Nicola Wealth Private Giving Foundation
Helping families “do well by doing good” is an aspect of planning on which we place great importance.
Creating a Legacy
We recognize that many of our clients have a desire to give back and, in some cases, build a lasting charitable legacy. The obstacles are a lack of time and means to set up and manage their own foundation.
We have a strong culture of giving back and want to help our clients enhance their gift-giving potential while providing them with a great tax planning tool. The Nicola Wealth Private Giving Foundation (PGF) was established to access the advantages that a foundation offers, but on a more cost-effective basis (Nicola Wealth covers the administrative costs and fees for all PGF donor-advised funds).
The Planning Opportunity
We often identify the opportunity high net worth families are missing to align their philanthropic wishes with their overall financial and tax planning strategy.
PGF can be a powerful financial vehicle for charity, whether your roadmap for giving is already clear or you’re still working to distinguish your core values.
Your PGF donor-advised fund can act as an immediate charitable instrument. By giving now, you’re able to save a larger amount for eventual donation while creating a significant tax advantage that can be integrated today and projected as part of your holistic planning.
Or, if you’re experiencing a liquidity event (such as selling your business), PGF is an ideal way to jumpstart your giving nest egg while earning a tax credit in the year you need it most.
PGF lets you give more over time during your highest earning years and enjoy seeing the value of your gift during your lifetime, instead of waiting to give an end lump sum through your estate. Also, PGF’s structure is such that you can give immediately, or take your time and better understand where you can make the strongest impact before donating.
Regardless of your situation, PGF facilitates giving in a tax efficient manner. More importantly, it allows you to build an endowment that can give in perpetuity and be your lasting legacy.
Benefits to You
The majority of families that take advantage of PGF donor advised funds do so because they have a desire to increase their charitable giving potential.
In some cases, it becomes an inter-generational legacy. Donors can appoint their children as successor donors to teach them the importance of giving and the responsibility of its management.
Beyond the broader impact on your family, PGF has several benefits:
• You do not have to decide immediately on a particular charity in order to obtain a tax receipt
• Contributions provide tax savings now and when selling the business
• Professional investment management of your donor-advised fund
• Ability to make in-kind donations
• Make substantial contributions in profitable years and sustain a similar level of giving in leaner times.
What is PGF?
PGF is a Canadian registered charity – in type, a public foundation. It can accept donations, issue tax receipts and make grants to other Canadian registered charities. Some families establish private foundations to meet their family’s philanthropic goals; PGF accepts donations from anyone.
Individual donors/families may establish a “donor-advised” fund within PGF. If you establish a donor-advised fund, you may, in future, provide recommendations to PGF regarding those Canadian registered charities to which you wish PGF to grant and in what amounts.
What can be donated to PGF?
Donations can be made in cash or in kind. In-kind donations can be mutual funds, stocks, bonds, real estate, insurance policies, etc. Under certain circumstances private company shares can be donated – this should be discussed with your advisor.
What is the cost?
There is no administrative cost to clients. NW bears the cost and administrative services to PGF and ensures that minimum annual disbursement quotas are met, tax receipts issued, annual filings prepared, etc.; however, standard asset management fees apply to the investment account itself.
What is required to set up a PGF donor-advised fund?
An investment account is established by PGF’s Directors at National Bank (NBCN) and an initial donation is made by the client. The minimum first donation amount is $25,000. A tax receipt will be issued to the Donor shortly thereafter.
The Donor, guided by their Advisor, may make recommendations with respect to the investments to be made for the account (see separate “Letter of Wishes & Acknowledgement”). While investments focused on capital appreciation may qualify, ideally most investments should generate regular interest or dividend income as this will better support disbursements to charities.
What happens to the funds after I make my contribution?
Once a contribution is made, it cannot be returned to the Donor and should not be considered part of their personal net worth.
Disbursement recommendations must be made by the Donor in writing, either by mail or e-mail, and should include the proposed gift amount and the name and registration number of the charity or charities. Please note that gifts cannot be made by PGF to charities that are not registered in Canada.
Under legislation governing Public Foundations, certain investments may not be permitted or may have limitations on how much can be held as a percentage of the Foundation’s assets overall. The Directors of PGF bear responsibility for the investment of all funds and must review and approve any investments that are not specifically permitted (such as private company shares).
PGF will correspond directly with the charities that receive disbursements from a donor-advised fund. PGF will also deliver the cheque directly to the charity. For Donors that wish to personalize the disbursement beyond the mention of their name in the letter, we would be happy to enclose a personal note provided by the Donor.
How often can I make grant recommendations?
The Foundation has grown significantly since inception; in order for us to continue to serve all Donors as effectively as possible, it is our preference that disbursements be requested no more than quarterly and in amounts not less than $500 per charity. PGF Directors may exercise discretion with regard to special circumstances.
What kind of donation constitutes an ‘ineligible distribution’?
- Donations to an individual or team that is raising funds under the banner of a registered charity for things like bike-a-thons, runs, etc., as CRA assumes that expenses for the event will be deducted from donations specific to that event and therefore not all of the donation will be eligible.
- Tickets to fundraising dinners, etc., as only a portion of this is considered a donation.
- Any distribution to a charity that is not registered in Canada – note that some international charities have registered partner organizations in Canada to facilitate overseas donations.
What happens to my PGF donor-advised fund after I pass away?
In the Deed of Gift, a donor may provide an alternate fund advisor, such as their executor, who may continue to provide grant recommendations or who may request that the entirety of the donor-advised fund be granted to appropriate recipients.
What if the Donor wishes to terminate the donor-advised fund?
The potential for the future termination of the donor-advised fund is addressed in the Deed of Gift. Generally speaking, the donor can recommend that the entirety of the fund be granted to other Canadian registered charities.