Book an Appointment
  • Charitable Giving

Most charitable giving happens the least efficient way possible.

Cash, after tax, once a year. If giving is already part of your plan, or something you’re open to, there is very likely a more efficient way to do it that costs you less and gives more.

This isn’t about deciding whether to give. It’s about making sure that if you already are, or intend to, the structure behind it isn’t quietly leaving money on the table that could have gone further.

The Gap

Most people who give appreciated investments personally, publicly traded shares, for example, aren’t aware they can donate the shares directly instead of selling them and donating the cash. Selling first triggers capital gains tax. Donating the shares in kind generally avoids it entirely, while still producing a full donation receipt for the fair market value.

Business owners have an even larger opportunity sitting inside a holding company or investment portfolio, and it is very commonly overlooked because philanthropy and corporate tax planning tend to happen in two separate conversations, if they happen at all.

What's typically overlooked

Only a small share of donors give appreciated securities directly rather than cash, even though the tax difference can be significant. No verified current figure for this percentage is available, so none is stated. Treat any specific percentage as approximate until confirmed.

$500,000

As an illustrative example only, not a client case: shares worth 500,000 dollars with a 100,000 dollar cost base.

~27%

Sold personally first, that could trigger roughly 27 percent capital gains tax on the 400,000 dollar gain before the remaining cash is donated.

Full value

Donated directly instead, that tax is generally avoided, and the full 500,000 dollar value still produces a donation receipt.

Two Paths

Without a coordinated plan

Giving happens in cash, after tax, disconnected from the rest of your tax and estate strategy. Appreciated securities sit untouched because selling them personally would trigger tax nobody wants to pay, so the giving that does happen is smaller than it could be.

With Wealth Defence

Giving is structured through appreciated securities, personal or corporate, coordinated with your CPA and lawyer so the tax benefit, the donation receipt, and any Capital Dividend Account credit all work together. Where it fits, the tax savings can even fund a life insurance policy that replaces the gifted value for your family, so giving doesn’t have to mean a smaller inheritance.

“You can give to charity, keep your family whole, and reduce what goes to the government. That is not a trade-off. It is a structure.”

Where the plan works

01

Gift appreciated securities directly

Donating shares in kind instead of cash generally avoids the capital gains tax that a personal sale would trigger, while still producing a full donation receipt at fair market value.

02

Gift corporate-owned appreciated securities

When a corporation or holding company donates appreciated shares to a donor advised fund or foundation, it can generate a deduction against corporate income, avoid the capital gains tax on the shares, and credit the resulting gain to the Capital Dividend Account, allowing that amount to reach shareholders as a tax free capital dividend. This is generally more efficient than a personal donation of the same value.

03

Give and get, replacing the gift with insurance

Where the tax savings from a strategy like the one above are meaningful, a portion can fund a life insurance policy that replaces the gifted value for the next generation. The gift goes to charity. The family is not left with less.

04

Gift an existing policy you no longer need

A term or permanent policy that no longer serves its original purpose can be donated directly, generating a receipt for its fair market value, or its future premiums can generate receipts as they’re paid.

05

Beneficiary and bequest giving

Naming a charity as a full or partial beneficiary of an RRSP, RRIF, or life insurance policy, or including a gift in your will, is simple to set up and can meaningfully reduce the tax otherwise owed on those assets at death.

Related

Estate Planning

Make sure what you built lands where you intended it to.
Read more →

Tax Mitigation

Keep more of what you’ve built while you’re still here to enjoy it.
Read more →

Corporate Owned Life Insurance

Turn a taxed asset into a tax advantaged one.
Read more →

Giving well and giving efficiently are not different goals. .Let’s make sure yours are working together.

Book a Free Consultation →
Take the Wealth Snapshot →