Donate Securities to Charity [Doing Well by Doing Good]

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ockham
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Re: Doing Well by Doing Good

Post by ockham »

brucecohen wrote:
adrian2 wrote:Welcome back, Bylo, you've been missed! :beer:
+1 :thumbsup:
+3 :beer:
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Re: Doing Well by Doing Good

Post by always_learning »

brucecohen wrote:
adrian2 wrote:Welcome back, Bylo, you've been missed! :beer:
+1 :thumbsup:
+2 :D
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Re: Doing Well by Doing Good

Post by Raul »

In 2016, I've donated shares to a charity from my personal account. I've incurred a capital loss by gifting these shares.

This is the first time that I've done this. Thus, I'm unsure of the tax reporting.

1. Am I eligible to claim the capital loss?

2. Do I claim the value of the shares received by the charity as a charitable donation?
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Re: Doing Well by Doing Good

Post by DavidR »

Raul, Yes and yes, according to one google search result at least https://www.soschildrensvillages.ca/cap ... securities
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Quebec »

Dear Bylo (and others), I've produced a draft article for finiki about Donating appreciated securities.

Can the experts on this topic read the draft and validate the contents? Suggestions are welcome. You can edit the article directly in fikini (the best option) or post comments here.

Thanks!
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by gsp_ »

Quebec wrote: 20 Apr 2021 18:42 Can the experts on this topic read the draft and validate the contents? Suggestions are welcome.
No expert claim here but a suggestion. If CanadaHelps is going to be mentioned then https://www.charitableimpact.com should likely also be included. The former is cheaper for small donations but the latter is significantly less expensive for large security donations and their accounts which allow the creation of donation accounts makes large transfers(without immediate assignment to a charity) more likely.
Charitable Impact wrote: The fee charged by Canaccord Genuity is calculated based on the trade value:

$0 - $2,999: $130
$3,000 - $4,999: $150
$5,000 and above: $180 or (1% + $30) whichever is higher
https://help.charitableimpact.com/artic ... securities
Canada Helps wrote: * 3% fee applies to donations less than $10,000; 2.5% fee applies to donations between $10,000-$49,999; 2.25% fee applies to donations between $50,000-$99,999; 2% fee applies to donations $100,000+
https://www.canadahelps.org/en/why-cana ... /our-fees/

At amounts below 6k CH is cheaper, above 6k CI is less expensive.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Quebec »

But Charitable Impact also charges 0.5% on the first million on top of the broker fees? See fees. There is also a note that says "Minimum fees apply, please contact us to learn more". Not very transparent. I am reading this wrong?
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Peculiar_Investor »

Quebec wrote: 20 Apr 2021 18:42 Dear Bylo (and others), I've produced a draft article for finiki about Donating appreciated securities.
Article is now in the wiki's main article space, Donating appreciated securities - finiki, the Canadian financial wiki. The link in the quoted post has been updated.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by gsp_ »

Good spot on the additional 0.5%. I thought it only applied to investment accounts(fair enough I guess) but it seems they also take a cut of outright donations after immediate liquidation for some reason(admin?). I haven’t used them yet, a few people on the RR community forum including Ben Felix seemed to like them. Your queries activated me to send them questions to clarify their fees, will report back.

Even with the additional 0.5% we’re looking at 1.5% + $30 which is still quite a bit lower than CH at 2.5-3% for amounts under 50k. It raises the threshold to $7.2k vs the previously referenced 6k.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Bylo Selhi »

Quebec wrote: 20 Apr 2021 18:42 Dear Bylo (and others), I've produced a draft article for finiki about Donating appreciated securities.
Great article. Thanks for taking the time to create it.

Some random comments. I'll leave it to you to determine if they're worth including in finiki:

1. Re "capital gains tax does not apply," strictly speaking you have to declare the donation on Schedule 9 - Donations and Gifts and the capital gain on Schedule 3 - Capital Gains (or Losses). But then you deduct the gain on form T1170 - Capital Gains on Gifts of Certain Capital Property so the net capital gain becomes nil.

2. Donating securities is an option to consider if you have shares that were DRIPed for many years and you don't have an accurate ACB. Just donate the shares to charity and the exact ACB no longer matters.

3. People who are doing estate planning may want to consider making a share donation a provision in their will to offset other taxes due.

4. CRA may ask for copies of the receipts from the charities a few months after you NETFILE a tax return. This is routine. It's not an audit. Just send them copies. I routinely scan all my receipts into a PDF at tax time. Then when CRA asks for them I upload the PDF via MyAccount and they leave me alone for another year.

Incidentally I like that wiki articles reference threads on FWF. Have you considered inserting a reverse link to the related finiki article in the first post of such threads?
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Quebec »

Thanks Bylo, I've updated the article on finiki using your points.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by LadyGeek »

Bylo Selhi wrote: 21 Apr 2021 11:59 ...Incidentally I like that wiki articles reference threads on FWF. Have you considered inserting a reverse link to the related finiki article in the first post of such threads?
Interesting idea, but that would require a moderator to edit the post.

Additionally, the article may be not be relevant in the context of that post. It could be relevant later in the discussion, but not as the OP originally intended.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Bylo Selhi »

LadyGeek wrote: 22 Apr 2021 07:41
Bylo Selhi wrote: 21 Apr 2021 11:59 ...Incidentally I like that wiki articles reference threads on FWF. Have you considered inserting a reverse link to the related finiki article in the first post of such threads?
Interesting idea, but that would require a moderator to edit the post.

Additionally, the article may be not be relevant in the context of that post. It could be relevant later in the discussion, but not as the OP originally intended.
Or perhaps the back link should be inserted in the specific post that the finiki article refers to.

I appreciate it would have to be done manually by someone with the appropriate authority, etc. That might actually be a feature rather than a drawback in that only selected threads/posts that offer relevant additional information would be linked in this way.

Anyway it's just an idea.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Peculiar_Investor »

Bylo Selhi wrote: 22 Apr 2021 07:56 Or perhaps the back link should be inserted in the specific post that the finiki article refers to.
I would argue that 'feature' already exists. It is often the case that wiki editors posts article links, as has happened in this topic. For a variety of reasons, one of which LadyGeek has identified, the wiki article link often appears within the FWF topic and not at a specific place such as the first post.

Our wiki editors often utilize a 'trending' FWF topic as the seed for capturing the collective knowledge into a wiki article and then post back to the topic is gather feedback and ideas to improve the wiki article.

Based on my observations, many FWF'ers and particularly Quebec, make it common practice to mention (and link) wiki articles wherever possible. You never know when a lurker or newcomer might discover the bountiful knowledge that has been captured in our wiki.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Toner »

If one donates shares to a Charity can the shares be immediately repurchased or does one have to wait 30 days to avoid the "superficial loss" rule?
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Bylo Selhi »

Toner wrote: 09 Oct 2021 10:49 If one donates shares to a Charity can the shares be immediately repurchased or does one have to wait 30 days to avoid the "superficial loss" rule?
1. If the donated securities have a capital gain then yes, you can repurchase them without running afoul of the superficial loss rule.

2. If the donated shares have a capital loss then why donate them? Harvest the loss as usual and transfer some of 1. instead.
Last edited by Bylo Selhi on 09 Oct 2021 16:19, edited 1 time in total.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Toner »

The securities to be donated have a large capital gain.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Bylo Selhi »

Toner wrote: 09 Oct 2021 15:37 The securities to be donated have a large capital gain.
Then yes, you can repurchase them without running afoul of the superficial loss rule.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by ockham »

I've just done this for the first time. My brokerage is RBCDI. FWIW, these are the steps I took:
1. Through DI's secure messaging confirmed its process. (For some reason, they requested a "letter of direction" from me in addition to their own Donation form. This seemed redundant in that the letter of direction I composed in substance merely repeated the contents of the Donation form.)
2. Contacted the charity to request its donation form. The contents of the charity's form had all the information I needed to complete the DI form (e.g., name of charity's broker, contact person at charity's broker, contact person at charity, etc).
3. Faxed the completed DI form and letter of direction to DI, and provided a copy (with my brokerage account # deleted) to the charity.
4. Sent a secure message to DI to advise I'd faxed donation instructions and requested confirmation of receipt.
5. Two weeks later (!) received a secure message from DI confirming receipt of instructions.
6. Shares transferred the day after I received confirmation of receipt of instructions.
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Bylo Selhi »

ockham wrote: 18 Nov 2021 12:265. Two weeks later (!)
Wow! I suppose people who plan to do this using RBCDI should start today if they want to make sure this happens before Christmas.

When I used to fax forms to TDDI it only took a few days for them to do the transfer. Now with a Relationship Manager it happens as soon as same day. Next day at the latest.

P.S. When you donate for the first time to a charity it's a good idea to tell them what you intend to do before you start. Give them your brokerage info (name, account, security) so that their broker will know to accept the transfer. Otherwise they may reject the incoming transaction because they don't recognize who it's from (or sometimes because they recognize who it's from Queen's stripping Radler's name from business wing.)
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Re: Doing Well by Doing Good [Donate Securities to Charity]

Post by Shakespeare »

Moderator - suggest the terms in the revised title be reversed.
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Re: Donate Securities to Charity [Doing Well by Doing Good]

Post by brucecohen »

This morning I made a trial donation of securities through Canada Helps. It was incredibly easy and convenient. It'll be interesting to see if it goes through without a hitch.

CH already has broker info for its client charities. So you simply fill out a simple screen in which you name the charity, the security with quantity, the name of your broker and your account number. I gave the Ontario Association of Food Banks (Feed Ontario) units of MAW104. The CH input screen's mutfund tab allows the quantity to be entered with three decimals. After submitting the input screen you get back a letter of direction for your broker that contains all required info. You just print, sign and fax it to the broker. CH provides the phone number. I deal with TDDI and the fax number provided worked perfectly. CH warns, however, that TDDI and other big-bank brokers might insist on getting their own form so my trial donation might encounter a roadblock.

I like donating through CH because you can indicate that you do not want the charity to get your name and address. I hate getting put on solicitation lists and even when I ask the charity not to do that, they don't always comply and they still send me at least one newsletter a year. Just got a glossy one from the local hospital. Came in a big 12x9 envelope with $1.94 in postage.

Bylo will rightly point out that the charity has to pay CH a %fee. The fundraiser at my local hospital told me that's OK because the cost is about the same as the credit card fee for direct donations and spares them the effort of issuing a receipt. There is, of course, no credit card fee on donated securities but CH's anonymous donation option keeps the charity from wasting money on soliciting you once or more each year. (Charities might make money from renting their donor lists. I doubt that, but don't know.)
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Re: Donate Securities to Charity [Doing Well by Doing Good]

Post by LAJ »

I donated shares of XIU for the first time in March of 2021. I went through The Winnipeg Foundation (TWF) as these funds were intended for my local foundation (Interlake Community Foundation - ICF) that has an affiliate relationship with TWF. If the donated funds are going into an endowment fund with ICF or TWF, but held by TWF, then TWF covers any admin fees for the transfer. It should be noted that each endowment fund pays an annual fee to TWF anyways so it isn't "free", but there are no additional charges for the transfer. I looked at the fees at Canada Helps but in discussion with my local foundation I found this method to be more efficient. It took around two weeks for Questrade to action the transfer but it was at the end of the RRSP season (if that makes a difference). Doing it again this upcoming March.

I also make occasional contributions (including flow through donations to add to the annual fund grants) using a credit card and the fees for that are also covered by TWF.
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Re: Donate Securities to Charity [Doing Well by Doing Good]

Post by Bylo Selhi »

brucecohen wrote: 03 Dec 2021 14:20Bylo will rightly point out that the charity has to pay CH a %fee. The fundraiser at my local hospital told me that's OK because the cost is about the same as the credit card fee for direct donations and spares them the effort of issuing a receipt. There is, of course, no credit card fee on donated securities
There's no transfer-out fee for donated securities, at least not by TDDI. However it's my impression that the charity's broker will charge them a brokerage fee for selling. I'll be seeing the head of a large local charity in a couple of weeks. If I remember I'll ask her.

Also I donated the last of my Vanguard US ETFs earlier this year. I doubt the receiving charity did a NG. More likely the receiving broker gave them a "preferred" rate of "only" mid-market plus 1½%.

Fees are like fleas on a dog. Once you have them you can't get rid of them...
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Re: Donate Securities to Charity [Doing Well by Doing Good]

Post by Marcus Aurelius »

I have a somewhat related donation question:

Why does a donation of securities get a capital gains inclusion rate of zero, but donation of land does not (unless declared ecologically sensitive)?

If I wanted to donate a land parcel to a charity so they could build a building for their own use, why is this less worthy? Particularly after a possible inclusion rate rise above 50%, this discourages me from making this kind of donation.

I am sure there are some old political reasons - I would be interested if anyone knows them.

There was an attempt to modify this in the failed Bill C-256, but it was only for the proceeds of a land sale. I want to donate property directly.
https://drache.ca/articles/bill-c-256-s ... al-estate/
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