Create a lasting legacy through charitable giving

Transcript

Intro speaker:

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now here’s your host, Leanne.

Leanne Kaufman:

Hello, I’m Leanne Kaufman, and welcome to Matters Beyond Wealth. I have two wonderful guests with me today to discuss the very important topic of charitable giving and philanthropy. Paul Nazareth, Vice-President, Education and Development for the Canadian Association of Gift Planners and Kim Plewes, Philanthropic Advisory Specialist with RBC Wealth Management.

Paul has worked in Canada’s philanthropic sector for over 20 years and is on the board of several charities, and on the Advisory Council of Carleton University’s Master’s in Philanthropy and Non-profit Leadership program. He also serves as faculty for the Master Financial Advisor in Philanthropy program, and is a frequent instructor for the tax and advisor community with organizations like CPA, Advocis and Estate Planning Councils. Paul writes on philanthropy for a variety of publications, and regularly appears on national radio and television to speak about creating a personal legacy through smart, generous giving.

Kim has spent more than 15 years working in the charitable sector, engaging with families across North America to help them develop personalized strategies that align with their charitable giving goals. With this unique perspective on the intersection of charitable gift planning and major gifts fundraising, Kim works alongside her RBC professional colleagues to provide strategic advice and guidance to clients in developing their charitable giving and legacy plans as part of their broader wealth management planning.

Kim and Paul, thanks so much for joining us today to talk about charitable giving and leaving a legacy, and why this matters beyond wealth.

Kim Plewes:

Thanks so much for having us, Leanne.

Paul Nazareth:

Yeah. Excited to be here.

Leanne Kaufman:

So Kim, why don’t you kick us off and let’s start here with the why. Why do the clients that you work with, and you speak to, choose to include philanthropy or charitable giving as part of their overall wealth planning?

Kim Plewes:

Leanne, this is a great question. First and foremost, it’s because they’re charitably inclined, nothing else matters around a charitable giving conversation if someone doesn’t already have that inclination. Now it doesn’t mean that they have to have already done charitable giving, or volunteering, or engaged with the charity, but it means they have to have that desire to do so moving forward. And I would say the biggest trend about why folks are looking to my team, to their advisors for help in this space is because they’re wanting to move to a place of intention and proactivity—that perhaps they’ve supported charities in the past, but it’s been really reactive based on requests and solicitations from friends, or colleagues, or from charities themselves. And there hasn’t been much thought or intention into the kind of impact they’re seeking to have and they want to move into that place, and are looking for help in the way to do so.

Leanne Kaufman:

So Paul, that’s a great lead-in then to help us unpack this really big topic a little bit. What are the types of vehicles, or structures, or the plans that people most typically use in Canada to achieve these charitable giving goals?

Paul Nazareth:

You’ve asked a key question here, which is “what are the typical vehicles used as opposed to, very often, what are the vehicles that need to be used?” We don’t say this enough, that Canada has one of the greatest charitable credit tax systems in the Western world. We’ve got so many opportunities between things like very often bequests in the states that are used; donations like securities of publicly traded securities in life, to take advantage of capital gains opportunities; and there’s more like trusts and insurance, et cetera. But one of the challenges is that the typical vehicles used, just like Kim was sharing, most people give because they were asked. And the typical vehicles used very often is because people are connected to charities and doing their planning that way, as opposed to using advisors, which they need to do more of.

Leanne Kaufman:

So talk to me a little bit about, you know, what are those options? If someone’s really new to charitable giving, either Kim or Paul, I know everyone knows that they can… well, opening a checkbook sounds a bit antiquated, but let’s say make a donation online. What are the other ways? People may not even be aware that gifts to charities in your Will or some of the other structures. Can you just give us a quick hit on what some of those other things look like?

Paul Nazareth:

I can probably jump into that one because that’s what very often my role is, teaching in this space. We start from the in-life options like publicly listed securities, and move to some of the planning options like gifts of life insurance, planning through trusts. What a lot of Canadians overlook is gifts of assets or in-kind. Many people have collections of art and different areas of property, or even land and things they want to donate. They can donate those too. So there’s a lot between assets like land or securities. There’s a lot of vehicles for planning, like insurance or trusts, that is out there and all of these. And again, because so many people have all these options, very often they default to the easiest options. And so that’s the challenge. Sometimes there’s a paralysis of choice.

Leanne Kaufman:

Yeah. Good point.

Kim Plewes:

If I can Leanne, I’d like to also build on that. I think a lot of folks as they move to a place of this productivity and intention, particularly if tied to a liquidity event, assume they’ve got to go the direction of a private foundation and setting up this structure that they name, and that is theirs. Because they see a lot of wealthy, prominent Canadian philanthropists do this. There are other vehicles like a donor-advised fund, which allows folks to separate out that point of donation when they get the tax receipt. From that point of choosing which one or several charities they want to support, that can be a great planning vehicle for different kinds of Canadians at that point of liquidity event. And a great thing to talk to an advisor about as they make those decisions.

Leanne Kaufman:

And I think a common, what we call liquidity event would be for example, the sale of a business where there’s suddenly a lot of cash or assets on hand. So it just points to the complexity, and I think we’ll talk in a minute about the importance of using an advisor with expertise. But maybe before we get to that, we may tend to think of estate planning, and maybe even charitable giving, as something that’s more likely to be undertaken by older Canadians. But we recently did a survey with Ipsos here at RBC Royal Trust, and we learned that 53 percent of Canadians under the age of 35 would include charitable giving in their estate planning. That number actually dropped to 13 percent of those Canadians who are over the age of 55—kind of an inversion, maybe, of what my assumption might have been. Paul given your years of experience, does that surprise you?

Paul Nazareth:

It does. This is some really interesting information on kind of what are people’s attitude towards charitable giving. We do know though that often older Canadians worry about splitting their wealth between family and heirs they care about, which is again the importance of estate planning. But to hear that more younger Canadians, which very often before in the family or the business building years, didn’t always think of charitable giving. So this is actually opening up a frankly, a whole new demographic for the charitable sector and conversations for advisors around values.

Leanne Kaufman:

Yeah, great point. And my personal thought on this based on nothing in particular is that maybe this has a bit to do with the social impact that our younger generation feels responsible to make. But Kim, I’m interested from your point of view, have you noticed any changes in intentions and charitable purpose of Canadians in recent years, maybe even related to the pandemic?

Kim Plewes:

Absolutely. I think the pandemic made everyone take a moment to pause, particularly those who had jobs that had them traveling a lot. Where they were home for weekends or spits and spurts, particularly if they had children and instead gave them uninterrupted time where everyone was forced to look at their own mortality a little bit in the mirror, as we went through this, as we now say “unprecedented moment” together, and really helped people reflect on and decide a little bit on reprioritization. What are those most important values that perhaps I, as a parent or a grandparent, want to be passing down?; or a godparent, or someone with a child in my life in some way, and what are those activities that I really want to be modeling and instilling in my children or in my community?

And we’re seeing out of that focus time together, more people reexamining what are in their Wills, how much of that money is being split in different ways. And for folks who may have been on one track with the business and are now saying, “you know what, let’s sell it because I do want more time to be spent in different ways” and to bring that charitable giving into life, as opposed to just something that’s on the back burner waiting for retirement. So it’s been a fascinating time to really help folks bring it into the now, bring it into a multi-generational experience.

Leanne Kaufman:

So we’ve already talked about how this kind of planning can be complex. It’s quite technical, particularly all the tax rules and we really don’t want to get it wrong. Paul, your role is focused primarily on education. What are your thoughts on the importance of working with a professional who has expertise in this area?

Paul Nazareth:

Our community, the organization I represent, the Canadian Association of Gift Planners was created to be the bridge between fundraising philanthropy and finance tax and estate planning. And that’s because of the vital need and the importance of planning and purpose coming together. Again, people often give because they were asked and there’s a gigantic world of fundraising out there. And that may be the most emotionally efficient, but is it the most financial, tax and estate efficient? In fact, now after 30 years of being an organization, we’re reminding people that not all advisors are the same, right? Again, if you are going to be giving publicly listed securities in life, you need to be talking to a proper tax and financial advisor. And when it comes to making bequests or thinking of planning through trust, and as Kim shared, the absolutely incredible opportunities of donor-advised funds, which have brought a new flexibility, and actually again, another bridge between finance and tax planning in life, and estate planning and beyond.

The importance of working with an advisor that understands these vehicles in the planning context between the needs of life, and again, perfect example Kim of selling a business. We have many Prairie families now that are transitioning land, the farms and things like that. Planning is really important. And in fact, we’ve seen now that the higher up the wealth management community you go, the more you’re going to need planning and actually often decoupling the timing of the donation and thinking about how that money will be used. And now that we’ve got more vehicles on the front-end for planning like securities and other tax benefits, and on the back-end for granting like advised funds and foundations, we’ve never had a better environment to help the average Canadian to make a really cool plan that speaks for them—both in the head and the technical and in the heart, the emotional, how that money will be used.

Leanne Kaufman:

Very nicely said. And Kim, this is what you do for RBC. You work with clients and their financial advisors, their investment advisors to talk about how they can structure their particular situation. Based on your experience, both since you’ve joined RBC, but including your time before that as well, how important do you see the planning aspects of this conversation to be?

Kim Plewes:

I think the planning part of this is vital for those that, again, are wanting to move to a place of not just giving to the same charities they always have, or giving to the one percent of charities that get 66 percent of donations out there, but are wanting to say, “this is the cause I care about, this is the kind of impact I seek to have,” planning is vital to putting a mission statement together so you can really clearly have a north star for what you’re wanting to do. and against which you’re able to evaluate charities. We have over 86,000 charities here in Canada, we are spoiled with choice. And for some, as Paul said earlier, that could be really paralyzing. But if you have a clear sense of where it is, you want to go, it’ll be easier to figure out which one or several charities you want to invite on that journey with you. And that you can enable them to do the work for the causes that really speak to your heart and to the values that you want to be living every day.

And that’s what the Philanthropic Advisory Services team, which is just a small part of family office services available to RBC Wealth clients across the country are here to help do is bring that north star together with tools, resources, client meetings, to make it easy, to make it manageable, but make it something that one can be proud of when they talk about their charitable giving with loved ones, with family and with their community.

Leanne Kaufman:

You both have so much expertise in this area and we could learn so much from you and keep talking for hours, I feel. But let’s just wrap this by saying, could you each give us in a couple of sentences or less, if you hope listeners only remembered one thing out of this conversation, what would that be? Paul, I’ll start with you.

Paul Nazareth:

I feel very strongly about this because so many Canadians they feel so… they care about their communities, they care about organizations, but so much of that planning is still in the heart. Please bring the head to this conversation, pick up the phone, have a conversation. Even though we’ve talked about technical aspects, and tax, and insurance, and securities and all that. That’s what Kim and her team do is they make this conversation easy. So the key thing is to have the conversations with advisors that blend the planning of the head and the caring of the heart. And if you do that, your giving will not just be more efficient, it’ll be more effective. And you’ll be more satisfied with what you’re doing in this world today, tomorrow and forever.

Leanne Kaufman:

Kim, how about you? What’s the one thing you hope everyone remembers?

Kim Plewes:

I would say that making a donation is easy, but creating impact takes time and intention. And it’s okay to ask for help.

Leanne Kaufman:

Well said, both of you. Sincere thanks for joining me today, to help unpack and demystify this, sometimes complicated, world of charitable giving and certainly the planning aspects of it. And to talk about why planning for philanthropy matters beyond wealth.

Kim Plewes:

Thanks so much for having us, Leanne, a great conversation.

Paul Nazareth:

Yes, indeed. Appreciate it.

Leanne Kaufman:

You can find more about Paul on Twitter at @UinvitedU, on his LinkedIn profile, Paul Nazareth. Kim is also on LinkedIn under Kim Plewes, or you can find her through your RBC Wealth Management advisor. Until next time, I’m Leanne Kaufman. Thanks for listening.

Outro speaker:

Whether you are planning for your own estate, the needs of your family or business, or you are an executor for a loved one’s estate, we can help guide you, simplify the complex and support your life’s vision. Partner with RBC Royal Trust and ensure your legacy will thrive for generations to come. Leave a legacy, not a burden^TM. Visit rbc.com/royaltrust. Thank you for joining us on this episode of Matters Beyond Wealth. If you’d like more information about RBC Royal Trust, please visit our website at rbc.com/royaltrust.