Planned Giving: 2010 and Beyond Presented to Southern Alberta Round Table May 9, 2011 Presented by DeWayne Osborn CGA, CFP Lawton Partners

The New Frontier in Charitable Administration — 2 Presentation Overview Discuss significant legislation Discuss trends/possible future Questions Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 3 The Road Behind Us Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 4 Well understood Applies to gifts to public charities Mutual and segregated funds, warrants, rights, and stock LISTED on Tier 1 and 2 exchanges Applies to individual and non-individual (e.g., corporate) donors Since 1997… Zero inclusion on capital gains Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 5 Not well understood Zero-inclusion capital gains apply to qualifying private foundations Tax-free portion eligible for CDA Zero inclusion on capital gains Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 6 ITA Sections 248(30)–(41) Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 7 Split receipting (eligible amount, advantage [248(30,31)]) Deemed value of gift = lesser of FMV and cost (or ACB) if gifted within three years [248(35)] Now includes insurance policies Non-arms-length property subject to 10-year rule [248(36)] Not even Close to Understanding!! Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 8 Gift = nil if donor, prior to the gift, fails to disclose that 248(31), (35), (36), (38), or (39) would apply Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 9

The New Frontier in Charitable Administration — 10 o listed security o real or immovable property in Canada o cultural o ecological o a privately held capital share o property subject to 85(1) or (2) Avoid 248(35)… Misunderstood Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 11 Bequests 100% of Net Income Life Insurance Proceeds RRIF, TFA, RSP Caught Advisors Attention 1996….. Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — % FMV over 24 months Simplified administration No DQ for charitable organizations with assets <$100,000 OR for foundations with assets <$25,000 Disbursement Quota Amendments Planned Giving: 2010 and Beyond

The New Frontier in Charitable Administration — 13 One of oldest forms of recognition Now $25,000 to $50,000 typical for named Endowment Perpetual funding Preservation of capital Spending 3 to 5% annually Traditional Endowments Understood Planned Giving: 2010 and Beyond

Donor Advised Funds More recent Donor has more control Emergence of “Retail Charities” Higher thresholds Admin fees Planned Giving: 2010 and Beyond

The Road Ahead Planned Giving: 2010 and Beyond

The Road Ahead Planned Giving: 2010 and Beyond

$millions and millions in gifts available ◦Boomers can’t take it with them ◦Wealth is accumulating ◦Mortality realization ◦Bequest is still #1 ◦Holdco gifts increasing  Excess holdings regime Planned Giving: 2010 and Beyond

$Millions and $millions in gifts available 15,000+ Private Foundations ◦5,000 without trying ◦Easier than ever ◦Flexibility is King! ◦Rigid = no gift ◦Duty over Passion ◦Policy makeover Planned Giving: 2010 and Beyond

$Millions and $millions in gifts available 15,000+ Private Foundations CRA/Finance Planned Giving: 2010 and Beyond More rules and regulations Did I say 15,000 private fdns?? $6 Billion/170,000 What is the next one? Real estate?

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) ◦Advantage/Eligible amount ◦248(35) Planned Giving: 2010 and Beyond

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues ◦20 years into some gifts ◦Something has to go wrong! ◦Charities litigated ◦Interest rates all time low ◦ART/YRT ◦Poor gift maintenance Planned Giving: 2010 and Beyond 15,000 private fdns!

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues Challenges to “traditional thinking” ◦Capital in Endowments ◦Income spending Planned Giving: 2010 and Beyond Emergence of the Hostile DAF? More, More, More….

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues Challenges to “traditional thinking” Increased policy flexibility required ◦Duty over Passion ◦Did I say 15,000 Private Fdns?? ◦Traditional endowment ◦Super DAF, Flex Endowment ◦Change existing agreements?? Planned Giving: 2010 and Beyond

$Millions and $millions in gifts available 15,000+ Private Foundations More rules and regulations More expense (e.g. valuations) Lapsing gifts / Trust/Residual issues Challenges to “traditional thinking” Increased policy flexibility required Increased abuses/scams ◦Donors will not change! ◦DQ gone Shyster, Shyster & Thief LLP Planned Giving: 2010 and Beyond 15,000 private fdns!!!

Planned Giving :

Questions??? Thank You DeWayne Osborn (ext 256)

Planned Giving : Questions??? Thank You DeWayne Osborn (ext 256)

Planned Giving : Questions??? Thank You DeWayne Osborn (ext 256)

Planned Giving : Questions??? Thank You DeWayne Osborn (ext 256)