The art of transformational giving

BMO Private Wealth - Dec 04, 2023
Today’s economic climate is putting pressure on all of us in different ways. More and more people are turning to community organizations for support.
Man and a woman on a couch smiling in their living room

Today’s economic climate is putting pressure on all of us in different ways. More and more people are turning to community organizations for support. Our charities are stretched to do more with less while the gap between demand and capacity keeps growing. Everywhere you look, there’s a call to action.

According to Foundation magazine’s 2023 Giving Report, more than 31% of Canadian charities reported that fundraising is lower than pre-pandemic levels. The good news is that high-net-worth individuals and families are stepping up and donating more.

A few decades ago, just one gift to a Canadian philanthropic organization exceeded the $100-million mark – a fact noted in The Bridge to Transformational Giving in Canada report from Marts and Lundy. In contrast, there were six such gifts in 2022, including a $500-million donation to the Winnipeg Foundation, the largest gift given by an individual donor in Canadian history. But making a seven-, eight- or even nine-figure donation isn’t as easy as cutting a cheque and dropping it in a donation box.

For those who want to give a transformational gift, whether to a hospital, food bank, university, or another important cause, you have to differentiate between charitable and philanthropic giving, says Danielle Robinson, Director of Philanthropic Advisory Services at BMO Private Wealth, who helps clients make multi-million gifts.

“Most of us participate in charitable giving, like a one-off donation to a fundraising event, or in response to the latest global crisis, or when asked by a cashier to donate to some cause at point of sale,” Robinson notes. “But when you give at a philanthropic level, you’re supporting root causes behind many of today’s problems and investing in those types of activities and programs for measured systemic change.”

Give strategically

Some donations can come together quickly, particularly in the case of an estate endowment or in reaction to a humanitarian disaster, but Robinson says most major gifts take time to materialize. “A strategic philanthropic gift needs to be well-thought-out,” she explains. “Generally, larger donations happen over time after a relationship between donor and the charitable organization has been built.”

The first and probably most difficult step is choosing an organization to donate to. Finding a cause that resonates deeply is essential, but you should try to investigate prospective recipients thoroughly. One place to start? Look up a charity’s annual returns filed with the Canada Revenue Agency to make sure you’re happy with how the organization uses the funds it already has. As well, it’s important to confirm the organization has the staff and the experience to leverage a large donation properly.

“There are 86,000 charities in the country and many of them work in similar spaces,” Robinson says. “You really want to understand what your end goal is, first and foremost, and then you start to do the research to figure out if the charity checks the boxes.”

Determine how to donate

From there, Robinson advises her clients to approach the next steps in the donation process like any business partnership. A key decision is to figure out what kind of donation you want to make. Is it a one-time grant that will pay out as a lump sum, or are you looking to create a multi-generational legacy through a Donor Advised Fund or private foundation? Will the money be directed to a specific program within the charitable offering, or can the organization use the funds to help strengthen its team and operations?

While it might be tempting to grant one large gift to a charity, Robinson suggests a multi-year commitment might be a better way to approach a multi-million dollar gift. “Organizational priorities can change, program delivery can change, circumstances in the community can change after year one,” she notes. “Having the ability to pivot funding within a partnership will ultimately support the organization and those it serves, and the donor, best.”   

The details of any large gift should also be specified in a gift agreement/memorandum of understanding before money changes hands. “Ensuring all parties are aligned with all aspects of the gift is important,” says Robinson.

To go public or not to go public

Charities like to showcase big donations to promote their work and encourage others to give, so you’ll need to think about whether or not you want to go public with your gift. Some donors prefer to remain anonymous, while other donors are comfortable with the charity making a public gift announcement as a way to encourage others to join them in making a difference. Both approaches have their pros and cons and come down to donor preferences.

“A gift announcement can be an important activity for charities as a way of demonstrating trust, competence, and accountability,” Robinson notes. “It demonstrates to the larger community and other donors that they’re accountable, and there’s trust in place.”

Large charitable gifts are crucial in sustaining our communities and provide countless people with services and opportunities that would otherwise go unfunded, says Robinson. Before making a big gift, though, it’s important to tap the expertise of an advisor, such as the ones at BMO Private Wealth, to make the most of a generous gift.

“For people giving at this level, it’s not about the tax receipt,” Robinson says. “That is not the motivator in terms of why they’re setting up a Donor Advised Fund or a family foundation. They intrinsically want to give back and create meaningful change for good with their wealth.”

For donors who can afford it, in addition to making a transformational gift aligned with a specific project, consider building unrestricted donations into your philanthropic plans. This can help those charities doing meaningful work that is often of an urgent nature during these challenging economic times, particularly during the holiday season.


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