All About Estates

Charitable Matching Funds

As a fundraiser at a university in the early 1990s I discovered that a primary extra incentive for major charitable gifts is matching funds.  Typically from government sources, matching funds are compelling to donors and important fundraising tools for a lucky few charities.  Unfortunately they create an uneven playing field in the charitable sector.

Matching programs are varied and often short-lived, but in every case they represent a government priority. Examples range from post-secondary scholarships, endowed chairs, capital projects, medical research, land conservation, arts endowments, humanitarian disasters, and recently a $300 million Federal program for maternal and child health in developing countries.

Matching funds have been a driver in the growth of large endowments and completion of capital projects. In design, these program vary widely. Some are needlessly restrictive or bureaucratic. Others – such as some programs launched during humanitarian crises — dress up planned or existing government funding as a matching opportunities.

The current Senate Special Committee on the Charitable Sector reminds us that are concerns about the unequal distribution of donations among charities. Inequity among registered charities is an issue, but it is unlikely to be changed by tax policy. Over two-thirds of the 86,000 charities are primarily volunteer and have revenue under $100,000.  The top 1% of organizations has greater revenue and often captures bigger donations. Direct government funding bolstered by matching funds to encourage donations provides a fundraising advantage. Matching funds are a tactic to steer donors to fund charities and causes aligned with government priorities.

As a generation of experienced Canadian philanthropists’ ages, some are thinking about how to leverage their estate donations with matching funds. Making a gift by will contingent on the provisions of matching funds is risky, as matching gift programs shift over time.

There are a couple of obvious planning strategies.  First, the will may contain a precatory wish to direct the executor to negotiate matching funds. Second, the will may name an intermediate charitable beneficiary, such as a donor advised fund with a spend-down mandate.  This provides planning certainty (a tax receipt), as well as time and discretion to ensure post-mortem donations are leveraged.

 

 

About Malcolm Burrows
Malcolm is a philanthropic advisor with 30 years of experience. He is head, philanthropic advisory services at Scotia Wealth Management and founder of Aqueduct Foundation. Views are his own. malcolm.burrows@scotiawealth.com

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