$1 billion and counting: How Canadians have given back and how you can get started

Key Concepts

• Donor Advised Fund (DAF): A philanthropic vehicle that allows donors to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time.
• Private Giving Foundation: TD’s proprietary DAF program, which acts as a public foundation to manage assets and governance for individual donors.
• Philanthropic Advisory Services: A holistic approach to wealth management that integrates charitable giving into a client’s overall financial and estate plan.
• Tax-Efficient Giving: Strategies such as donating publicly traded securities to eliminate capital gains tax.
• Systemic Advocacy: Charitable work focused on addressing the root causes of social issues (e.g., income inequality) rather than just providing immediate relief.

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1. Overview of Donor Advised Funds (DAFs)

A DAF serves as a simplified alternative to establishing a private foundation. While a private foundation requires significant legal setup, CRA registration, and ongoing fiduciary responsibilities, a DAF operates under an existing public foundation’s umbrella.

• Entry Point: Accounts can be opened with as little as $10,000.
• Process: The donor contributes assets, receives an immediate tax receipt, and the funds are invested. The foundation handles all governance, administration, and compliance, while the donor retains the ability to recommend which charities receive grants.
• Scale: TD’s Private Giving Foundation has granted over $1 billion to charity and manages over $1.2 billion in assets.

2. Historical Context and Development

Joanne Ryan, Executive Director of the Private Giving Foundation, spearheaded the initiative at TD in 2003.

• Inspiration: The model was adapted from U.S. financial institutions like Fidelity and Vanguard, which pioneered DAFs in the 1990s.
• Strategic Shift: At the time, the proposal was a "tough sell" because financial institutions were primarily focused on banking and investment management rather than holistic estate and philanthropic planning. The success of the program signaled a shift toward more comprehensive wealth advisory services.

3. Drivers of Charitable Giving

Ryan identifies several key motivations for modern donors:

• Personal Impact: Donors are often driven by personal experiences, such as the death of a family member or a desire to honor a loved one’s legacy.
• Legacy Planning: Many high-net-worth individuals have more wealth than they intend to spend or pass on to heirs; philanthropy serves as a meaningful "legacy" or "child" for these individuals.
• Societal Triggers: Events like the COVID-19 pandemic highlighted systemic inequalities, prompting increased action from donors.
• Tax Incentives: While not the primary driver, tax-efficient strategies (like donating securities) allow donors to maximize their impact.

4. Trends in Philanthropy

• Digital Adoption: Platforms like CanadaHelps are driving growth by simplifying the donation process, allowing for easy online giving and the donation of securities.
• Donor Base Dynamics: While total donation dollars are increasing, the actual number of donors has been shrinking, though there was a slight 1% increase in the donor base last year.
• Crisis Response: Online platforms have become essential for rapid response to crises, such as wildfires or international conflicts.

5. Real-World Applications and Case Studies

The discussion highlighted two specific areas of focus:

• Food Insecurity: Ryan noted that one in four Canadians currently access food banks. She highlighted Right to Food, which focuses on providing nutritious food with dignity while engaging in advocacy to address the "income problem" that forces reliance on food banks.
• Shelter Movers: This organization provides logistical support for women escaping domestic abuse. They assist with the physical move, including the transport of children, pets, and belongings, and coordinate storage for personal items, addressing a critical gap in the support system for vulnerable individuals.

6. Actionable Advice for Donors

Ryan suggests a structured approach to philanthropy:

1. Consult Financial Advisors: Advisors are increasingly equipped to integrate charitable strategies into financial plans.
2. Develop a Philanthropic Plan: With over 85,000 charities in Canada, donors should narrow their focus.
3. Define Values: Families should identify their top three values and preferred geographic areas to ensure their giving is intentional rather than reactive.
4. Prioritize Efficiency: Use tax-efficient methods to ensure more capital reaches the intended causes.

Synthesis

The evolution of donor advised funds in Canada reflects a broader trend toward professionalized, accessible, and strategic philanthropy. By lowering the barrier to entry for private foundations and integrating giving into holistic wealth management, institutions like TD enable donors to move beyond simple donations toward long-term, impactful legacy building. The shift toward systemic advocacy—addressing the root causes of issues like food insecurity and domestic abuse—marks a maturing philanthropic landscape in Canada.