Why charitable giving in wills is on the rise

This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you can register for Globe Advisor, then sign up for this newsletter and others on our newsletter sign-up page.

Smaller donations to charitable organizations are trending downward due to life being more expensive. Thirty-one per cent of registered charities raised fewer funds in 2022, according to data from CanadaHelps. But one silver lining is that more strategic gifts, such as donating securities or through insurance, remain mostly stable, says Ruth MacKenzie, president and chief executive officer of the Canadian Association of Gift Planners. For example, securities donations rose 52 per cent in 2021.

Globe Advisor spoke with Ms. MacKenzie recently about planned giving in a will, demographic trends, and guidance on how advisors can assist clients with charitable giving strategies.

Where are charitable giving initiatives on the rise?

We’ve seen commitments to gifts in people’s wills really increase over the time of the pandemic.

In 2019, we launched a national campaign called Willpower and we benchmarked the current situation as being 5 per cent of Canadians have a gift to a charity in a will. Our 10-year goal for the campaign was to move the bar from 5 per cent to 8.5 per cent. By last November, we were already at 8 per cent. That’s a significant jump in commitments to gifts in wills.

We’ve also seen the growth in the millennial cohort leaving a gift in a will. Our research shows it’s 12 per cent for millennials, a significant difference.

What’s the benefit of leaving a gift in a will versus giving now?

For a lot of people, it’s an opportunity to make a significant gift. Then, you’re looking at your whole estate and taking care of your family, but there’s also room for a charity and a cause that you care about in your will.

There are huge tax advantages for your final estate if you have a gift to a charity in your will. And there’s often a big tax bill payable on death. It’s a way to mitigate the taxes and also make a statement about your life and values.

To what do you attribute the millennial growth in this area?

It’s a cohort that’s obviously starting to develop their wills as some are pushing 40 now – and they have mortgages and kids. So, they’re kind of tapped out financially on a present basis, but they really care about giving back.

We think the reason we’ve seen that growth is because by leaving a gift in their will, there’s still an opportunity to be mindful of giving back, even if they don’t have the ability to give back in a real way right now. We’re excited about this statistic because, ultimately, it does build a culture of philanthropy.

What takeaways do you have for advisors when it comes to planned giving strategies?

Our internal research tells us that high-net-worth clients want their advisors to be talking to them about charitable giving and how they can integrate their philanthropic interests into wealth management plans. And they’re comfortable with advisors talking to them [about this] early on in their relationship. This is not something where advisors have to wait for a relationship to be established.

This interview has been edited and condensed.

– Deanne Gage, Globe Advisor reporter

Must-reads from Globe Advisor this week

How top women advisors are investing through the market noise

Portfolio managers in the inaugural Canada’s Top Women Wealth Advisors ranking have several key traits in common. But it’s their disciplined and holistic philosophy for investing that has guided them over the years to make sound decisions for clients. Many also got their start in other businesses before becoming advisors, which helped form the foundation for their practices. Gillian Livingston speaks to three top women advisors about their ultimate strategies for their clients.

How to help retirees overcome ‘irrational’ saving and enjoy their money

Some seniors are too frugal in retirement, curbing spending on goods and services they can afford that would make their lives easier and more enjoyable. The so-called “retirement consumption gap” often stems from an inability to switch off a saving mindset and fears of running out of money, especially as the cost of living rises and people live longer. A 2021 U.S. report showed the number of households that can fund their retirement increases dramatically to 48 per cent from 18 per cent during the first decade of retirement, driven by reduced spending. Still, almost a quarter of Canadian retirees described their lifestyle as frugal, according to a 2019 Sun Life Financial Inc. survey. Brenda Bouw reports on how retirees can overcome this mindset.

Why this money manager is betting against a recession this year

Money manager Anil Tahiliani knows some economic indicators point to a recession, but doesn’t believe we’ll have one here in North America. “We think we’re going to skirt a recession this year. [Gross domestic product] may go to zero or 1 per cent, but not reach a technical recession,” says Mr. Tahiliani, senior portfolio manager at Matco Financial Inc. in Calgary, who oversees about $220-million of his firm’s $600-million in assets. Now that inflation has eased and the U.S. Federal Reserve Board hiked interest rates yet again this week, Mr. Tahiliani thinks we’re at the end of the interest rate hiking cycle in North America and anticipates growth across some parts of the economy. Brenda Bouw speaks with him about what he’s buying and selling.

How fund managers have turned bullish on Chinese stocks over the short term

Despite harsh regulatory crackdowns, geopolitical tensions over Taiwan and a lengthy zero-COVID-19 policy, North American fund managers have become more upbeat on certain Chinese stocks lately – at least for the shorter term. And they see the pullback from the sharp, re-opening rally that peaked in late January as a buying opportunity. In the first quarter, the world’s second-largest economy began coming to life. China’s gross domestic product (GDP) grew by a better-than-expected 4.5 per cent, with retail sales surging 10.6 per cent. Shirley Won speaks to portfolio managers on their strategy.

Also see:

How top women advisors are investing through the market noise

How to invest in the space race as recent setbacks highlight risks, uncertainty and cost of failure

Will Sell in May work this year? Here’s what to consider when deciding whether to stay invested?

Central banks, take a back seat – the great moderation is over

U.S. Fed’s 10th rate hike on the cards in Advisor Lookahead

Charlie Munger: U.S. banks are ‘full of’ bad commercial property loans

What you and your clients need to know

Canadian wealth managers notify clients about data breach linked to ‘GoAnywhere’ hack

Several of Canada’s major wealth managers are notifying fund investors that their personal information – including social insurance numbers – has been breached in a data hack. Mutual fund providers Mackenzie Investments and Franklin Templeton Canada are among the companies that have sent letters to clients this week, revealing that their personal information was stolen in a cyberattack at the end of January. The breach is linked to back-office service provider InvestorCOM Inc., which provides printing and delivery of client materials and used the popular data transfer tool GoAnywhere. Irene Galea, Clare O’Hara, and Andrew Willis examine the scale of the breach.

TD, First Horizon terminate US$13.4-billion takeover, halting TD’s expansion in the U.S. southeast

Toronto-Dominion Bank and First Horizon Corp. have terminated TD’s proposed US$13.4-billion takeover of the Memphis, Tenn.-based bank, killing the Canadian lender’s expansion in the southeast U.S. TD warned in early March that it was struggling to receive regulatory blessings in a timely manner, and on Thursday the two banks announced they have mutually agreed to scrap the deal. The merger agreement was set to expire on May 27. James Bradshaw and Tim Kiladze examine the details.

Why all the fuss over mandatory RRIF withdrawals

If the federal government wants to score points with seniors, it will eliminate or roll back the requirement to make a minimum annual withdrawal from registered retirement income funds. But mandatory RRIF withdrawals aren’t as onerous as they’re sometimes made out to be. In no way do they force seniors to deplete their savings in a way that could cause them to run out of money. Rob Carrick reports on how to make the most of the required withdrawals.

3 things to consider when buying a family cottage

According to the 2023 Re/Max Cottage Trends Report, 11 per cent of Canadians own a cottage or cabin, just as many are aiming to purchase one, and that 36 per cent of Canadians are attracted to the quality of life that a cottage can afford compared to an urban lifestyle. To make a purchase more affordable, 18 per cent of those who plan to buy a recreational property expect to rent it out for additional income. Tim Cestnick shares his tips on things to consider before buying.

– Globe Advisor Staff