All About Estates

Time Matters in Philanthropy

SickKids Foundation’s year-end giving campaign has generated a lot of attention for its gripping “Vs” spots. Skillfully edited, the ad borrows fight, hip-hop and adventure movie imagery to dramatize the plight of the hospital’s young patients.  This campaign is highly effective and a great example of visceral, urgent annual fundraising.  Raw emotion has a place in charitable giving, but it doesn’t serve large “exceptional” donations at tax year-end and in estates.

At tax year-end, large donations are often enabled by major tax events. Capital gains tax is triggered by a sale of a business, real estate, or public securities.  For example, an executive at a public company exercises stock options within an insider trading window.  A donation can offset the tax liability, but the taxpayer often has no clear idea about what they wish to support, partly due to the large amount involved.  A major donation makes tax sense, but may not get completed due to lack of clarity about charities.

A similar scenario may exist with estate donations. The amount is large and the distribution date is distant.  It is easy to choose a charity based on current information and emotional appeal, and then hope for the best.

A more effective strategy with large donations is to separate the planning and tax receipting process from the ultimate choice of charities and terms of gifts. This requires an intermediate charity, such as a public foundation with donor advised funds.  Giving to an intermediate charity uncouples the tax receipt from the choice of ultimate charitable beneficiary.  In other words, it separates the gift from the eventual grant.  An intermediate foundation provides the donor with time to choose charities and negotiate a grant.

At Aqueduct Foundation, our experience has been that large exceptional gifts are most effective in achieving social and charitable goals when there is time to select projects and charities. That time could be six months or five years.  Aqueduct promises that its donors can make grants to any qualified donee, in any amount, at any time.  The Foundation provides the donor with charity research, due diligence, gift negotiation and even grant agreements.  The process is designed to increase philanthropic effectiveness and social impact by providing the time for thoughtful, passionate giving.









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.