Your Giving Journey Part 1: Starting a Fund

Your Giving Journey Part 1: Starting a Fund

by Diane Silva, Director, Philanthropy

Diane Silva

The holiday season inspires more generosity than any other time of year. Statistics show that 31% of annual giving occurs in December! With that in mind, as we open our hearts and wallets, inspired by the wintery warmth of the holidays, I’d like to share some strategies on how you can turn your giving into a lasting charitable legacy.

Perhaps you’ve received a surprise financial windfall, or maybe amassed wealth from years of hard work, or simply want to start small and slowly build up a fund for you or your family. When you start a fund at London Community Foundation, we become your one-stop shop for philanthropy.

Start with a gift of any size

You can begin building your fund with a gift of any size. Your gift will be invested immediately in its entirety, and through the power of endowment, will begin growing. As your fund capital increases, more and more options become available to you. For example, a Donor-Advised Fund is like having your own private foundation, where you have direct control over where your fund grants to every year.

If you’re having a hard time deciding what to support, or what your area of focus might be, you can begin by making your gift, getting a tax receipt right away, and then allocating your granting at a later time (while exploring the Foundation’s community knowledge to guide you through the process, which we’ll cover in part 3).

Tax benefits

There are tax benefits when donating to charity, so why not explore this with your advisors? If you’re facing a large tax bill, giving to your fund is a strategic way to offset your tax situation.

A cash donation isn’t the only way to give. There are a few other giving strategies available to you to maximize your assets, the tax benefits you receive, and ultimately the impact you make on the community.

Gift in will

Making a deferred gift by writing LCF into your will is an excellent way to make a large gift at no cost to you during your lifetime. While you won’t receive any immediate tax benefits, your estate will be issued a tax receipt for 100% of the value.

Gift of life insurance

There are three ways to make a gift of life insurance, each with different tax benefits:

1. Purchase a new life insurance policy and name LCF as the owner and beneficiary. You’ll receive a charitable tax receipt every time you pay the premium and the gifted proceeds will not be taxed.

2. Donate an existing term policy to LCF. If your term life insurance policy is up for renewal or about to expire and you no longer want its coverage, you can instead donate it and receive a tax receipt for the fair market value of the policy.

3. Name LCF as a beneficiary of your existing life insurance policy. Your estate will receive a receipt when the proceeds are paid to LCF.

Gift of securities

The tax benefits of giving are often most apparent in gifts of securities (think stocks, shares and government bonds). When you sell stocks in Canada after they’ve increased in value (commonly referred to as appreciated securities), 50% of your profit is considered taxable income, requiring you to pay what’s known as capital gains tax.

If you choose to donate those stocks, you’re exempt from paying this tax. We’ll take care of the transaction for you and you’ll receive a receipt for the current value of the stocks. In many cases the tax credit you receive may still be more than your initial investment, making a gift of securities one of the most powerful philanthropic tools at your disposal.

We realize that saving on your taxes isn’t the driving motivator for giving, but if you have a choice between the Canadian Revenue Agency and supporting the causes you love – why not explore your options and use the opportunity to start your charitable legacy?

As you can see, it’s easy to start your giving journey at London Community Foundation. In Part 2, we’ll cover just a few of the ways our donor services make being a fundholder an easy yet extremely rewarding experience. Stay tuned!