If you’re interested in a more active approach with your giving or you’d like some or all of your family to participate in creating a charitable legacy, these are the various charitable giving options you can consider.
Private foundation
How it works: A private foundation is a non-profit organization usually funded by a single source or a small group. The foundation awards grants to support specific work by others or makes contributions to other registered charities. Private foundations can be established as trusts or corporations and have to act exclusively for charitable purposes. Income and capital cannot be used to benefit any members, shareholders or governing officials. Often, the money contributed is invested and portions of income and capital may be donated annually.
Benefits: Private foundations provide significant flexibility in charitable giving. Generally, they are funded with a large initial contribution. The donor will get a donation tax receipt for the fair market value of the amount contributed to the private foundation. Subsequent gifts made by the foundation to other registered charities don’t generate donation tax receipts. With the ability to donate a large amount immediately, you can plan your tax credits and potentially minimize tax while creating a lasting legacy.
Donor advised fund
How it works: A donor advised fund allows you to create an enduring charitable legacy but without the time and expense required for a private foundation. With a donor advised fund, you can donate cash or other assets to a fund administered by a registered public foundation. The gift is irrevocable. You receive a donation tax receipt equal to the value of the assets donated. You can recommend how contributions are managed and which charities receive grants, subject to the public foundation’s final approval.
Benefits: A donor advised fund may be the right choice for you if you want to establish an enduring legacy and you prefer convenience over control. The minimum initial investment varies depending on the fund.
Endowment fund
How it works: An endowment fund is held by a foundation or charity. They are created by donors when the donors require the charity to maintain the principal amount that was originally donated.
Benefits: The charity will typically invest the donation and only use the income earned to fund ongoing projects. Many institutions operate endowment funds that provide scholarships, fellowships, bursaries and research grants. In some cases, wealthy individuals or families provide very large donations to fund, for example, a professorship. You will need to work with the intended charity to set up an endowment fund.
Learn more about creating an enduring legacy with the RBC Charitable Giving Program
Whether you want to help advance life-saving medical research, boost educational efforts, sustain environmental initiatives, support the arts or assist others, your charitable giving can have a real and lasting impact in your community and beyond.
A convenient way to create your legacy, the RBC Charitable Gift Program (CGP), administered by Charitable Gift Funds Canada Foundation, helps make charitable giving easier for you and your family. The CGP is a simple and efficient way to give during your lifetime and/or from your estate that combines immediate tax benefits with the flexibility to support your favorite charities over time and across generations.
Establishing a charitable gift fund (CGF) provides many of the same advantages as a private foundation, without the upfront costs, complexity and ongoing administration responsibilities. Easy to establish and comparatively low in cost, a CGF is a flexible fund that you can tailor to your philanthropic goals.
Learn more about the RBC Charitable Giving Program, here.
If you'd like to explore how your giving strategies might impact your overall financial plan, or if you have any questions about optimizing your approach, please reach out to your Harbour Group representative.
The Harbour Group
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