From left to right: Dr. Robert and Wendy McDonald, whose gifts of securities to the QEII Foundation have supported life-saving care at the QEII Health Sciences Centre.
Originally published on Saltwire.com
Charitable giving has long been part of Dr. Robert and Wendy McDonald’s financial plan, so when the retired Halifax couple learned how their giving could make a bigger impact with significant tax savings, they were sold.
The McDonalds started working with their financial planner and, for the past several years, have donated a portion of their appreciated stocks directly to the QEII Foundation in support of advanced care, research and innovation at the QEII Health Sciences Centre.
“We are aging, so we figured we’re going to need their help someday,” Robert (Bob), a former chemistry professor and researcher, jokes.
A tax-efficient alternative to a cash donation, investors may gift securities, which includes stocks, bonds and mutual funds, directly to the QEII Foundation and designate the assets to an area of care or research meaningful to them. Connecting supporters with the programs they’re inspired by is part of Geoff Graham’s work as a charitable giving advisor for the QEII Foundation.
“We receive gifts of stock in all different shapes and sizes,” says Graham. “From grateful patients who’ve received care at the QEII, or those who just want to give back to the hospital and their community and are also looking to be financially smart about their giving.”
Donors who gift securities receive a charitable tax credit, which can be carried over and declared in personal tax returns over the following five years. Through donating securities directly to charity, the donor avoids paying capital gains. A capital gain is an increase in the value of an investment; if the value of the asset increases, you have a capital gain and must pay tax on it. If a donor were to cash out their stocks and take the lump sum, they must declare that money as income and pay capital gains.
GIFTING SECURITIES A WIN-WIN
For the McDonalds, the opportunity to put their earnings to work in a tax-efficient way is part of the reward and further motivation to give.
"If this were coming from my bank account I would notice, but because these are securities, I don’t notice it as much,” says Bob. “Once we realized that if we were to sell, we’re going to lose part to capital gains, but we would not if we gave our shares directly to the charity…this was an interesting opportunity.”
Passionate nature lovers whose gift-giving includes donations to nature conservancies, the McDonalds say their donations have increased since discovering this path to philanthropy.
“I’m sitting here with my list, which includes the QEII, and my overall contributions have gone up considerably in the past couple of years,” says Bob. “We have two grown sons who don’t need this money and as we haven’t been able to travel…and with our investments going up, this is one way to share.”
For certified financial planner Greg Bonnell and his team at Richard McKenster Financial Planning, the path to gifting securities begins with a holistic view of the client’s portfolio and lifestyle considerations.
Bonnell says that with three different possible routes — donating shares, gifting registered assets or repurposing life insurance — that savvy donors can take, there’s no one-size-fits-all solution.
“Get your will, your power of attorney, personal and medical directives updated and talk with professionals about what you’d like to do,” says Bonnell. “Then it’s just about timing – is this something you want to do now or…when you’re no longer here?”
Uncovering exactly where clients want to focus is a priority for Assante Capital Management Ltd. financial planning advisor Glenn Stewardson, who says the win-win scenario for donor and charity elevates the so-called joy factor of philanthropy.
“It’s really important for us to help people experience that joy by showing them what the potential is and how their investments can impact a great cause,” Stewardson says. “Once the client is at that phase of life and they know they have (money) they’re not going to spend, then we talk about how to reduce the overall tax bill with a charitable gift.”
With this shift in strategy – from growth to tax efficiency, Stewardson says it’s common for the donor’s contributions to increase.
“We’re changing it from cash flow giving to asset giving, which generally means people will give more, because it’s strategic,” he says.
Planning to leave a legacy that will impact community and bolster a local charity like the QEII Foundation is a deeply personal matter, says Adrienne Power, a financial advisor with Edward Jones.
"A legacy gift is about personal impact one wishes to make in this world. It depends on the personal missions of each individual,” says Power. “I find the real motivations are to make a difference for a cause that has real connection to donors themselves.”
'A DIRECT AND IMMEDIATE IMPACT' ON HEALTH CARE
For the McDonalds, their gifts of securities to the QEII Foundation have supported everything from stroke treatment in the QEII’s new, interventional radiology suites to surgical robotics technology for life-saving cancer surgeries. Seeing the direct and immediate impact their gift can have on local health care, they encourage others to consider this method of giving.
This fall, one area where QEII Foundation donors can have a transformative impact is the QEII’s new orthopaedic surgical robot; Atlantic Canada’s first and the second in all of Canada.
According to Graham, the robotics technology – which will be entirely funded by donors – will be a total game-changer for orthopaedic care, setting standards here at home and across the country.
“Whether you support the ortho robot or an area of health care that you and your loved ones are passionate about, it makes a significant difference in the lives of patients.”
To learn more about giving a gift of securities and to support health care at the QEII today, visit QE2Foundation.ca/securities.