Smart Strategies for Creating a Charitable Legacy


Canadians believe strongly in giving back to communities, causes, and organizations that are important to them. For many Canadians, philanthropy has become an increasingly important part of overall financial planning. What’s more, Canadians are looking for ways to “do good while doing well” when investing their money.

When it comes to charitable giving, you have a number of options that can help you achieve your philanthropic goals, while at the same time provide you with some tax relief.

Donating securities

The federal government has introduced several tax incentives in recent years to encourage charitable giving. For example, if you donate publicly listed securities directly to qualified charities, rather than first selling stocks and then donating the proceeds, you will not be charged capital gains tax. This means that you not only receive a tax break, but you also receive a donation receipt equal to the fair market value of the donated security.

Charitable foundations

Another tax-effective charitable giving strategy is setting up your own charitable foundation. A private foundation gives you a high level of control and flexibility with respect to charitable giving, and you can make donations to your own foundation and still receive a donation tax receipt like any other donation. However, to maintain its charitable status, your foundation must meet its annual disbursement quota, which means that 3.5% of the average value of the foundation’s assets that are not used directly in charitable activities or administration must be spent on charitable activities or on gifts to qualified donees. A private foundation also involves certain costs and administrative requirements.

An alternative to setting up a private foundation is making tax-deductible donations to a public foundation. Public foundations are similar to private foundations in many respects, but they involve less cost and administration. Although you would not have outright control, you could still recommend to the public foundation’s directors which charities receive grants. And, similar to private foundations, in-kind donations of publicly listed securities to a public foundation are eligible for the zero capital gains inclusion rate.

Gifting life insurance

Depending on your age and needs, there are other creative charitable giving strategies. Gifting your life insurance can reduce taxes and significantly increase your charitable contribution after death to your favourite charity.

This article is supplied by Sunil Heda, CPA, an Investment & Wealth Advisor with RBC Dominion Securities Inc. (Member–Canadian Investor Protection Fund). This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article. Sunil Heda can be reached by phone at 416-571-0369 or by email at




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