Giving of Head and Heart: Donations of Cash and Non-Cash Assets
by Grant Monck, LL.B.
When you financially support a charity, it is a combination of what your head thinks you can practically give and the passion in your heart to support causes you care about deeply.
Canadians are generous people who support many causes. Throughout our history, donations have usually been based on cash on hand whether you give at the door, online or in response to a major gift solicitation. A challenge for charities is to unleash the wealth of non-cash assets that Canadians hold, offering potential benefit to Canadian society along with substantial tax benefits for donors.
Tax incentives for gifts of non-cash assets
When I started my fundraising career in 1995, donations other than cash were fairly uncommon in Canada. Then in 1996, changes to the Income Tax Act began to increase tax incentives for Canadians to donate gifts in addition to cash. This change created great potential for Canadians to support the charitable sector through gifts of non-cash assets.
At a recent AFP conference in Vancouver, I spoke on the topic of gifts of assets. For the presentation, I reflected on my twenty years of working with donors and their advisers and a wide range of Canadian charities.
The opportunities for Canadians to gift non-cash assets are great, but the majority of Canadians and charities are not reaping the benefits. Why isn’t this happening, and what may be done?
On the positive side, many Canadians now take advantage of tax incentives for gifts of publicly listed securities. This type of gift is promoted by the charitable sector and understood by most advisers to the benefit of many charities and donors. Yet, the tax benefits of most gifts of non-cash assets remain greatly underutilized. This is unfortunate.
Charities who continue to rely on traditional funding from corporations, foundations and governments are seeing mixed results as more charities are pursuing a smaller funding pie of cash each year. At the same time, board members and senior staff across the country are working very hard to maintain current revenues, let alone increase resources to move their missions forward.
In my view there is going to continue to be significant challenges in 2016 for those organizations following a traditional funding model for major gifts that relies heavily on the cash Canadians have on hand. Charitable donations coming from non-cash assets offer an alternate source of revenue for those willing to explore a new giving vehicle.
How are professional advisors fairing with their high net-worth client base in discussions on charitable giving? A recent survey of advisors and clients across Canada, entitled The Philanthropic Conversation – Understanding Financial Advisors’ Approaches and High Net Worth Individuals’ Perspectives, showed an apparent divide between what advisors believe they are discussing with their clients regarding charitable giving and what their clients are hearing and wish to hear. From this survey, the focus of advisers appears to be on wealth preservation rather than developing meaningful strategies for charitable giving based on the asset base of each client.
What can be done to further promote gifts of non-cash assets in Canada?
1) More advocacy and education of advisors, charities and donors is needed regarding the benefits of donating non-cash assets;
2) While charities need to maintain current sources of support in the short-term, there should be a shift in approach and resources over time from a reliance on institutional donors to individuals and their non-cash wealth; and
3) Staff and volunteers involved in fundraising need to be better trained to solicit donations from individuals based on their entire asset base.
It is not easy for charities to depart from their reliance on traditional methods of fundraising, or for advisors to expand planning discussions beyond increasing wealth. These approaches still have a place in Canadian philanthropy and financial planning.
It does appear that the survival of many charities in Canada calls for changes in how major gifts are solicited and the types of discussions both advisors and charities have with individuals regarding philanthropy. The passion of Canadians to support the charitable sector continues, and the tax tools are in place to discuss donations of non-cash assets with individuals, couples and families across the country by professional advisors and charities.
Grant Monck has held senior fundraising positions with national organizations in the areas of conservation, education and health since 1995 including the Canadian Cancer Society, Ducks Unlimited Canada, Pearson World College and the University of British Columbia. In 2014, Grant opened his own private consulting firm to assist donors and the nonprofit sector based in Vancouver. Contact him at firstname.lastname@example.org.