Whether it is in Ottawa, or just about any Canadian city, capital campaigns abound.
Hospitals, universities and every charity or foundation in between are seeking millions to meet the needs of communities. With so many competing causes and demands for charitable dollars, it has never been more important for major donors to leverage and get the very most out of each gift.
That was the case for Patricia Saputo, a well-known tax accountant and family adviser, when she decided to make a historic $5-million gift to the University of Ottawa to endow the new Family Enterprise Legacy Institute at the Telfer School of Business.
“Using charity flow-through shares has allowed me to give more than I would otherwise been able to give,” explains Patricia, who co-founded the enterprising family advisory firm Crysalia Inc. in 2021. “Because of the fact we are doubling or even tripling our gift through all the tax benefits the government has allowed. So why wouldn’t anyone take advantage of giving a dollar with a cost of about 10 cents?”
Charity flow-through shares is a common financial structure that has been in the Canadian tax code since 2006. When donors purchase flow-through shares, they are investing in junior exploration companies. These companies are often seeking critical minerals such as lithium, copper and cobalt that are essential to technology and our green energy future.
In exchange for the purchase, the donor is given a 100-per-cent tax deduction, plus additional provincial and often critical mineral tax credits. The donor can then give these shares to charity, unlocking yet another 100-per-cent tax deduction.
But here is the special part: one second after donating these shares, they can be sold, at a discount, to a prearranged liquidity provider (usually institutional mining investors) willing to take on the stock market risk.
All combined, these tax policies allow donors, like Saputo, to significantly bring down the cost to donate. WCPD, one of a few charity flow-through share providers, takes care of the process in one seamless transaction. There is just one catch — you must have tax to pay. Wealth is not enough. This structure applies to anyone making over $250,000 in taxable income and/or passive inside a corporation.
For Patricia, as someone who is community-minded, charity flow-through allows her to thoughtfully stretch to more sectors of society.
“There are a lot of advantages to seeing who are the service providers out there, such as WCPD, that allow your dollar to go that much further,” she says.
How it works:
Step 1:
Buy flow-through shares issued by a Canadian mining company. Every dollar invested in these shares is 100% tax deductible.
Step 2:
Immediately donate these shares to charity. These shares are then instantly sold to a pre-arranged buyer (liquidity provider) at a pre-arranged contractual price.
This step eliminates any stock market risk to the donor.
Step 3:
Charity receives the cash proceeds and issues donation tax receipt to the donor, generating a second 100% tax deduction.
The result:
By combining two tax policies (flow-through shares & donations), the Foundation (WCPD) can help reduce your taxes, and if you wish to, allow you to give more.
Jeff Todd is the president of AFP Ottawa Chapter and vice-president of marketing and communications for the WCPD Foundation.