While cash donations are the most common way that donors give to Shine Foundation, did you know it’s not the only option? In fact, there is a more tax-effective way to give that you may be missing out on!
In Canada, donating securities is the single most tax-effective way to make a donation to your favourite charity, yet many Canadians remain unaware of this valuable opportunity.
What are Securities?
“Gifts of securities” refers to donations of publicly traded stocks, bonds, or mutual funds.
Why Donate Securities?
Over time, when securities increase in value, the owner experiences a “capital gain.” These capital gains are taxable when the securities are sold.
By
For example, say you purchased $1,000 in shares of a company, which are now worth $5,000 today. That represents a capital gain of $4,000.
If you were to sell those shares and donate a cash gift, you would be required to pay a capital gains tax, decreasing your gift to Shine and your charitable tax credit amount.
However, if you were to donate those shares directly to Shine Foundation, the capital gains tax is eliminated, allowing you to make a larger donation and receive a larger charitable tax credit!
| If you sell your securities and donate the funds to Shine | If you donate your securities directly to Shine to sell |
Original price of securities | $1,000 | $1,000 |
Current market value (a) | $5,000 | $5,000 |
Capital gain | $4,000 | $4,000 |
Taxable capital gain | $2,000 | $0 |
Capital gains tax (b) | $9201 | $0 |
After-tax donation amount | $4,0802 | $5,000 |
You receive a tax receipt for | $4,080 | $5,000 |
You receive a tax credit for (c) | $1,876.803 | $2,3003 |
Total cost of donation = (a) + (b) – (c) | $4,043.20 | $2,700 |
1 Assuming a marginal tax rate of 46%, which is applied to 50% of the capital gain ((4,000x0.50)x0.46). 2 Represents the full donation amount after the capital gains tax is paid (5,000-920). 3 Assuming a charitable donation tax credit rate of 46% (4,080x0.46 or 5,000x0.46). | ||
How to Donate Securities to Shine Foundation
1. Talk to your Advisor
To ensure a gift of securities is the right option for you, speak with your financial/investment advisor or accountant. They can help make sure this method aligns with your philanthropic goals and help you choose an amount that both meets your budget and will make a significant impact.
2. Complete our Gift of Securities Form
Once you have met with your advisor and determined what you would like to give, have them help you complete our Gift of Securities Form.
Document
Please note that because gifts of securities take longer to transfer and process than cash gifts, the deadline to make gifts of securities to Shine Foundation each year (and receive a same-year tax receipt) is December 15 at 5:00pm Eastern Time. After that, any gifts of securities received will be processed on a best-effort basis.
3. Receive a Tax Receipt
Shine Foundation will issue you a charitable tax receipt for the fair market value of your donation. The fair market value is determined by the closing price on the day the securities are received by Shine.
Did you know if you leave a gift of securities to Shine Foundation in your Will, your estate can receive the same tax benefits? Learn more about including Shine Foundation in your estate plans here.
Your donation of securities can have a big impact at Shine, with benefits for both you and the young people living with severe physical disabilities we serve. Help change more lives by considering a donation of securities and contacting your advisor today to get started.
For more information, please contact:
Kyla Martin
Director of Philanthropy
519-642-0990 ext. 227
kyla [dot] martin [at] shinefoundation [dot] ca (kyla[dot]martin[at]shinefoundation[dot]ca)
Disclaimer: This article is intended to provide general information about donating gifts of securities to Shine Foundation and is not intended to be interpreted as financial or legal advice.
Sources:
CanadaHelps. “Donate Securities and Mutual Funds.”
RBC Wealth Management. “Charitable Donations of Securities.”
