Gift Acceptance Policy

Guidelines

Abundance Canada will consider any gift that is legally permissible by CRA with acceptance of gifts subject to management approval.

Cash

Cash is defined as anything that can be deposited directly into Abundance Canada’s bank account. This would include, but not be limited to, cash, cheques, money orders, bank drafts, etc.

  1. Cash gifts will be deposited into Abundance Canada’s bank account upon receipt.
  2. If the deposit takes the form of foreign cash, the receipt value will be based on the Canadian dollar equivalent as calculated by Abundance Canada’s bank and recorded as the deposit amount in Canadian dollars.
  3. All receipts will be issued using Canadian dollar equivalencies.
  4. Charitable receipts will be issued for gifts of cash as outlined by the Income Tax Act (ITA).
  5. Charitable receipts will be issued in the name of the person who owns the cash that is being donated to Abundance Canada. While the name on a cheque should be viewed as strong evidence of the ownership of the funds, in some circumstances this is not conclusive. For example, a cheque may actually represent the collection of donations from various individuals and for simplicity one cheque is issued to Abundance Canada. In this scenario the person issuing the cheque is acting as an agent for Abundance Canada and has collected all the individual donations. The agent submits a list of names and addresses to Abundance Canada for the individual donors represented by the consolidated payment to Abundance Canada. Abundance Canada management should be consulted in situations where the ownership of the funds is not readily determined.

Gifts-In-Kind

Publicly Listed Securities

Publicly listed securities are securities that are publicly traded on a stock exchange recognized by Canada Revenue Agency (CRA) and cannot come from a registered investment account (RRSP, RSP, RIF, TFSA etc.). Gift-in-kind donations of publicly listed securities may be received via:

  1. Transfer of securities from the donor’s brokerage account to Abundance Canada’s brokerage account
  2. Deposit of physical stock or bond certificates made out in the name of the donor to Abundance Canada’s brokerage account

Abundance Canada will use the following criteria to value the securities for donation receipt purposes. In all cases Abundance Canada will use the method which will provide the donor with the largest receipt possible:

  • The closing price on the transfer date,
  • The simple average of the high and low trading price on the transfer date,
  • If the securities were not traded on the transfer date, the average of the bid and ask prices will be used, or
  • If there were no bids on that day, then the price on the most recent date on which the securities were traded or had a bid and ask price will be used.
  • If the transfer date falls on a day the stock exchange is closed (weekend or holiday) then the valuation will be based on the next day the exchange is open for trading.

The transfer date will be:

  • The date the transfer forms/instructions are signed by the donor and submitted to their broker/brokerage firm for processing.

Private Company Shares

Acceptance of donations of private company shares is evaluated on a case-by-case basis. Consult with Abundance Canada management for direction on any private company share donation scenarios.

Items that need to be considered prior to accepting a donation of private company shares:

  • The enhanced tax benefit that applies to the donation of publicly listed securities does not apply to the donation of private company shares.
  • Are the shares a non-qualified security (NQS)as defined by the ITA?  If so, do the exception rules apply?
  • Is there a buyer for the shares after the donation to Abundance Canada has been completed?
  • How long will Abundance Canada be required to hold the shares before they can be sold? Can the market value be accurately determined at the time of transfer?
  • Are there contingent liabilities within the corporation that could adversely affect the market value or the ability of Abundance Canada to sell the securities?
  • Are the shares closely held (limited number of shareholders), which could affect the liquidity of the shares?
  • What is the nature of the business and is it consistent with Abundance Canada’s social screens for investments?
  • Does the ownership of the shares require Abundance Canada to be actively involved in the day-to-day operations of the business?
  • Is there a restriction on the sale of the shares (minimum holding period, buy/sell arrangements, etc.)?
  • If the shares are to be held, do they pay a dividend (disbursement quota issue)?
  • Is the issuing corporation willing to redeem the shares immediately and issue a Note payable to Abundance Canada for the value of the shares?
  • Does the Note have an interest rate payable in cash annually to Abundance Canada?

Life Insurance

If a client donates a new or existing life insurance policy to Abundance Canada, Abundance Canada becomes the owner and beneficiary of the policy. Prior to accepting a donation of life insurance, Abundance Canada will review the insurance policy to determine if the policy meets the charitable purposes of the donor. The following procedures apply to life insurance gifts.

Donating an Existing Policy

  1. Ownership of the policy is irrevocably transferred to Abundance Canada.
  2. A charitable receipt is issued for the fair value of the policy at the time of the ownership change.
  3. On-going premiums, if paid by the donor, are eligible for a charitable receipt. A donor may continue to make the premium payments as follows:
    1. The donor makes a gift to Abundance Canada for the amount of the insurance premium. Abundance Canada makes a payment to the insurance company for the premium.
    2. An added benefit of processing the premium payment through Abundance Canada is that the client can choose the form the donation will take to maximize their tax benefit. For example, they could donate publicly listed securities to Abundance Canada and use the proceeds of disposition to fund the life insurance premiums.
    3. The donor pays the premium to the insurance company directly. Abundance Canada confirms with the insurance company the total premiums paid annually as of December 31 and issues a charitable receipt for such premium donations.
    4. Donors wishing to make pre-authorized contributions (PAC) payments are encouraged to pay directly to the insurance company.
  4. If the donor is unwilling or unable to make a premium payment, Abundance Canada will contact the donor to determine the best course of action. Options to consider are:
    1. Use any existing cash surrender value in the policy to make the premium payments.
    2. Contact the charities that are to benefit from the policy (Distribution Recommendation form) to determine if they are willing to continue making the premium payments.
    3. Collapse the policy and distribute any available cash surrender value.
    4. Consult with the agent on record to review other options such as a reduced payout.
    5. Abundance Canada continues to make the premium payments as an investment. The insurance policy payout would be used 100% to support the work of Abundance Canada.

Naming Abundance Canada as a Beneficiary within a Policy

A client may choose to name Abundance Canada as a beneficiary in a life insurance policy. In this situation, Abundance Canada is not the owner of the policy. The client does not receive a donation receipt for fair value of the policy, or the premiums paid. Abundance Canada issues a donation receipt to the estate of the deceased insured for the amount received from the insurance company at the death of the insured individual.

Summary

Before a donation of life insurance is initiated, it must be established if the donor requires a donation receipt while they are alive or if their estate needs the donation receipt.

Donation receipt issued for fair value of the donated policy and any life insurance premiums paid by the donor after the policy is transferred to Abundance Canada:

  1. Abundance Canada is owner and beneficiary of policy
  2. No donation receipt issued at the time of death
  3. Abundance Canada issues donation receipts for premiums paid by the client on the policy
  4. Client can use the donation receipts while they are alive

Donation receipt issued for payout from life insurance company

  1. Client is the owner of the policy and Abundance Canada is listed as a beneficiary
  2. No donation receipts issued for premium payments during client’s lifetime
  3. Abundance Canada issues a donation receipt to the client’s estate for the value of the life insurance payout

Property

Real Estate

A donation of property can include vacant land or land and buildings. Donations of property will be evaluated on a case-by-case basis and in consultation with Abundance Canada management.

Due to the limited liquidity and other risks commonly associated with holding property, Abundance Canada will generally only accept donations of property if a willing buyer is available at the time the donation is made or Abundance Canada management is confident that the property can be sold for the transfer date valuation at a time of its choosing.

Receipts will be issued in keeping with the provisions of the ITA for the donation of capital property.

Issues and information that need to be addressed prior to accepting a donation of property:

  1. An independent appraisal is required to establish market value.
  2. An environmental review may be required prior to accepting the gift.
  3. Any consideration that is attached to the property (mortgage, restricted covenants, caveats or other items registered against the title) must be clearly identified and its value to the donor ascertainable. If its value cannot be reasonably determined, no charitable receipt can be issued.
  4. The enhanced tax benefit that applies to the donation of publicly listed securities does not apply to the donation of property.
  5. Recommend that the donor obtain independent professional advice regarding the implications of making the gift.
  6. Identify whether there is a buyer for the property after the donation to Abundance Canada has been completed
  7. Identify the length of time Abundance Canada will be required to hold the property before it can be sold
  8. Determine whether there is a life interest component to the donation
  9. Determine future valuation of the property
  10. Determine any contingent liabilities associated with the property that could adversely affect the market value or the ability of Abundance Canada to sell the property
  11. Ascertain whether the property generates any revenue
  12. Determine any ongoing maintenance costs associated with owning the property

Personal-Use Property

Donations of personal-use property (PP) will be evaluated on a case-by-case basis. Consult with Abundance Canada management for direction on any particular case. Examples of personal use property include, but are not limited to, art, jewellery, household effects, heirlooms.

Due to the limited liquidity and other risks associated with holding PP, Abundance Canada will generally only accept donations of PP if a willing buyer is available at the time the donation is made or Abundance Canada management is confident that the PP can be sold for the transfer date valuation at a time of its choosing.

Receipts will be issued in keeping with the provisions of the ITA.

Issues and information that need to be addressed prior to accepting a donation of PP:

  1. An independent appraisal may be required to establish market value.
  2. The appraiser must be a qualified and independent party who is not connected to the donor.
  3. The enhanced tax benefit that applies to the donation of publicly listed securities does not apply to the donation of PP.
  4. Identify whether there is a buyer for the PP after the donation to Abundance Canada has been completed
  5. Determine the length of time Abundance Canada will be required to hold the PP before it can be sold
  6. Recommend that the donor obtain independent professional advice regarding the implications of making the gift.
  7. Determine whether the PP will hold its value into the future
  8. Identify any contingent liabilities associated with the PP that could adversely affect the market value or the ability of Abundance Canada to sell it
  9. Determine whether there are any ongoing maintenance costs associated with owning the property
  10. Determine whether other family members have been consulted regarding the donation of the PP

Ecologically Sensitive Land

Abundance Canada does not qualify as a charity eligible to accept donations of cultural property or ecologically sensitive land that generate additional tax benefits to the donor. Please refer to the information in the ITA pertaining to donating these assets in a tax efficient manner.

 

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