For This Business, Generosity is the Bottom Line
Today’s marketplace may be dominated by large corporations duty-bound to deliver ever-increasing profits, but for 40 years Norm and Joan Smith* ran a prosperous agriculture business with a different definition of success. Generosity outweighed the bottom line, and they prioritized donating to numerous charities from their farm income every year. The Smiths always knew that running their business this way benefitted others, but they never expected one day their charitable giving would help them as well.
Growing a Successful Business
Norm grew up farming alongside his father and grandfather, and as they all got older, he slowly took over more and more tasks in the family business. After finishing college and getting married, Norm purchased the farm from his father.
Over the next four decades he and Joan built the family farm up into a successful commercial enterprise. They loved working the land, and even as the business grew, they remained committed to the values of generosity that their faith instilled. They frequently volunteered their time and always allocated part of their farm income to support the charities they loved.
Plans for a Simple Retirement
Eventually, Norm and Joan decided to sell the farm. They were getting older, and their grown children had no interest in taking over the family business. The Smiths assumed the proceeds from the sale would allow them to retire comfortably while continuing with their annual donations to charity.
However, these simple plans were thrown for a loop when they discovered just how much their business had appreciated in value over the years. When sold, it would leave them owing a large amount of tax, even after their capital gains exemptions. Knowing the Smith’s penchant for generosity, their financial advisor suggested a charitable donation from the business could offset some of the taxes.
The Smiths were about to owe a large amount of tax due to the sale of their business. They spoke with Abundance Canada to learn how a charitable donation from the business could offset some of the taxes.
Exploring Their Gifting Options
The Smiths liked the idea of giving more to the charities they cared about, but they had lots of questions. Would they have to give a large lump sum gift? To which charity would they give it? Some of the small organizations they supported couldn’t handle a large gift – did it have to be all at once? What would this mean for their giving later? Their financial advisor put them in touch with Abundance Canada.
I met with Norm and Joan and we talked through their gifting options. While they were worried about the tax implications of selling their business, they were equally concerned that their donations provide the most effective support for their favourite charities. The Smiths had been supporting some of these organizations for many years, and they didn’t want to disrupt the pattern of regular giving the charities had come to rely on.
Norm and Joan were pleased to learn that a Gifting Fund™ would give them the flexibility to make a large donation right away, but allow them the time they needed to decide which charities they wanted to support, how much they wished to donate to each, and when they wanted to disburse the funds. Together, we developed a Generosity Plan™ that included all their favourite charities.
A New Generosity Plan
The Smiths sold their business and donated a lump sum from the proceeds to start an Abundance Canada Gifting Fund. They received a charitable receipt for the donation, which helped them offset some of the taxes owed in the year they sold their business.
Today, Norm and Joan take comfort knowing that the funds for their charitable donations are already in place, so no matter what else happens, they will be able to continue giving generously throughout their retirement years. For a couple who always put generosity ahead of the bottom line, that’s just good business.
*Pseudonyms used to protect the privacy of the individuals sharing their story
Contributed by Brad Friesen
Gift Planning Consultant