credit: | ($21,850) | ($21,850) |
| Add tax on the capital gain | $ 0 | $ 8,740 |
| After tax cost of your donation | $28,150 | $36,890 |
Marginal Tax Rate: 43.7% / Tax Credit: 43.7%
Benefits
| Tax receipt for Gift to SD43 Education Foundation: | $50,000 |
| Other income you shelter | $13,100 |
| SD43 Education Foundation receives | $50,000 |
Note: The annual limit for claims in respect of charitable donations is generally 75% of net income for the year. This limit is increased to 100% in the year of death or the year prior.
FOR QUESTIONS
We along with your financial planner can help you realize your charitable objectives by providing for charitable giving opportunities, explaining options, and suggesting solutions.
Life Insurance
For the young parent with limited dollars, it is a way to protect the family against economic loss in the event of a parent’s premature death. For the business owner, it may provide dollars to buy out a deceased partner’s interest or compensate for the loss of a key manager. For older individuals, it provides the liquidity needed to settle an estate and pay taxes.
Life insurance has another important use: it is a popular and practical way to make a significant gift to charity. A gift to a community foundation will be wisely administered through their investment program which will result in a stable source of income to the foundation for years to come.
Gift Examples
- Any whole life policy
- Many term policies
- Many group insurance policies
Benefits to the Donor
- Donation receipt for cash surrender value and any future premiums* paid on policies where the ownership is transferred to the charity. Small current outlay leveraged into larger future gift
- If policy ownership rights retained by donor during lifetime and charity named as beneficiary:
- donation receipt to estate for full value of death proceeds;
- satisfaction of providing a future gift while retaining full control of policy.
Most Appropriate for
- Persons (generally ages 30-60) who:
- have an older policy no longer needed, or
- want to make a large gift but have limited resources
- Persons (any age) whose personal needs and family situation may be subject to change
- Professionals with good cash flow, but limited capital assets.
Real Estate
A gift of real estate can enable a donor to make a bigger charitable difference than they thought possible. If given as a bequest it can reduce estate taxes and minimize or eliminate a burden placed on heirs.
Charitable gifts of real estate range from personal residences and vacation homes to rental properties, farmland, and commercially developed land.
A donor may also choose to give the gift immediately if they realize they no longer require a property, or they may consider retaining the use of the property during their lifetime and leaving the property to their chosen charity in the form of a Charitable Remainder Trust and claiming a tax credit for the charitable portion of the gift.
Gift Examples (and CRA links)
- Principal residence
- Cottage or vacation property
- Investment property
- Farmland
- Vacant land
- Environmentally Sensitive Land
Benefits to the Donor
- Donation receipt for fair market value of property
- Capital gains tax on 50% of gain (except for gifts of principal residence or ecologically sensitive land) is offset by donation receipt
Most Appropriate for
- Donors who no longer wish to retain vacation or investment properties
MORE TYPES OF GIVING
We along with your financial planner can help you realize your charitable objectives by providing for charitable giving opportunities, explaining options, and suggesting solutions.
