Green Legacy Update2004/Final
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The Stewardship Series Giving to nature through a personal legacy is a choice more and more people are making. Green Legacies: A Donor’s Guide for B.C. is a one-stop resource for legal, financial and other professional advisors whose clients wish to create their personal nature legacies. A Donor’s Guide for B.C. Places of not only great beauty but true ecological importance on this earth are being lost. Please join us in helping to protect these special places. —Birgit and Robert Bateman G REEN An interesting and informative compendium of tax, legal and administrative implications for potential donors, written in comprehensible English, enlivened with real life examples and accompanied by lists of donees and other useful resources. —Dennis E. Culver GREEN Sustainability has become a core value in all aspect of our lives.Whether you are a professional advisor or a donor, this guide will provide you with ways to invest and make a difference to the well being of future generations. —Milton Wong It is hard to imagine in this our 21st century that anyone would disagree with the propo- Guide for B.C. A Donor’s sition that current knowledge requires us all to place the preservation of our environment at or near the top of the priority list. But, environmental action costs money. The value of this fine book is that it lets potential donors know that they can individually afford to contribute through one or more of the well explained options. —hon. Bryan Williams, q.c. www.stewardshipcentre.bc.ca/greenlegacies WHY GREEN LEGACIES? Giving to nature through a personal legacy is a choice more and more people are making. It’s no mystery why this form of philanthropy is taking hold now. Polls con- ducted by Angus McAllister Research showed that 63% of British Columbians are “very concerned” about the environment.* In real numbers, this means that over two million people may be motivated to donate to the environment. Their gifts – whether of cash, stocks or bonds, life insurance policies, real estate, or other assets – could mean the difference between losing critical wildlife habitat or preserving our province’s precious nat- ural heritage. Their actions could also mean enriching the lives of our children and grandchildren through ongoing support for nature conservation programs. Green Legacies: A Donor’s Guide for B.C. is a one-stop resource for legal, financial and other professional advisors whose clients wish to create their per- sonal nature legacies. The guide shows how to > link client goals with advantageous planned-giving options, > discover the financial benefits of giving ecologically sensitive land and covenants, > match client interests with nature conservation programs and compatible organizations, > easily locate current contact information for organizations, and > access information on the internet (www.stewardshipcentre.bc.ca/ greenlegacies). Green Legacies is a collaborative project born of a desire to better inform peo- ple who care about the rewards of making a gift to nature in British Columbia. Leading conservationists, legal and financial advisors have combined their expertise to produce a guide that is an accessible, informative business tool. Over the next decade, millions of dollars will be donated or bequeathed to conserve threatened habitat and to restore damaged land and waterways. The need is urgent! By creating personal legacies, individuals, families and businesses can ensure support for British Columbia’s natural environment that lasts beyond a lifetime. *Poll commissioned by IMPACS (Institute for Media, Policy and Civil Society). The poll of 600 British Columbians was conducted by telephone by Angus McAllister Research between March 31 and April 10, 2001. A sample of this size has a margin of error of plus or minus 4%, 19 times out of 20. Copies of the poll are available from IMPACS at (604) 682-1953. UPDATE: May 2004 A Donor’s Guide for B.C. GREEN Since the publication of this guide in 2002, there have been some changes to the rules regarding giving to nature – this update outlines those changes. Readers are also encouraged to visit our website, www.greenlegacies.ca, for updated con- tact information for the organizations listed in the directory (pages 71 - 126 of the guide), and for additional information on related topics. Thanks for your interest in giving to nature. UPDATE UPDATE: May 2004 UPDATE: from other registered charities: 80% Since the publication of the 2004 FEDERAL BUDGET: for public foundations and 100% Green Legacies guide, there for private foundations. have been significant PROPOSED CHANGES changes that affect planned Underlying Rationale for Changes to Disbursement Quota Rules giving and charities. This Disbursement Quota Rules The changes to the disbursement quota update highlights some key The 2004 Budget announced a number rules appear to be designed to reflect changes. of significant changes regarding the more recent investment market condi- disbursement quota rules. tions and realities. The objective seems For more information, contact to be to help charities more effectively Overview of Current Disbursement the Canada Revenue Agency and preserve capital assets on a long-term Quota Rules basis and manage endowed funds/ the Federal Ministry of Finance, A registered charity must annually dis- investments for greater overall return, or visit: burse an amount at least equal to the recognizing that investment returns are CRA: www.cra-arc.gc.ca/tax/chari- total of the following: earned not only by way of interest and > 80% of tax-receipted donations ties/menu-e.html dividends, but also through price (other than endowments) received appreciation (capital gains). Ministry of Finance: www.fin.gc.ca by it in the previous year; > 80% of the proceeds from the dis- Disbursement Quota on Capital Assets position of endowments in the year; > for charitable foundations, 4.5% of Disbursement Quota Rate the fair market value of its capital The Budget reduces the 4.5% disburse- assets (such as investments) that are ment quota rate on capital assets to 3.5%. not used directly in charitable activ- This is intended to be more representa- ities or administration; tive of historical long-term real rates of > for charitable foundations, a per- return earned on the typical investment centage of amounts received by it portfolio held by a registered charity. 2 GREEN LEGACIES: A DONOR’S GUIDE FOR B.C.: UPDATE This rate will be reviewed periodi- This will apply to taxation years that requirement will be applied to transfers cally to ensure that it continues to be rep- begin after March 22, 2004. (other than specified gifts and transfers of resentative of long-term rates of return. capital endowments, as described below) This change will apply to taxation Extending the 3.5% Disbursement received by registered charitable organi- years that begin after March 22, 2004. Quota to Charitable Organizations zations in taxation years that begin after The Budget proposes that charitable March 22, 2004. Realizing Capital Gains from organizations be made subject to the Endowments 3.5% disbursement obligation on their Transfer of Endowments Registered charities typically hold capi- capital assets. With this change, all reg- Where the terms of an endowment allow tal endowments that produce invest- istered charities will be subject to the it, a registered charity may transfer prop- ment income in the form of capital same disbursement obligations on their erty received as an endowment to gains, dividends, and interest. Since an capital assets. another registered charity. However, the annual disbursement quota is applied In order to provide charitable existing income tax rules for endow- on the value of these capital endow- organizations registered before March ments provide impediments to such ments, registered charities will need to 23, 2004 with sufficient time to adjust transfers, generally because of the inter- use the investment income in order to to this new requirement, this measure action of the disbursement obligations meet their disbursement obligations. In will apply only to their taxation years on both the transferor and the transferee. some cases, the return on an invest- that begin after 2008. For charitable In order to facilitate these transfers, ment is weighted heavily in favour of organizations registered after March the Budget proposes that an endow- capital gains, rather than cash flow such 22, 2004, this measure will apply to tax- ment received by a registered charity as dividends or interest. In these cir- ation years that begin after that date. from another registered charity result in cumstances, a registered charity might the same treatment as if the endowment prefer to meet its disbursement quota had been received directly from the Transfers Between by realizing, and expending, capital Registered Charities original donor. This will be effected by gains that have accrued on endow- applying a 100% disbursement require- ments, if the terms of the gift do not ment to the transferor (which will be restrict the charity from doing this. Gifts Transferred to Charitable satisfied by the transfer), and by treating However, if the charity does so, under Organizations the endowment in the hands of the the current rules it must then meet an Currently, both charitable organiza- recipient charity as if it had been 80% disbursement obligation to the tions and charitable foundations may received directly from the original extent that the proceeds of disposition receive funds transferred from other donor. This will apply to taxation years are expended by the charity. The effect charities. These transfers may be used that begin after March 22, 2004. of the current rules is to discourage reg- to satisfy the disbursement quota of istered charities from realizing capital the transferor charity and, if the trans- Gifts Made by Way of Direct gains in order to meet disbursement fer is made to a registered charitable Designation obligations to fund charitable pro- foundation, is taken into account in grams and services.