Often when we think of charitable giving, we think about making a cash donation to an organization or institution whose mission is important to us.
As an added benefit, we receive a tax credit that can be used to reduce the amount of taxes we owe.
While the reason for giving in that scenario is typically spot on, it may be time to re-think the how of the donation.
That’s because there can be benefits to donating assets of publicly-traded securities such as stocks, bonds and mutual funds or employee stock options to an organization like the Langley Memorial Hospital Foundation, instead of cash, explains Tanya Lyn Werk, a Financial Planner, Investor’s Group, and member of the Langley Memorial Hospital Foundation Legacy Giving Advisory Committee.
Why?
The Canadian government provides an additional tax benefit for the donation of certain securities in-kind, including:
- Shares listed on a designated stock exchange;
- Mutual funds;
- Interest in related segregated funds; or
- Government of Canada or provincial government bonds.
By donating assets like securities, you’ll not only receive a donation receipt for the fair market value of the securities, but you may also avoid having to pay Capital Gains Tax.
“You can give to your community, get the tax back from it, then give again,” Werk says, noting the process for donating securities is typically very simple.
Because gifts can be given during your lifetime or through your will, these donations can also be part of your estate planning – helping reduce the amount of tax paid by the estate, and ensuring more of your money gets where you want it to go.
While every situation is different, reviewing your goals with your financial team is the easiest way to chart your best path forward, Werk notes.
“I would sit down with your financial planner and accountant to explore your specifics,” such as when you might most benefit from the tax efficiencies – now, later in retirement, or for your estate. “It’s a very individual decision so that you have what you want to give, when it’s the right time to do it.”
Other options people might not think about include donating a life insurance policy, where the beneficiary is the non-profit.
How to get your donation started
How can you start the process of leaving a legacy to the Langley Memorial Hospital Foundation?
“No. 1, I think they need to meet with someone who can give them advice based on their unique situation – sit down with a holistic financial planner who will ask you a lot of different questions,” Werk says. Based on your answers and finances, they’ll show you a variety of options and scenarios.
“That, to me, is the first step anyone should take before donating a large sum.”
If a gift of securities is deemed the most tax-efficient option, donors simply complete the Donation of Publicly Traded Securities Form and submit to their financial advisor to initiate the transfer, then notify LMH Foundation of your gift by emailing a copy of the completed form to info@lmhfoundation.com
To learn more about donating gifts of any kind to Langley Memorial Hospital Foundation, visit lmhfoundation.com/ways-to-give or connect with the team at 604-514-6126.