November 2010 | LL
Keeping the Dream Alive for Future Generations
Creating enduring legacies with private foundations By Kate Blake-Paterson, Lawyer DAVIS LLP
We all want to leave this world better than we found it and many of us make charitable gifts with this goal in mind. Those who do should consider using a private foundation to structure their gifts. Private foundations are not-for-profit incorporated entities that provide a formal structure for making charitable gifts. As a corporate entity with charitable registration with the CRA, a private foundation has a lifespan as long as there is interest in maintaining it and funds to do so. Essentially, donors will make gifts to their private foundations which will, in turn, invest the gifts and distribute the income earned thereon to charitable organizations. By having a continued existence and preserving the value of the original gifts, foundations enable donors to create an enduring legacy to benefit future generations in a way that one-time donations to an already established charity may not. As entities that, by their definition, are controlled in large part by the individuals who established them, private foundations offer the dual advantage of allowing donors to create the legacy they want in their community and instil a culture of charitable giving and community-mindedness in their own family. Through the use of a private foundation, donors are able to control how their do-
nations are invested and used. They will be able to determine to extent to which funds are invested for future use, the charities to whom funds are distributed and the specific amounts to be received. This control allows donors to ensure their gifts are used in ways specifically tailored to the legacy that they want to leave and allows gifts to be dispensed over time so that they may have continued life beyond their donors. Private foundations also offer a unique opportunity for donors to instil a philanthropic spirit in their descendants. Because the management of a private foundation is often an intra-family and inter-generational affair, donors are able to involve their children, grandchildren or other relatives in the management of the foundation and teach them think charitably about others on a regular basis. In many instances, the habits established by such inter-generational participation will become the foundation’s true lasting legacy. Private foundations may sound exotic and extravagant, but in fact have become a more accessible way to give. They are still not for everyone. The vehicle chosen for charitable giving should reflect a donor’s personal goals. Foundations have some significant advantages, in particular for those who are interested in ensuring their gifts provide an enduring legacy, but also have some disadvantages. If you are interested in structured charitable giving, you should talk to your advisors about what is the right approach for you.
DID YOU KNOW?
ARTHRITIS.
KNOWS NO BOUNDARIES.
ARTHRITIS.
DOES NOT DISCRIMINATE.
ARTHRITIS. FIGHT IT. AND WIN.
MAKE THE PAIN GO AWAY. FOR GOOD.
To find out how, call:
Heather Hamilton-Wright Director, Major Gifts & Planned Giving P: 604.714.5565 / hhwright@bc.arthritis.ca
You would do anything to make sure she has access to help throughout her lifetime. Who can do that for you?
The Canada Revenue Agency (CRA) website www.cra.gc.ca/ donors provides facts about tax savings, donation receipts, the regulation of charities, and how to be an informed donor.
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