Last updated: January 08 2019
The desire to make a difference is gaining momentum with people of all ages, as individuals see their personal wealth not only as a means to live well, but also as a way to contribute have social impact or create a meaningful legacy. Advisors need to be able to help philanthropic-minded clients convert their wealth into some form of social capital. One option: Donor-Advised funds (DAFs).
DAFs allow donors to assign grants to specific causes and manage donations through charitable investment accounts. They are sponsored by independent public charities, public foundations, and financial institutions. Over the past decade, DAF assets have nearly tripled in Canada, to an estimated $4 billion, according to a report from Strategic Insight.
Nicola Elkins, course instructor and author for Knowledge Bureau’s new MFA – P (Philanthropy) designation and Chief Executive Officer of BenefAction, was recently featured in print edition of The Globe and Mail, discussing the features and advantages of DAFs. She says that DAFs are “ideal for families who feel the burden of establishing a private foundation is too great, but who still want to be strategic in their giving and create a legacy.”
The process of giving through a DAF is simplified when working with an organization like BenefAction because they handle all of the administrative responsibilities of donating, including issuing tax receipts, handling legal and audit duties, accounting, investment management, and governance. It takes as little as one business day to set up, and BenefAction’s DAFs start at $25,000.
Despite some decline in charitable giving by Canadians in recent years, according to the Fraser Institute’s Generosity Index, the trends indicate that over the longer term, charitable giving will continue to increase. Advisors play a key role in the giving process, ensuring that the options selected are suitable for each client’s long-term goals and retirement needs; and that they remain tax-efficient, particularly when selecting non-cash donation options in a DAF, such as donating real estate and funds from RRSPs or RRIFs. It’s important to prioritize the protection of your clients’ interests, while helping them take advantage of the generous tax incentives available to Canadians who donate.
Advisors interested in learning more about how they can help Canadians give back, can enhance their knowledge by enrolling in this new MFA – P (Philanthropy) designation, created in collaboration with the Canadian Association of Gift Planners (CAGP) and Spire Philanthropy, and launching early this year. You can pre-register today!
Additional educational resources: How to give back strategically will be on the agenda at 2019’s Distinguished Advisor Conference, where the theme will be “Powerful Competition: The Secret to Economic Resilience.” Register today to join us in beautiful Puerto Vallarta, Mexico, this November!
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