What is Planned Giving?
As Presbyterians, we are all familiar with the money we give to the church through our weekly offering or some other special appeal (e.g. emergency relief appeals through PWS&D). These contributions usually come from our current income and are intended to fund the immediate needs and programs supported through the annual operating budgets of our local congregation and the national church (i.e. Presbyterians Sharing).
We are less familiar with the many ways that we can support the church and its various ministries with donations from our accumulated assets (e.g. real estate, stocks and bonds, RRSPs and RRIFs, life insurance, etc.). Such gifts may be deferred (e.g. a bequest through a will) or they may be an immediate gift available for immediate use (e.g. a gift of stock). Generally, these gifts are intended to provide additional money to fund new ministries or to support the long-term ministry objectives of the church (e.g. a capital campaign or endowment fund). A certain amount of planning is often involved in such gifts to maximize the tax benefits and to ensure that the gift meets the philanthropic goals of the donor and the ministry objectives of the church. Because such gifts involve planning, they have come to be called “planned gifts,” and the professionals involved in helping donors to make the gift are called “gift planners.
Characteristics of Planned Gifts
- They are usually given from our accumulated assets rather than from our current income.
- They tend to be larger-in-size than the gifts we give regularly from our current income.
- They are usually used to fund the long-term ministry objectives of the church rather than the annual budgetary goals of the church.
- They often involve planned to take full advantage of the tax benefits.
Tax Benefits of Planned Giving
Tax laws in Canada are changing to encourage Canadians to give generously to charities from their assets, not just their current income. Did you know that up to 100% of net income can be claimed as a charitable gift during the year of death? The executor for your estate can also apply any unused tax credits to your previous tax-year, again up to 100% of your net income. This means that you can make a substantial gift to the church through your estate, and your heirs can benefit from the tax savings.
The tax advantages of giving while you are still living are even greater. Up to 75% of your annual net income can be claimed as a charitable gift in any one year while you are still living. Furthermore, any unused credits can be carried forward for an additional five years, again claiming up to 75% of net income each year. More and more Canadians are choosing to make sizeable donations to the charities of their choice while they are still living in order to take full advantage of the tax-benefits and because they want to see the fruit of their generosity while they are still alive.
In 2006, the federal government completely eliminated the capital gains tax on gifts of publicly traded securities (i.e. stocks, bonds and mutual funds) given directly to charity. (If you sell a stock privately, you are taxed on 50% of the capital gains.) Donors also receive a donation tax receipt for the full market value of the security on the day the security is received by the church. Gifts of securities that have appreciated in value are a tax-smart way to support the church and its ministries.
It is important to emphasize that such gift planning strategies are not a form of tax evasion; rather, they are utilizing the tax laws precisely as they were intended to be used. Current tax laws are intended to ensure that planned giving is a “win-win” – a win for donors who can experience the joy of giving larger gifts than they may have thought possible because of the accompanying tax benefits, and a win for charities and the expanded work they are able to do with the additional funding.
Ways to Make a Planned Gift
There are many ways to make a planned gift to the church – a bequest through your will, a gift of stock, a charitable gift annuity, naming the church as the beneficiary of a life insurance policy, etc. Each of them has its own benefits and tax considerations. Some of them are better suited to older donors (e.g. gift annuities), others to younger donors (life insurance). Because every donor’s situation is unique, it is important to consult a trusted professional estate planner, financial advisor or tax specialist, before taking action.
Why More and More Presbyterians Are Making a Planned Gift to the Church
“My parents taught me that everything ultimately belongs to God and to tithe my current income as a practical way of saying ‘Thank you’ to God. It seems natural that I should also tithe my assets through my will.”
“The church has made a huge difference in my own life. It was there for me when I was growing up, when I got married and when my husband died. I want to do my part to ensure it’s there for my children and grandchildren.”
“To me it is wonderful that I can continue to contribute to the ministry of the church long after I have died by giving a portion of my assets to my congregation’s endowment. It’s a concrete way that I can be part of that ‘great cloud of witnesses’ described in Hebrews 12:1.”
An Example of Generosity
Mrs. X had been part of her church choir since she was a teenager. It was the music of the church that spoke to her the most in worship and gave her the words to speak to God. She was also grateful to the synod church camp where her daughter was re-introduced to Christ and experienced her call to the ordained ministry. Mrs. X decided to tithe her estate to the church, designating half of her bequest to her congregation’s endowment fund to support its music ministry and half to her synod camp to establish a permanent scholarship in her daughter’s name. When Mrs. X died, her daughter found great comfort in her mother’s generosity and is deeply honoured that her own name is attached to her mother’s gift.
For Further Information
The staff in the Planned Giving Office are available to offer whatever information and guidance you need to help you turn your philanthropic wishes into reality. Contact us by email, phone at 1-800-619-7301 or mail to Planned Giving Office, The Presbyterian Church in Canada, 50 Wynford Drive, Toronto, Ontario M3C 1J7.
“Make purses for yourselves that do not wear out, an unfailing treasure in heaven” – Luke 12:33
The information on this website does not constitute legal or professional advice and should not be substituted for appropriate professional advice. The Presbyterian Church in Canada encourages you to seek professional legal and financial advice before deciding on a course of action.