Giving has always been important to Allan Baker and his wife Rochelle. In recent years, how they have decided to do that has changed. Allan and Rochelle have been members at Westworth United Church in Winnipeg for 42 years. They’ve given generously of their time and their money. Among other contributions, Allan has served on the Finance Committee.
At a church event hosted by Westworth United they heard a presentation by United Church of Canada staff Kathryn Hofley. Kathryn’s talk touched on many things including the benefits of making gifts of stocks and mutual funds. That caught the Bakers’ attention.
At one time, the congregation had its own brokerage account but after hearing Kathryn’s talk, the Bakers and Westworth United Church as a whole realised it would be advantageous for the church to rely on The United Church of Canada Foundation to facilitate gifts of stocks and mutual funds for congregations.
If you have investments that have increased in value over time, talk to the Foundation and your financial advisors about the pros and cons of donating them instead of making cash gifts this year. Like Allan and Rochelle Baker, you might be surprised with the savings you’ll find.
How it Works
- The Bakers, or other church members, instruct their broker to transfer shares. They tell the Foundation about the gift.
- The broker sends the shares to the Foundation.
- The Foundation sells the shares.
- The Foundation send the Bakers or other church members a tax receipt.
- The Foundation sends the proceeds from the sale of the shares to the Westworth United Church or other organization(s) instructed by the Bakers or other church members.
Benefit: Lower Fees
Full service brokerage accounts tend to have large transaction fees. The fees are usually a percentage of the amount being bought or sold.
By contrast, The Foundation uses a discount broker that has a flat fee of $9.95 per sale of shares. The $9.95 is taken off the amount received from the sale of the shares.
Benefit: Tax Savings
As long as the donor is making a gift to a registered charity, the donor doesn’t pay capital gains tax. Capital gains tax is a tax on the value that stocks have grown by while someone has owned them. Therefore, if someone sells stocks that are worth more than when they bought them, they have to pay tax on 50% of the growth. On the other hand, people who donate stocks or mutual funds instead of selling them don’t have to pay any tax on the amount the shares have grown by. (see our gifts of securities section for an illustration)
Allan and Rochelle’s new way of giving makes a difference both to their church community and to their own planning. As a person who had been self-employed, Allan was entirely funding his own retirement portfolio.
Allan says: “Giving stocks to my congregation through the Foundation is quite an easy and efficient process.”
Send us an email or give us a call. We’d love to talk to you about how you could do the same as the Bakers.