Philanthropy

Unlike a registered charity which relies on donations from the public to support its charitable purposes, a private foundation is set up by an individual or family and makes grants to qualified donors, as defined by the Canada Revenue Agency. Generally, a private foundation doesn’t conduct its own charitable operations but can make grants to fund the general operating expenses or specific programs of a registered charity or other types of qualified donees.

Private foundations are exempt from tax. The income earned on the assets held by the foundation grows tax free. This allows the foundation to increase its asset base and the amount of good that it can do. This is where legacy creation starts to begin. 

Choosing between a donor advised fund and a private foundation depends on your philanthropic goals. Generally, a DAF is a suitable choice if you’re seeking a low-cost, turn-key solution with minimal administration. It’s also ideal if you’re starting with a smaller capital amount or if you consistently donate to the same charities annually. Consider a DAF if you:

• Want to establish a fund with an accessible threshold amount ranging from $25,000 to $1,000,000
• Prefer not to manage the fund or its invested assets directly
• Desire a ‘named fund’ without the burden of administrative tasks
• Lack the time or inclination to review grant proposals, engage directly with grant-seekers, collaborate with other funders, or if you typically support the same charities each year

Getting involved in philanthropy by establishing a private foundation can be an exciting endeavour and a rewarding way to express your deepest values and aspirations, while also benefiting your community. It is also an ideal way to teach children about the role of philanthropy and their responsibility to their community. It all begins with identifying the values and charitable goals you want to express through your giving and translating these into a plan for action. We have experts that can also assist you with developing a strategic granting program for your foundation.

Yes, the tax benefits are the same whether giving through a private foundation, public foundation, donor advised fund or an operating charity.