What is Planned Giving?

Most people are aware that by making an outright gift of cash, work of art and so on, the charitable organization has use of the gift immediately and you get to see your contribution at work. In addition, you realize an immediate income tax savings.

An alternative is to make a deferred or planned gift. You establish the gift in the present, with its actual delivery to the charity sometime in the future. Some planned gifts allow current tax savings.

Planned gifts: charitable alternatives.
Planned giving is the designing of charitable gifts so that the donor realizes philanthropic objectives while maximizing tax and other financial benefits.

• A gift or bequest made after deliberate consideration through a financial or estate plan.

• A gift that requires some type of legal documentation (eg. will, life insurance, annuity, trust).

• A gift that is arranged now to provide funds to the charity some time in the future.

• A gift made from assets, not current income.

• A gift that may have tax advantages under current laws.

Will bequests
Charitable gifts made by will are probably the most common method used in planned giving for two reasons:

• It is very simple to designate a beneficiary under your will.

• It may be easier to give out of assets, rather than out of income.

Gifts made by will are deemed to have been made in the year of death. Therefore the charitable tax credit is received by the estate and can offset any tax owing from the estate.

Gift annuities
If you can afford to part with capital, but want to derive some income from it, you can five your favourite charity a sum of money in return for an income for life. Depending on many factors, you can receive all or a portion of the lifetime income tax-free. In addition, any excess amount contributed to the charity over the amount paid for the annuity would be an immediate charitable gift. You would receive a tax receipt for this amount.

Life insurance
The giving of a new or existing insurance policy is an effective method of planning a charitable gift. This allows people of even modest means to make a gift of sizable proportions with only a small annual or monthly outlay. And for immediate tax relief, a tax credit is available. In addition, your family’s share of your general assets is mot reduced because you are providing such a gift through premium payments out of income.