Canadians have proven themselves to be generous; carry a sense of duty towards their fellow citizens in need and have a clear understanding that to address philanthropy is to engage in moral biography.
Speaking as our guest to the Board of Directors of a national Canadian charity, Dr. Paul Schervish, of the Centre on Wealth and Philanthropy at BostonCollege said that:
“the moral vocation for all people of all ages is to combine capacity and moral compass into a moral biography to shape and steward those institutions and organizations dedicated to assisting others in need”.
It might be assumed that wealth brings with it the financial capacity to engage in philanthropy; but many Canadians draw from the example of their parents or grandparents or teachings of their faith to tithe a percentage of their income or indeed punch above their expected giving weight. In fact we are taught that the highest form of giving is the anonymous gift.
John Maynard Keynes wrote that:
“When individuals reach such a level of subjectively defined financial security they can experience a change in the nature of one’s duty to one’s neighbour. It will remain reasonable to be economically purposeful for others after it has ceased to be reasonable for oneself”.
Governments around the globe recognize the importance of private sector giving and encourage its frequency through tax credits and deductions.
The Canada Revenue Agency (CRA) defines a gift as: a “voluntary transfer of property without valuable consideration”.
5.4 million Canadian tax filers claimed a charitable credit in 2010. Imagine Canada attributes a sense of:
“compassion for those in need and a belief in the cause of the organisation supported” as the two major motivating factors behind a donor’s gift.
Increasingly however a third factor enters the equation – the tax effectiveness of the gift. Depending upon a Canadian donor’s place of residence for tax purposes, one may today face top marginal tax brackets of from 39% to 50% on income.
By the same token, the general rule of thumb with some exceptions is that at death an individual is deemed to have disposed of his or her capital assets at fair market value and is liable to pay a tax at their top marginal rate on 50% of all accrued gains, which creates a substantial tax liability ranging from 19.5% to 25% on all accrued gains.
Most people who have worked a lifetime to accumulate assets would at least appreciate a voice at the table in the determination of their ultimate destination.
The corollary to voluntary giving is that in its absence Canadian taxpayers give up to a quarter of their capital gains and half of their income to support the general tax rolls of the country. All of which are important contributions to the Canada we respect and love; but after a lifetime of so doing – donors wish choice in their legacy gifting.
We are creating a series of articles which will examine different forms of voluntary giving in greater detail. The series will address choice; direct tax efficient gifts to not for profit organisations that are individually meaningful; can fit with estate planning objectives of the donor and also magnify the gift to allow people of more modest means to make a significant gift.
Remembering that the average donor, once started, gives an average of 7 substantive gifts in their lifetime and an early encouragement advances the process and its impact.
Brian Etherington is the Chairman at Etherington Generations; a risk management firm that specializes in family life insurance and estate planning. He was appointed a Member of the Order of Canada in 2004 and a recipient 
of The Queen’s Golden Jubilee Medal in 2002 for community service, as well as The Queen’s Diamond Jubilee Medal in 2012. He is a Founding Chair of the Special Olympics Canada Foundation and a chair on the advisory council for the 2019 International Youth Games presented by Special Olympics Ontario.
