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If you wish to make philanthropy part of your estate planning, these tips from RBC Royal Trust's Jennifer Button can help you determine when and how to donate money.

Many Canadians look to include gifts to the charities they care about after passing. For many, philanthropy and charitable giving contribute to a lasting legacy, helping to achieve multi-generational family goals and supporting a longer-term commitment to giving back.

On a recent episode of Go-To Grandma, Jennifer Button, Director and Head of Philanthropic Services at RBC Royal Trust, chats with host Kathy Buckworth about the options available for making donations. She offers insights to help Canadians choose what’s best for their families, the causes that matter to them and their legacy and presents three tiers of planned giving to consider.

1. Making a gift through your Will

In this fairly straightforward approach to making donations, naming a cause or a charity in your Will means you can have your assets give back beyond your lifetime. In donating money this way, you preserve your assets in life use to support yourself while reducing the tax that could be owing from the estate.

2. Setting up a donor-advised fund

If you’re considering a more strategic approach to giving — or are thinking about larger sums or longer-term benefits for your gifts — you may want to consider establishing a donor-advised fund. “In a donor-advised fund, the donor creates their charitable fund within an existing public foundation structure,” explains Button. “They can name it; set aside a pot of assets; have donor advisory rights to request grants to go out to Canadian charities.”

This type of structure can be set up in life and/or from the estate, and regardless of when it is set up and how much you give, the same three benefits apply: Give, grow and grant. Button explains:

“You give that donation now to the charitable foundation, for which a donation tax receipt may be issued for the value of the gift today. The money will then typically stay invested, and it grows tax-exempt for you to grant disbursement recommendations to any qualified donee, which is really any of the 87,000 registered charities in Canada.”

3. Establishing a private foundation

If you’re looking to be even more strategic or have a more hands-on approach to giving, you may consider setting up a private foundation. While there is considerably more involved in setting up a private foundation than the other two options, establishing a private foundation allows you and your family to create a uniquely named, independent charitable foundation that reflects your values and carries them into the future.

“When setting up a private foundation, you’re applying to the CRA, and you’re usually involved in the governance and management of that private foundation,” explains Button. “It may be set up as a trust or a corporation, and it provides you and your family with the ability to shape the direction and administrative management of the foundation.”

Private foundations can be funded with any amount but are typically used as a focused and dedicated giving strategy when making larger gifts or looking for longer-term and wider family engagement around philanthropy.

Button advises that specialized tasks are involved in founding and operating a private foundation. “You’re issuing your own donation tax receipts, making annual tax filings to the CRA, dispersing money out to the charities you’re supporting,” she explains. These are tasks you can do yourself or with the help of an accountant or estate lawyer. “RBC Royal Trust also has philanthropic services to help support the administration of private foundations. We’re always happy to discuss what sorts of administrative tasks you might be looking to offload or partner with other professionals you may be working with.”

When you’re thinking about donating money and creating a legacy, the best approach for you will depend on how strategic you want to be with your giving, how involved you want to be and how much administration you’re willing to take on. Button encourages proper planning and getting professional advice. “Look at the bigger picture and ask yourself, what are your charitable objectives? What opportunities exist to support that? How can you make a lasting legacy that is simple and streamlined within your other goals and objectives?” And, of course, consider where you want to give, what you value and where you want to have the most impact.

“Regardless of how you choose to give,” says Button, “generosity never goes unnoticed by those organizations you want to support.”

Kathy Buckworth, host of the "Go-To Grandma Podcast'


Listen to Take 5 With RBC. At the 17:20 mark of the Go-To Grandma episode “I Do! I Don’t! I Will!” you’ll hear more from Button on how to incorporate philanthropy into your estate plan and leave a legacy for the people, causes and charities that matter most to you.

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