indicatorBuilding your philanthropic legacy

Maximizing win-wins with charitable tax planning

A few small changes can make a big difference.

By Darin Bruins, Senior Financial Advisor, RRC, CFP 3 May 2024 2 min read


When people ask me what I like about being a financial advisor, I could go on for a while. But the one that tops the list is supporting clients with their charitable giving. Not only do I get to help facilitate a generous contribution to a deserving organization, I also get to help clients make the most of their donation using tax strategies and timing.

With proper planning, there can be a substantial uplift in the financial value of the gift—both for the donor and for the charity.

So how can you make that happen?


1: Use it when it matters most.

Thinking closely about the relationship between your donations and your taxes is never a bad idea, especially if you’re considering a larger gift. It can be particularly useful for high-income earners and for anyone who experiences a one-time spike in income.

These spikes in taxable income can occur for a variety of reasons. Some are within your control, like exercising stock options, selling a secondary property or a business. Some are outside your control, like inheritance taxes.


2. Use the right tools.

Writing a one-time cheque to a charity may not be the best way to support your cause of choice. Charities usually need time to plan for the use of larger gifts and also benefit from ongoing support, which makes it preferential for them for you to make careful long-term plans. Donors, meanwhile, can often boost their tax benefits by making a more tax-efficient gift.

Common solutions that I discuss with my clients for thoughtful and tax-preferred giving include gifts of appreciated stock, donor-advised funds and life insurance.


3: Pick the right numbers.

The most efficient way to support a cause you care about and minimize your tax bill is not always obvious. A bigger donation does not always translate to a lower tax bill.

For example, not long ago I was helping a client make an estate plan with her lawyer. She was financially comfortable. She had also accumulated a considerable non-registered investments and wasn’t certain how to best ensure that her charities of choice and her children would be provided for while minimizing the taxes owing when those investments would be sold as part of her estate.

We worked through the math together and collaborated to build a giving plan to gift the investments to her children and her preferred charities that would eliminate all the taxes that she would otherwise have to pay to make that gift happen. Best of all, our discussions gave her the confidence to make the gifts while living and see the benefits of her gifts now instead of planning for her estate to make the gifts.


4. Find the right team.

Unfortunately, philanthropists sometimes encounter skepticism or even resistance from their financial advisors when the subject of giving comes up.

If you think like a philanthropist, you should have an advisor who does too. Finding one who understands what you are trying to accomplish and can connect you with other experts as needed can make a tremendous difference in the long-run, both to your legacy and to your financial well-being. I am happy to connect with you to discuss your situation and respond to any questions you may have.

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