Don’t forget to promote gifts of stocks & mutual funds, this holiday season.

publication date: Oct 18, 2016
 | 
author/source: Paul Nazareth

Paul NazarethIt’s a busy time of year as many charities host events and are meeting with donors to talk about donations before December 31.

And all across Canada smaller charities are missing out on a BIG secret.

Securities donations are all about the end of the year. 

Is your charity missing out?

These gifts are one of the most tax-smart and efficient ways donors can make charitable donations in Canada. Donations of securities are typically larger than cash donations, and because donors don’t have to pay capital gains tax on the appreciated value when donated directly, your charity receives a greater benefit, and the donor receives a larger receipt.

Many charities think that accepting securities requires a lot of work that only big charities can handle. This is not true and if you don’t accept them, you are leaving donations on the table. Want to get up to speed?

Here are just three steps to raising more this holiday season by using securities:

Educate your donors on the benefits of securities

For your charity, this is an opportunity to super-serve your donors by educating and empowering them to give strategically (ultimately giving more). 

Here’s how it works:

If a donor were to sell their securities or mutual funds and then donate the cash to your charity, they would be responsible for paying capital gains tax on the appreciated value—meaning the amount of money they have available to donate is less. But if they arrange to donate the securities directly to your charity, they will receive a tax receipt for the full value of the shares at the time of sale, and your charity will receive the full value of the gift with nothing lost to taxes.

Here are some approximate figures to illustrate:

The above chart assumes a 46% marginal tax rate. This is for illustrative purposes only and does not constitute legal or financial advice. Seeking professional advice before deciding upon your donation strategy is recommended. 

Facilitating donations of securities and mutual funds is easier than you might think. Here are the steps:

  1. Your donor completes a Letter of Authorization and sends it to their broker authorizing the transfer of securities or mutual fund shares to your broker. 
  2. The donor’s broker completes the transfer to your broker. 
  3. Your broker sells the securities or mutual funds and sends a cheque to your charity for the proceeds less their fee.
  4. Your charity issues a tax receipt for the value of the asset after it is received in your broker’s account, converting values to Canadian dollars based on the exchange rate at that time.

Easily get set-up

Your charity can create its own Letter of Authorization and establish a relationship with a broker to facilitate the service. For some, working on these transfers with your broker and ensuring you are onside with the charitable tax rules for these types of gifts may be daunting and time-consuming.  If that’s the case, there is another option: CanadaHelps.  

Since 2008, CanadaHelps has operated as Canada’s largest online facilitator of donations for gifts of securities. As a charity, with a free CanadaHelps Charity account, you can leverage this platform to begin accepting these gifts in minutes of getting your “Donate Securities” button for your website that initiates a donation of this type to your charity.  When a donation of securities is made to your charity, CanadaHelps will handle the process from beginning to end, issue a charitable tax receipt, and transfer the proceeds right into your charity’s bank account less its low non-commercial fee. 

 Market your appeal to be a success this holiday season!

Make your appeal!  You can use all the proven techniques for your other appeals, highlighting the impact your organization can make with this gift.  With that said, here are a few tips specific to this type of appeal:

  1. Segment your supporters by addressing this appeal to your high value donors, and often older mid-value donors.  
  2. Make an appeal, reinforcing the benefits of securities donations. You can find helpful, ready-to-go securities messaging and graphics here.
  3. Create a sense of urgency by tying your securities appeal and messaging to end of year tax time by including a time-sensitive cut-off for initiating their gift to ensure a 2016 tax receipt (ensuring there’s time to complete even more complicated sales). 
  4. Don’t forget the professional advisors! Do you have board members or volunteers who work in the financial, tax, or private client teams? Let them know you accept these gifts!

This giving season, help your donors have more impact and stretch their giving dollars by donating securities instead of cash. You’ll help them save money on their tax bill, and as a charity, you will enjoy the benefits of a substantially larger gift.

The 2016 deadline for donating securities and mutual funds through CanadaHelps is Friday, December 16th. Don’t miss out on these larger gifts this holiday season!

Paul Nazareth is the Vice President, Community Engagement at CanadaHelps. CanadaHelps.org allows donors to safely donate and fundraise online for any registered Canadian charity and also provides charities the secure online fundraising platform and education resources they need to succeed. As a registered charity itself, CanadaHelps has facilitated more than $650 million in donations to Canadian charities online since launching in 2000. Over 16,000 Canadian charities fundraise online using the CanadaHelps platform. Stay connected with CanadaHelps on Twitter @CharityLifeCA and @CanadaHelps.



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