There is a more efficient way to give back to your Church

By 
  • November 7, 2015

If it’s the thought that counts, think before you give. A little strategy can go a long way.

The strategy that has helped parishes and Catholic charities of all kinds achieve some kind of financial stability in recent years is gifts of securities. Stocks, bonds, mutual funds — any form of publicly traded security is often the smartest gift under Canadian tax law.

In the last three years the Archdiocese of Toronto’s Development and ShareLife offices have seen a 400-per-cent increase in gifts of securities.

These aren’t only donations rolling in from the well-heeled. Ordinary, middle-class parishioners make up the vast majority of donors choosing to give securities rather than cash, said Quentin Schesnuik, the Development Office’s manager of planned giving and personal gifts. He estimates 40 per cent of the archdiocese’s take from securities gifts consists of mutual funds — the sort of securities middle-class savers are most likely to contribute.

“We have a lot of securities donors who aren’t the wealthy,” Schesnuik said. “They’re just the average parishioners who find out they can do it and they would rather keep their cash.”

Tax laws to make giving securities more attractive changed in 2006, but it has taken time for the idea to filter down to ordinary donors, Schesnuik said.

“It was really a process by which we had to educate everybody,” he said. “People don’t realize they can support their offertory (gifts to the parish), their building fund, ShareLife, Project Hope — any work of the Archdiocese of Toronto, they can support using securities.”

The case for giving securities instead of cash has everything to do with tax savings for the donor.

If you had $1,000 in mutual funds and decided to sell them and give the money to your parish, it might seem like a good idea. Let’s assume you bought the mutual funds years ago for $500. It might seem like you’re giving the parish a $1,000 gift that only cost you $500. But not so fast.

When you sell your mutual funds the tax man is going to want his share. Out of that $500 in capital gains, $250 is taxable. If you’ve got a good job, that might mean the tax man gets 46 per cent of that $250, or $115.

But if you’re paying taxes at 46 per cent, that also means you get a tax credit of $460 for your $1,000 cash gift. So by giving the money to your parish, you saved $345 in taxes (the $460 tax credit minus $115 you had to pay in capital gains taxes).

But the math changes quite a bit if, instead of selling your mutual funds, you give them directly to the parish via the Archdiocese of Toronto’s development office.

Take that same $1,000 in mutual funds that originally cost you $500 years and years ago. Because you haven’t sold the mutual funds but rather just gave them away, you don’t incur any taxable capital gains. However, you still get that $460 tax credit.

So, if you sell $1,000 worth of mutual funds and give the money to the Church, assuming the mutual funds originally cost you $500, the $1,000 donation will have cost you $655. But if you just give the mutual funds themselves, the net cost of the donation is a mere $540.

Teaching Catholics this strategy was slow work at first. Since a lot of people’s giving begins in conversations with their parish priest, the development office had a job to do educating pastors. Then the 2008-09 crash came along and donors were more likely looking at losses than capital gains when they thought about unloading securities.

“Our securities donations dropped pretty dramatically that year,” recalled Schesnuik.

But the archdiocese really turned a corner with the Family of Faith campaign to raise $105 million. The campaign launched thousands of conversations between parishioners about giving — why to give and how to give. Word spread about the advantages of giving securities.

“I can’t overstate how big an impact that was,” Schesnuik said.

Whether it was old stock certificates sitting in a safety deposit box or Canada Savings Bonds or mutual fund units, Catholics in Toronto discovered there is a more efficient way to give.

Of course there’s a process. Forms must be filled out. But nobody should worry about those details. The archdiocese will take care of the paperwork and the tax planning free of charge.

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