Charitable Gifts Matrix

Type of Gift Benefits to Charitable Organizations Benefits to the Donor Gift Examples Most Appropriate For
Gift of Cash Available for immediate use

Liquid

No risk

Donation receipt for full amount

Straightforward transactions

Satisfaction of seeing gift at work today

Cash

Cheque

Credit Card

Pre-Authorized Contributions (PAC), usually paid monthly

Everyone (any age) who can afford to give up some principal and the interest it would otherwise earn
A Gift of Publicly Listed Securities Immediate Use

Liquid

Little risk

Generally simple and low cost to implement

Donation receipt for fair market value

No capital gains tax

Satisfaction of seeing gift at work today

Stocks

Bonds

Mutual Fund Units

Employee Stock Option Shares

Owners (any age) of stocks, bonds and other securities who can afford to give the asset and the interest or dividends it earns
Life Insurance Policy Immediate access to cash value, assurance of death proceeds if policy retained (Term policies are often not retained as donor gets older) Donation receipt for cash value and any future premiums paid

Small current outlay leveraged into larger future gift

A permanent policy (whole life or universal)

Term policy

Persons who i) have an older policy no longer needed, or ii) want to make a large gift but have limited resources
Life Insurance Will receive death proceeds unless donor changes beneficiary designation Satisfaction of providing a future gift while retaining full control of policy

Donation receipt to estate for full value of death proceeds

Any type of life insurance policy Persons (any age) whose personal needs and family situation may be subject to change
Bequest of Retirement Plan Accumulations Future gift provided beneficiary designation(s) and/ or bequest wording are not changed Satisfaction of providing a possible future gift while preserving personal security

Gift receipt that offsets tax on distribution of retirement funds

Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) accumulations All individuals, but especially single persons, and surviving spouses who have made other provisions for heirs
Bequest by Will Expectancy of future gift provided that bequest wording is not changed Satisfaction of providing for future gift while retaining full control of property

Donation receipt for use with final income tax return

For bequest of listed securities, no capital gain tax, for most other property 50% of capital gain will be taxable but can be offset by tax credit from gift, likely resulting in tax savings to estate.

Cash, securities, real estate, tangible personal property All individuals (any age), but especially older persons with few or no heirs
Shares in a Privately- Owned Corporation Share may pay dividends

Charity may be able to sell shares in near term, or may hold them for an indefinite period

Public charity – Donation receipt for appraised market value at time of gift, issued immediately (if gift to public charity)

Private Foundation – Donation receipt  issued only when foundation sells shares.  Receipt value is the lesser of amount realized by foundation and the fair market value at time of gift.

50% of capital gain taxable, offset by tax credit from donation receipt

Shares held in privately-owned corporation Entrepreneurs who are philanthropic

Venture philanthropists

Gift of Real Estate Proceeds available as soon as property is sold

Sometimes property itself can be retained and used

Valuation and ongoing maintenance considerations can add complexity to gift administration

Donation receipt for fair market value (FMV) determined by appraisal (independently obtained by charity)

50% of gain taxable, (unless property is donor’s primary residence, in which case no taxable capital gain), offset by tax credit from donation receipt

Real estate including principal residence, vacation properties, and investment properties. Owners (generally over 50) of a principal residence or investment property who do not need the property or the proceeds from its sale
Gifts of Tangible Personal Property (other than cultural property) Can be retained or sold and proceeds used for current needs

*Decisions to retain assets warrant careful consideration, in light of implications for valuation and usefulness for charitable purposes, and ability to issue donation receipt

Donation receipt (if applicable*) for fair market value determined by appraisal

50% of gain taxable, offset by tax credit from donation

Satisfaction of seeing gift at work now or in near term

Artworks, furniture, equipment, collections, automobiles, musical instruments Owners (generally over age 50) of objects which they no longer intend to use
Charitable Remainder Trust (CRT) Irrevocable future gift of remaining trust assets

While often complex to administer, can be a highly effective gift planning instrument in selected circumstances

Trust cannot allow encroachment of capital or guaranteed income

Net income from property for life or a term of years

May result in donation receipt for present value of the remainder interest issued at time trust established

Property not subject to probate

Cash, securities, real estate

 

Persons (generally over age 60) who want to make a future gift and obtain present tax relief but want to preserve investment income for themselves and/ or a survivor
Gift of Residual Interest in real estate or artworks  

Irrevocable future gift of property

Ability to continue using property for life or term of years

Donation receipt for present value of residual interest issued at time of gift

Avoidance of tax of a portion of capital gain if donor retains life interest

Property not subject to probate

Principal residence, other real estate, artworks Persons (generally over age 60) who otherwise would give the property under their will
Outright Gift of Certified Cultural Property Immediately added to collection and available for display or exhibition Donation receipt for fair market value determined by appraisal

100% contribution limit

No tax on capital gain

Satisfaction of preserving property of national significance

Artworks, collections, artifacts or historic structures certified by Cultural Property Review Board (CPRB) Owners (generally over age 50) of cultural treasures who would like to preserve the property within Canada
Interest-free Loan (normally payable on demand) Provides capital for building or investment without interest cost

Public Foundations (like community foundations) not currently eligible for these gifts due to debt restrictions under theIncome Tax Act

Principal is recoverable

Interest earned on loaned funds not taxable to donor

Satisfaction of helping charity today

Cash and cash equivalents Persons (any age) who have more than enough current income but want to preserve all principal for their own future security and/or heirs
Charitable Gift Annuity (self-insured) Irrevocable gift of whatever principal remains after making required payments Guaranteed life payments, all or substantially tax-free

A donation receipt for a portion of contribution

Cash or marketable securities Oldest donors (usually 65 and older) who want the security of guaranteed income payments
Charitable Gift Annuity (reinsured) Irrevocable gift of that portion of the contribution retained after purchasing commercial annuity Cash or marketable securities Oldest donors (usually 65 and older) who want the security of guaranteed income payments

* Note: Only charities designated as charitable organizations (i.e. not public or private foundations) and authorized under provincial law, may currently issue gift annuities.

Source: Minton & Somers, Planned Giving for Canadians, Third Edition (Adapted and revised)