How to establish your family’s charitable legacy

Debbie Bongard - Dec 15, 2021
While the holidays can be a time for festive parties and gift giving, there’s no better feeling than paying it forward and contributing to a cause close to your heart. If you’re looking to make a seasonal donation, there are plenty of ways you can, f

How to establish your family’s charitable legacy

 
While the holidays can be a time for festive parties and gift giving, there’s no better feeling than paying it forward and contributing to a cause close to your heart. If you’re looking to make a seasonal donation, there are plenty of ways you can, from making a charitable contribution to donating securities.
 
However, now more than ever charities need our support as they endure the long-lasting impacts of the COVID-19 pandemic. This holiday season you may want to consider how you can give back in a bigger way. In this article, we will be diving into two popular options for you to establish your family’s charitable legacy.

  1. Charitable foundations

One impactful way you can establish you and your family’s commitment to philanthropy is by establishing a private foundation.
 
The benefit of a private foundation is that whoever establishes it, usually a single donor or several family members, have direct input as to how it is governed and where funds are donated.
 
However, administration of a private foundation can be complex and time consuming, both to establish one and to maintain it. Logistically, a private foundation must be registered as a corporation or trust with the Canada Revenue Agency (CRA). As a result of CRA requirements you will need to publicly file details of your foundation and financial activities.

  1. Donor-advised funds

Donor-advised funds (DAFs) are less common but growing in popularity across Canada. In fact, by 2026 it is estimated there will be $10 billion in DAFs across Canada. One of the key differences between a DAF and a private foundation is that there is less direct involvement from the donor.
 
A DAF is established by either a public foundation, private foundation or charitable foundation and it is managed on behalf of the donor, distributing their funds based on their wishes. These funds have similar tax benefits to a private foundation, however fewer administrative responsibilities.
 
Which option is for me?
Which fund you choose is up to you and likely depends on how involved you want to be. Many people find the direct administration of a charitable foundation fulfilling, whereas others find purpose in choosing where their donations go and leave the management to those running the DAF. Both options are great ways to make significant and consistent charitable donations, helping your or your family meet your philanthropic goals.
 
How can advisors help?
No matter how much of your finances you want to put into philanthropy, an advisor can play a huge role in helping you meet your charitable goals, make the most of your wealth and handle the, sometimes complex, administrative processes that come with establishing a charitable foundation or a DAF. For example, if you decide to establish a DAF, your advisor can help you understand what kind of donation is best for you as they can range from appreciated securities to real estate.
 
At Bongard Wealth Advisory we believe that building your philanthropic goals into your financial plan is a central part of holistic wealth management. We are proud to help our clients see the direct impact their wealth can have on a community or cause.