"I want to Leave a Lasting Charitable Legacy."
Private Giving Through The Hemisphere Foundation
At Hemisphere, we believe in making a difference by helping others and supporting our Calgary communities. Our philanthropic efforts reach a diverse set of causes driven by our employees, clients, and the communities in which we live. Through the Hemisphere Foundation, we aim to enhance our wealth management services in Calgary by assisting our clients with their charitable donations. Learn more about setting up a Donor-Advised Fund within a private giving foundation.
WHAT IS a Donor-Advised Fund
A Donor-Advised Fund is a tax-preferred charitable investing account created under the umbrella of a private foundation. You make an initial contribution and allow that contribution to grow while also making charitable donations over time. Once the account is setup, you are able to contribute as much as you want, whenever you want.
CHARITABLE GIVING Benefits
Establishing a Donor-Advised Fund is a great way to assist with your private charitable giving. This provides similar benefits to a private foundation without the set-up costs and ongoing administration headaches. Once setup, you can support your preferred charities at a pace that is convenient for you.
One benefit that is often overlooked is privacy. Through a Donor-Advised Fund, your identity and donations can remain anonymous if you prefer. It is sheltered by the foundation umbrella. This option does not exist with a private foundation. The CRA’s website displays the names of the directors of every private foundation. All gifts from a private foundation are also disclosed.
Tax Planning Benefits
Setting up a Donor-Advised Fund provides notable tax benefits. You will receive a tax receipt for the full amount donated in the year given. This allows you to make strategic donations to minimize tax bills in a given year.
You can also utilize in-kind donations to donate securities directly to your Donor-Advised Fund. This allows you to avoid future tax liabilities while enjoying tax benefits from the donation. This is particularly beneficial for securities that have a high unrealized gain. By donating these securities, you are able to avoid paying tax on the capital gains if you were to sell the security. You also receive the tax benefits from the donation amount.
Leave A Lasting Charitable Legacy Through the Hemisphere Foundation
Establishing a Donor-Advised Fund can be an effective way to leave a lasting charitable legacy that reflects your values and priorities. You can establish a philanthropic fund that will continue to support the causes you care about on an ongoing basis. By contributing to the fund during your lifetime and designating successors to carry on your charitable giving, you can ensure that your legacy will continue to make a difference in the world for generations to come.
Hemisphere’s existing clients have the opportunity to establish a Donor-Advised Fund under the Hemisphere Foundation with a minimum irrevocable contribution of $25,000 in securities or cash. Hemisphere provides the necessary investment management and administration services for the fund.
If you are not an existing client but are looking to setup a Donor-Advised Fund through a more substantial contribution, speak to one of our financial advisors in Calgary.
Donor-Advised Fund Additional Information
Donor-Advised Funds are charitable accounts setup under the umbrella of an existing Private Foundation. These allow individuals to make tax-deductible contributions and recommend grants to charities over time. Private Foundations, on the other hand, are independent legal charitable entities created by individuals or families to manage their private charitable giving.
Donor-Advised Funds are typically a more cost-effective option for charitable giving, with lower administrative and compliance costs than Private Foundations. Donor-Advised Funds also allow donors to remain anonymous in their giving. Private Foundations require the disclosure of the donor’s identity.
Private Foundations, however, provide greater control over the charitable assets. Donors can engage other family members as directors in the foundation’s private giving process. This may better align with the donor’s philanthropic goals. Donors are also able to setup their own charitable legal objects. In certain instances, a Donor-Advised Fund may be restricted by the charitable objects of the overarching private foundation.
Overall, the choice between a Donor-Advised Funds and a Private Foundation depends on the intended donation amount and the donor’s goals, desired level of involvement, and charitable giving preferences. Speak to one of our Calgary-based financial advisors if you are trying to decide between a Donor-Advised Fund and a Private Foundation.
Converting a Private Foundation to a Donor-Advised Fund is typically done for one of the following reasons:
- Decrease overhead costs involved with managing the foundation.
- Spend more time making donations than on administration duties.
- Retain a certain level of anonymity in the donation process.
No matter the reason for this undertaking, it can certainly be done. Once the Donor-Advised Fund is open under another foundation, all of the assets from your Private Foundation will need to be granted out to the Donor-Advised Fund. Final tax returns and fillings will need to be completed. The proper legal and financial professionals should be consulted during this process.
When a Donor-Advised Fund (DAF) holder passes away, there are three options:
- Successor: If a successor is named, they can continue to recommend grants from the Donor-Advised Fund after the donor’s death.
- Designated Charities: If specific charities were named as recipients of the funds upon death, the remaining funds in the Donor-Advised Fund are distributed to these charities.
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General Grantmaking: If the donor has not designated a successor or specified charitable beneficiaries, the Donor-Advised Fund will be converted into a general fund. The remaining funds will be distributed to various charities.
The Hemisphere Foundation’s mandate is to support a wide range of charitable activities by granting funds to qualified donees (e.g. registered charities). Donations can either be made towards the general benefit of a selected charity or towards a specific use.
The minimum annual grant from the account must be the greater of 3.5% of the market value or $1,000. Pursuant to the changes in the 2022 Federal Budget, the minimum annual grant may increase to 5% should the Hemisphere Foundation exceed $1 million.
Hemisphere manages all administration related to the Donor-Advised Funds. This includes administering grants to the qualified donees, ensuring proper tax receipts are issued, filing all applicable documents with the Canada Revenue Agency and providing a semi-annual report of individual Donor-Advised Funds.
We created the Hemisphere Foundation to support and maximize the private giving of our clients. Currently, there are no setup costs or ongoing administration fees associated with opening a modest Donor-Advised Fund account for our existing clients. The Hemisphere Foundation also does not currently charge any investment management fees on these accounts. This is a beneficial service that we offer to our clients free of charge.