Giving may be something that comes from the heart, but it might also be something that comes from the head. Today, we’d like to introduce you to one of the Foundation’s donors, who has agreed to share some of his insights into the charitable aspect of financial planning.
Every day, Pierre Lesage helps his clients find solutions to build, protect and pass on their wealth. Although he’s someone who lives and breathes finance and actually taught economics back in the day, he doesn’t believe that people should keep everything for themselves. He is a proud donor to the Foundation and several other causes — and has been for many years.
I consider myself to be very lucky. I have my health, a stable family life and a good education. So I feel duty-bound to give back to society. My father was always very generous in his support for charitable organizations and he taught me to do the same. I never give anonymously because I want to be an inspiration to others.
Pierre is also a father. When his daughters were younger, he saw first-hand the essential role Sainte-Justine plays for all of Quebec.
Sainte-Justine has always been a place of hope and reassurance to me. No matter where in the province you live, Sainte-Justine is there. I’m very fortunate in that I’ve only had to go in once with my older daughter to run some tests. And I’m happy to report the outcome was a positive one.
The underappreciated benefits of donating securities
Whenever possible, Pierre uses the securities in the non-RRSP portion of his portfolio to make donations. This can be a particularly cost-effective option when there are significant unrealized capital gains involved and where interests and dividends can be waived. It’s a well-kept secret more people should be aware of, in Pierre’s view.
Shares transferred directly to a charity are tax-exempt, by virtue of a game-changing government incentive that has been in effect for several years now. Not only that, but donors are entitled to a tax receipt based on the fair market value of the asset on the day of transfer.
By donating securities held outside of an RRSP, especially those that have appreciated significantly in value, you can increase what you give by a considerable amount without it costing you any more. It’s a win-win for both the donor and the recipient organization.
He gives the example of someone looking to make a $5,000 donation through shares they acquired for $2,000 a few years earlier. Assuming they are in the top tax bracket, the capital gains savings (about 50% of half of the increase in value) comes to about $750, plus a tax credit of close to $2,500.
“So that $5,000 donation would actually cost more along the lines of $1,750, once the tax savings are factored into the equation,” he said. “And even less if the capital gain is higher, which may be an incentive to consider giving more.”
In other words, gifting publicly traded shares is more beneficial than selling the shares and donating the resulting cash.
It also has the advantage of being a very simple transaction, despite what many people may think.
Giving to a charity that is accustomed to processing this type of donation is easy. The practice is becoming more and more widespread, and a lot of organizations already have the team and the paperwork in place to ensure a smooth transfer. Your investment advisor, if you have one, can also walk you through the whole thing.
In terms of timing, November and December are a particularly good time of year to examine how your investments are performing and make the corresponding adjustments. That way, you won’t have to wait too long to take advantage of the year-end tax benefits.
Budgeting for generosity
What’s Pierre’s top tip for someone looking to make charitable giving a regular part of their lives? He highly recommends adding a “generosity” line to your household budget.
It’s a little like going to the gym. You need to have a plan. Draw up an annual budget. Set yourself a goal of how much you want to contribute and where, taking into account the causes that are important to you and special requests that may come up during the year. For me, sometimes as the holidays draw nearer, I realize I’m short of my target. That’s when I get my chequebook out or, better yet, see which of my shares would be good candidates for a charitable donation.
A team of professionals who are here to help
At the CHU Sainte-Justine Foundation, we have a specialized team who can assist you in preparing a gift of securities. Feel free to contact Nathalie Gagnon, Associate Director, Planned and Major Giving, at email@example.com or 514-345-4931, extension 6749, for more information.
We also encourage you to talk to your financial or legal advisor for more information on how to boost the tax benefits of your charitable gifts.