Consider a Long-Term Distribution Plan for Significant Donations to Charity

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Finding yourself in the situation where you can make a significant donation to charity is exciting but can be difficult as not all charities are able to accept large gifts all at once; that is why we suggest a long-term distribution strategy for your gift. Often, the intention behind these types of donations is to provide prolonged support to your beloved charity. So, we must ask ourselves, “What is in the best interest of the recipient charity?” Hint: it is often a long-term distribution strategy.

Some charities can immediately handle a significant donation, while others are best supported by consistent donations over time. An oversized gift can overwhelm a small or medium-sized charity because it does not have the capacity to best manage that large one-time donation. In these cases, many people choose to stagger the distribution of funds once they consider the continuing needs of the charity.

Using a Public Foundation to Plan Your Donation

Using an intermediary foundation such as Abundance Canada often offers an ideal fit to help accomplish your goal of consistent support. Seasoned philanthropists have been using various forms of the public charitable foundation model for decades because it provides the flexibility and tax efficiencies to optimize their charitable gift planning.

Using a public foundation to plan your donation provides flexibility and tax efficiencies to optimize your charitable gift planning. Share on Twitter

In our experience at Abundance Canada, we see this challenge arise during business transitions (the sale of a business or farm) or through an estate plan: the client has a tax event where a significant donation is both possible and practical, however, many don’t know — immediately or fully — what they want their money to support. Some may feel nervous about making large irrevocable gifts, and frequently they don’t know who can help them with this type of planning.

Often the best solution is to consider the use of a Donor Advised Fund (DAF) offered by a public charitable foundation. Then the determined amount can be donated to the foundation where clients will receive a receipt for the full amount immediately. Donations can be made individually or through a corporation.

Creating Your Long-Term Distribution Strategy

Abundance Canada works with clients to create a Generosity Plan™, where the client recommends the recipient charity and determines the amount of the donation and timing of disbursement. To do this, we use a DAF, which we call a Gifting Fund™. The balance is invested so that earnings accrue tax free, and there is flexibility to alter the distribution plan to include capital, earnings, and so on.

Our flexible distribution model is one of the key benefits of a Gifting Fund at Abundance Canada. Clients can alter their long-distribution plan as often as they wish since they are not locked into a pre-determined plan. For instance, you want to make a donation to the capital campaign your favourite charity is organizing, but the project may not move forward for another two years. You can build up capital in your Gifting Fund during that time to support the project, and if the campaign does not occur, you can consider other opportunities for your donation.

Abundance Canada gift planning consultants are available to give advice on charitable gift planning, including a long-term distribution strategy for significant donations. We work with you to create a custom Generosity Plan, which allows you to ask questions, learn along the way and make a notable difference to the cause or causes you care about most. This peace of mind and flexibility makes giving all the more satisfying!

Set up a meeting today to discover your donation options >

Marlow Gingerich

By Marlow Gingerich, Gift Planning Consultant

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