By: Sean P. Young
As the baby boomer generation ages, it will be important for millennials and Gen Z to give with the same vigour as previous generations, or there is a risk of a shortfall for charities in Canada. Christy Soholt is the director of legacy and strategic philanthropy at the Alberta Cancer Foundation.
Soholt explains how young people can support the causes they care about in meaningful ways.
Q: What are some strategies young people can utilize when giving to charities?
“A really big thing to know is that any charitable contribution in Canada gets a tax receipt, which gives you a tax credit to reduce your taxes owing. Gifts from assets beyond disposable income can provide even more tax benefit. For young people, I recommend they plan their philanthropy to be the most meaningful and beneficial to them, then get strategic in how they give to save on tax and give more. They should always talk to a professional advisor about what will work best for them. Three strategies I would recommend they investigate would be life insurance, donating appreciated securities and having a will that names a charity as a beneficiary.”
Q: Let’s start with life insurance. How does that work?
“Life insurance is a good choice for young people, because they can make a much larger future impact at a quite minimal cost. For example, they could take out a guaranteed permanent life insurance policy. Over 10 years, they pay a fraction of the actual value of the life insurance policy. They can name the charity as a beneficiary and make a really big impact once they pass away. And they get that tax credit in their lifetime as they’re paying their premiums. That counts as their charitable contribution for that year.”
Q: How about giving through securities?
“Donating publicly traded stock is the most tax-efficient way to give. By transferring appreciated stock to charity, capital gain tax on the growth is eliminated, plus the donor will get their tax receipt for the full fair market value received from the transaction. By giving appreciated securities instead of cashing them in and getting both tax benefits, young people may find they can give even more than they thought. Plus, they can always use their tax credit to buy back those securities they want to keep growing at the new cost base.”
Q: Lastly, how does naming a charity as a beneficiary in your will make an impact?
“I’d first stress, please be sure you have a will. Always, always, always have a will. A lot of younger Canadians do not have a will. Make sure you set up your family first — it’s the most important reason for having a will. But especially for younger Canadians in the midst of growing their careers and assets, if something tragic happens, the taxes owing from their estate may be quite high. Including a charity in their will can help reduce that tax bill and direct funds to the causes that matter to them instead.”
Want to Learn More?
The Alberta Cancer Foundation offers complimentary tickets to our tax- and estate-planning seminars throughout the year. Contact Christy Soholt at Christy.soholt@albertacancer.ca to reserve your seat or learn more about strategic philanthropy.