Can you support charities forever?
It is amazing to realize that there are more than 150 registered charities in the Orillia area working on an incredible variety of different issues in our community. Although some of these charities receive some funding from various government sources, and many hold events to raise funds, a large portion of their revenue comes from direct financial donations. These donations are extremely important to the success of our local charities.
According to Statistics Canada's most recent data from 2018, approximately 26% of tax filers reported making a charitable donation. Many of these donors are consistent donors to the charities they support, either through monthly recurring donations or regular annual donations. These recurring donors are incredibly vital to the charities they support raising the funds they require each year to deliver their services.
Unfortunately, despite our best efforts, no one lives forever, and when a donor passes away they are no longer able to continue their recurring support of their chosen charities.
In some cases, a donor may leave a final donation to a charity in their will/estate. According to Statistics Canada's most recent data from 2018, approximately 7% of tax filers reported leaving a charitable bequest in their will. There is no question that local charities really miss the support of the 93% of people who do not make plans to continue their support in their will.
When thinking about a final donation or bequest to a charity in your will, many people may leave a donation directly to the charity. In this case the charity receives the full amount of the donation in the year the estate is settled and can decide what to do with the funds (which were likely not part of the budget for that year).
This is certainly much better than not leaving a bequest at all but I encourage local donors to consider the role that the Community Foundation of Orillia and Area can play to spread that final donation over time.
Another option is to make a donation to the Community Foundation of Orillia to an Endowment Fund for the charity. In this case, the donation is invested as part of the Community Foundation’s $15-million portfolio and the investment income is granted to the charity each year forever!
Our goal, and the new requirement of the CRA for public foundations such as the Community Foundation, is to grant 5% of the value of the endowment fund to the charity every year in perpetuity.
What this means for a donor is that making a final gift in their will of 20 times their recurring annual donation will result in their annual support of the charity continuing forever.
So, for someone who donates $500 each year to a charity, a bequest of $10,000 in their will to an endowment fund at the Community Foundation that earns a 5% return would produce an annual grant of $500 to the charity every year forever! Thus, our motto of “Give today, help forever!”
The Community Foundation of Orillia and Area is always happy to chat with local donors or charities about the benefits and our experience managing endowment funds and other long-term money. Please contact us at https://www.communityfoundationorillia.ca/contact/ .
Michael Gordon is chair of the board of the Community Foundation of Orillia and Area (CFOA) and an active local volunteer and community member. He was recognized as Orillia’s Citizen of the Year in 2018.
