Planned Giving: 2010 and Beyond Presented to Southern Alberta Round Table May 9, 2011 Presented by...

Planned Giving: 2010 Planned Giving: 2010 and Beyondand Beyond

Presented to Southern Alberta Round Table

May 9, 2011

Presented byDeWayne Osborn CGA, CFP

Lawton Partners

The New Frontier in Charitable Administration — 2

Presentation Overview

Discuss significant legislation

Discuss trends/possible future

Questions

Planned Giving: 2010 and BeyondPlanned Giving: 2010 and Beyond


The Road Behind Us



Well understood

• Applies to gifts to public charities

• Mutual and segregated funds, warrants, rights, and stock LISTED on Tier 1 and 2 exchanges

• Applies to individual and non-individual (e.g., corporate) donors

• Since 1997…

Zero inclusion on capital gains



Not well understood

• Zero-inclusion capital gains apply to qualifying private foundations

• Tax-free portion eligible for CDA

Zero inclusion on capital gains



ITA Sections 248(30)–(41)



• Split receipting (eligible amount, advantage [248(30,31)])

• Deemed value of gift = lesser of FMV and cost (or ACB) if gifted within three years [248(35)]

• Now includes insurance policies

• Non-arms-length property subject to 10-year rule [248(36)]

Not even Close to Understanding!!Not even Close to Understanding!!



• Gift = nil if donor, prior to the gift, fails to disclose that 248(31), (35), (36), (38), or (39) would apply



o listed securityo real or immovable property in

Canadao culturalo ecologicalo a privately held capital shareo property subject to 85(1) or (2)

Avoid 248(35)… MisunderstoodAvoid 248(35)… Misunderstood



• Bequests 100% of Net Income

• Life Insurance Proceeds

• RRIF, TFA, RSP

• Caught Advisors Attention

• 1996…..



• 3.5% FMV over 24 months

• Simplified administration

• No DQ for charitable organizations with assets <$100,000 OR

• for foundations with assets <$25,000

Disbursement Quota AmendmentsDisbursement Quota Amendments



• One of oldest forms of recognition

• Now $25,000 to $50,000 typical for named Endowment

• Perpetual funding

• Preservation of capital

• Spending 3 to 5% annually

TraditionalTraditional EndowmentsEndowments

Understood


Donor Advised FundsDonor Advised Funds

• More recent• Donor has more control• Emergence of “Retail

Charities”• Higher thresholds• Admin fees


The Road Ahead


$millions and millions in gifts available◦Boomers can’t take it with them◦Wealth is accumulating◦Mortality realization◦Bequest is still #1◦Holdco gifts increasing

Excess holdings regime


$Millions and $millions in gifts available

15,000+ Private Foundations◦5,000 without trying◦Easier than ever◦Flexibility is King!◦Rigid = no gift◦Duty over Passion◦Policy makeover


$Millions and $millions in gifts available 15,000+ Private Foundations

CRA/Finance


More rules and regulations

• Did I say 15,000 private fdns??

• $6 Billion/170,000

• What is the next one?

• Real estate?

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulationsMore expense (e.g. valuations)

◦Advantage/Eligible amount◦248(35)


$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations)

Lapsing gifts / Trust/Residual issues◦20 years into some gifts◦Something has to go wrong!◦Charities litigated◦Interest rates all time low◦ART/YRT◦Poor gift maintenance


•15,000 private fdns!

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issuesChallenges to “traditional thinking”

◦Capital in Endowments◦Income spending


• Emergence of the Hostile DAF?•More, More, More….

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues Challenges to “traditional thinking”Increased policy flexibility required

◦Duty over Passion ◦Did I say 15,000 Private Fdns??◦Traditional endowment◦Super DAF, Flex Endowment◦Change existing agreements??


$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues Challenges to “traditional thinking” Increased policy flexibility required Increased abuses/scams

◦Donors will not change!◦DQ gone

Shyster, Shyster & Shyster, Shyster & Thief LLPThief LLP


•15,000 private fdns!!!

Planned GivingPlanned Giving: :

Planned GivingPlanned Giving: :

Questions???

Thank You

DeWayne Osborn1-888-944-1144 (ext 256)

[email protected]

Planned Giving: 2010 and Beyond Presented to Southern Alberta Round Table May 9, 2011 Presented by...

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