Using Donor-Advised Funds to honour one's memory

Key Concepts

• Donor Advised Fund (DAF): A charitable giving vehicle administered by a public charity, allowing donors to make an irrevocable gift to the charity, receive an immediate tax deduction, and then recommend grants from the fund over time.
• Private Giving Foundation: A type of public foundation that allows individuals or families to establish a charitable fund with specific philanthropic goals, often managed by a financial institution.
• Fiduciary Responsibility: The legal obligation of a person or entity to act in the best interests of another party, particularly in financial matters.
• CRA (Canada Revenue Agency): The Canadian government agency responsible for administering tax laws.
• Income Tax Act: The primary legislation governing taxation in Canada.
• Capital Gains Tax: A tax on the profit realized from the sale of a capital asset, such as securities.
• In Memoriam Accounts: Charitable accounts established to honor the memory of a deceased individual, often used for donations in lieu of flowers.
• Autoimmune Disease: A condition in which the body's immune system mistakenly attacks its own tissues.
• Inflammation: A localized physical condition in which part of the body becomes reddened, swollen, hot, and often painful, especially as a reaction to injury or infection.

Estate Executive and Philanthropic Giving

Dr. Ray Young, a senior scientist and staff rheumatologist at the Hospital for Sick Children in Toronto, discusses her role as an executor of her late uncle's estate, which includes significant philanthropic endeavors. Her uncle, a dedicated physician and cancer doctor, was passionate about research and its direct impact on patients. He recognized the parallels between cancer and autoimmune diseases, noting that autoimmune diseases, while less "sexy" and thus attracting less funding, also involve cells growing wildly and attacking the body. This resonated with him, especially given the prevalence of autoimmune diseases within their family. Coming from humble beginnings, he accumulated wealth and desired to give back to society, particularly by supporting children's health research, viewing them as the future.

Utilizing a Private Giving Foundation for Charitable Direction

Dr. Young describes her experience using TD's Private Giving Foundation, managed by Joanne Ryan, Executive Director, as a "speed dating process" for directing her uncle's multi-million dollar gift to the Dr. Hawk Mingchu Research Program in Inflammation and Autoimmunity at Sick Kids. Her uncle had a clear philanthropic plan before his passing. While there was a learning curve and some "red tape," the foundation's team made the process comfortable and manageable. They handled administrative complexities, allowing Dr. Young to focus on the philanthropic goals. A key benefit was the foundation's ability to grow the donated funds, increasing the impact of the donation.

Donor Advised Funds vs. Private Foundations

Joanne Ryan explains that a Donor Advised Fund (DAF) offered by a private giving foundation is a simpler alternative to establishing one's own private foundation. Establishing a private foundation involves significant administrative burdens, including board membership, fiduciary responsibilities, compliance with CRA regulations, board meetings, and extensive filings. In contrast, a DAF, managed by an established public foundation like TD's Private Giving Foundation, simplifies this process. The foundation has its own board of directors and handles all administration through a services agreement. Once funds are contributed and a charitable tax receipt is issued, the donor is relieved of administrative duties. The investments within the DAF grow tax-free, maximizing the amount available for charitable giving. This allows individuals like Dr. Young, who are already busy professionals, to focus on their philanthropic vision rather than administrative tasks.

Considerations for Estate Planning and Charitable Giving

For individuals considering leaving a substantial sum to charity in their estate, several factors are crucial:

• Designation in Will: A will can specifically name a charity or designate funds to a charity at the discretion of the executor. Clear communication between the testator and the executor is vital to ensure understanding of philanthropic intentions.
• Tax Planning:
  • Donations can be claimed up to 75% of net income annually, with excess amounts carried forward for five years.
  • In the year of death, donations can be claimed up to 100% of net income, with excess carried back one year.
  • Donating appreciated securities can eliminate capital gains tax, making the donation more tax-efficient and allowing for a larger charitable impact.
• Communication with Family: Openly discussing charitable intentions with family and heirs is essential to avoid potential challenges to the will and to ensure the philanthropic legacy is understood and celebrated.
• In Memoriam Accounts: For those who pass away unexpectedly, "in memoriam" accounts can be established through organizations like canadahelps.org, which can then transfer funds to a private giving foundation. This allows families to create a long-term legacy of giving in honor of their loved ones.

Hopes for the Research Program

Dr. Young expresses her hope that her uncle would be pleased with the impact of the Dr. Hawk Mingchu Research Program. Her vision is for research to transform care, a model she and her uncle lived by. She aims to leverage the lessons learned from cancer research as a template for autoimmunity research and then scale and scope this knowledge to benefit children and, by extension, all Canadians. She views children as a "clean model" for understanding diseases, as their bodies have not been subjected to the same environmental factors as adults. By identifying "signals" in children's health, valuable insights can be gained to help broader populations affected by various diseases. The ultimate goal is a transformational impact on health at both the funding and health outcome levels.