Resources for professional advisors

Glenn Stewardson, CFP explains why charitable giving conversations are important, how these conversations can deepen the relationship with clients, and how they will benefit an advisor’s business in the long-term.

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The Canada Revenue Agency (CRA) defines a charitable gift as a voluntary transfer of property without valuable consideration to the donor.

Canadians enjoy a generous charitable tax credit for contributions to the charitable causes important to them.

Section 118.1 of the Income Tax Act provides a tax credit to individuals for donations made to registered charities.  A business receives a tax deduction. 

How does Canada's generous tax credit add up?

The tax credit is in two parts; a federal and a provincial income tax credit.  A federal tax credit rate of 33% matching the top tax rate applies to donations that are above the first $200, when an individual's taxable income exceeds $205,842.

The federal credit is calculated as the total of the following:

• 15% on the first $200 of total donations in the year
• 33% on whichever of the following amounts is less:
  • the amount of the donations for the year above the first $200
  • the amount of the taxable income that is over $205,842
• 29% on the total donations for the year above the first $200, which are not eligible for the 33% rate above

Learn more

Glenn Stewardson, CFP discusses how advisors can incorporate philanthropic conversations with clients.

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Glenn Stewardson, CFP discusses the benefits of asset donations opposed to cash-flow contributions, adding value to your practice through philanthropy.

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1. Clients give a lot more often than you think
   Advisors think that 48 per cent of their client base donates regularly when, in fact, the actual number is 93 per cent. You need to talk to them about charitable strategies, ask them their charitable goals and plan around it.
2.  Clients give away much more than you’d guess
   Fifty-one per cent of clients who have more than $1 million in assets gave between $5,000 and $100,000 last year. And most advisors don’t know about it because they fail to ask their clients about their charitable endeavours.
3. Clients want advanced charitable strategies
   Seventy-two per cent of clients with more than $1 million in investable assets say that they found it very valuable for their advisor to offer them charitable strategies. Many advisors know about basic strategies but being able to offer advanced strategies can change the way the client views your relationship.
4. Knowledge is power
   More than half (57 per cent) of clients surveyed said, if their advisor was knowledgeable about charitable strategies, they would view their wealth manager as a broad financial expert.
5. Retaining ‘assets under management’ for generations
   Thirty-seven per cent of clients said that charitable discussions led to assets staying with the parent’s advisor because they were now viewed as the family’s advisor. Advisors who can demonstrate expertise in charitable giving strategies can differentiate themselves from competitors to keep future generations and their assets, in-house.
6. Charitable giving acumen equals new referrals
   Thirty-five per cent of clients said that talking about charitable strategies makes the advisor more referable. Now we just need to get advisors to ask for referrals more often.
7. They want to give away more than just their cash
   The fidelity report found that 91 per cent of clients give cash because they’re not sure what else they can give. Donating appreciated assets, real estate and collectables does take a higher level of expertise but with the right network and training can be an excellent tax-efficient offering. 
8. Know your way around the tax code
   Fifty-nine per cent of clients say their advisor has not told them that complex assets can be donated in a tax-favoured manner that can give them the chance to donate more than they ever expected.
9. Keep an open mind and be progressive about charitable strategies
   Advisors seem perplexed as to where to get training on strategies like the ones that are most valuable to their philanthropic clients. Advisors need to open their minds to different strategies and techniques that might have seemed foreign or “against their investment philosophy” to serve their client’s needs. It is not about you, it is about what is best for your clients.
10. When philanthropy is done right, everybody wins
    If you learn these strategies you will become more referable, keep the assets after your clients die, and have a more fulfilling career knowing you have helped empower your clients to take control of their money by directing it to the charities that mean the most to them.

List compiled by: www.financial-planning.ca

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