Rights & Money

Planned Giving: What You Need to Know

You can go on supporting the causes that matter to you even after you’re gone if you do the proper planning now

By Didier Bert

Planning a gift means giving to a good cause without depriving yourself or your loved ones. Whether your goal is to express gratitude to an institution, give back to society, or honour someone’s memory, when you decide to transfer part of your estate to a cause after you die, it’s important to think carefully about the consequences for your heirs. Will they have enough cash? What will the tax bill be? Will your wishes be respected? To address these concerns, you should start planning as soon as you start writing your will.

Here are a few questions and answers on planned giving to help you both prepare and to make informed decisions.

What is a planned gift?

A planned gift is a cash or in-kind payment to a charitable organization or foundation that is “the final stage of an immediate or future charitable gift-planning process that reflects the donor’s objectives by taking into account his or her financial, tax, and estate situation,” says Antonietta Nicolo, the senior advisor for major gifts and planned giving at the Old Brewery Mission Foundation in Montreal and a chair of the Canadian Association of Gift Planners executive committee for Quebec.


Why plan to leave a gift?

When it comes to a cause that’s close to your heart, planning allows you to arrange over the long term one or more gifts to support an organization’s work while making sure that you have the capacity to offer these gifts by reconciling them with your own financial interests and those of your loved ones.


How does one decide on a specific type of planned giving?

A gift can take various forms, including cash payments, artwork, real estate, and financial assets such as mutual funds and shares, RRSPs, RRIFs, a life-insurance policy, and a life annuity.

Before you decide, it’s important to check with the organization you have in mind to see if it can accept the type of gift you’re planning to give. Some organizations, for example, can’t accept works of art. Your gift can be transferred immediately or at a later date. The most common planned gift is a bequest. These represent about 90 percent of planned gifts, Nicolo says. You can also combine several types of gifts to several organizations, says Humeyra A. Karsli, the major and planned gifts advisor at the HEC Montréal Foundation.


Which is better—an immediate gift or a future gift?

“Most organizations prefer an immediate gift,” Nicolo says. Nevertheless, a future gift allows you to enjoy an asset, such as your home, before it’s transferred to an organization after your death. A future gift also ensures the sustainability of the charitable organization and offers it a view of its future resources, Nicolo adds.


What are the steps to take?

Ideally, as a donor, you should start by discussing your plans with the charitable organization of your choice.

“When donors call us, we listen to their wishes, as they may want to designate their gift to a specific part of our mission,” Nicolo explains. The organization then checks to see if this designation is a good fit with the work it does. If it isn’t, the organization will let you know. Charities and other beneficiaries appreciate the chance to speak with their donors. “I like to thank them during their lifetimes and not deal only with the estate trustee,” Nicolo says. “Then we can tell them what we’re doing with the gifts and explain our vision for the future.”

Finally, as a donor, you should consult the relevant professionals to measure the effect of the gift on your finances, your taxes, and your estate—at the very least, a lawyer or a notary to plan for a gift in your will, as well as a financial planner and perhaps a tax advisor. All these experts can assess the effect the donation will have on you and your loved ones.


Should you talk to your family about a planned gift?

Yes. That’s the best way to prevent a dispute after your death—your heirs might be expecting to receive all of your property. So it’s an opportunity to explain to them your wish to help a particular cause and how this gesture reflects your personal values. “This allows the family a sense of pride,” Karsli says.


What’s the minimum amount of a planned gift?

“There is no minimum gift,” Nicolo says. “Any amount is accepted.”

Many donors mistakenly believe they’re unable to give, she adds. “They want to think of their family first, and of course it’s important to do that. But a planned gift creates a tax credit for the estate, rather than the estate paying income tax on these funds to the government.” The tax credit can be from 45 to 50 percent of the gift’s value.


How can you give when you don’t have cash available?

You can do this through a bequest, which allows you to keep enjoying your property, a part of which can be given as part of your estate.

Another option is to give a life-insurance policy to a charitable organization, which will receive the amount of the policy when you die. “This strategy lets you give an amount that is greater than the sum of the premiums paid,” Karsli says.

Photo by Josh Appel on Unsplash