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The Federal Government's decision to remove the capital-gains tax on listed stocks donated to private foundations will likely generate very substantial donations to private foundations and, consequently, to charities, according to Marvi Ricker, Vice-President and Managing Director, Philanthropic Services, at BMO Harris Private Banking.

Ms. Ricker said the government's decision is a very positive move that will build on changes it made last year to increase the donation of securities to charitable organizations and broaden the options for individuals and families who want to direct their philanthropy in line with their values.

“We applaud the government for supporting further increases in charitable donations by Canadians and their families,” said Ms. Ricker. “Now, individuals and families who have chosen to create private foundations will be encouraged, through tax incentives, to increase their philanthropy, supporting worthy causes that reflect their values and preferences. The elimination, last May, of the capital-gains tax on donations of publicly traded equities to public foundations and charities has led to increases in substantial donations, notably to universities and hospitals, which is certainly beneficial to Canadians. I expect this change will also directly result in some very substantial donations.”

Ricker noted that in 1996, federal government tax measures allowed gifts of assets, other than cash, to be donated to charitable organizations and then increased the tax credit to 75 per cent of an individual's taxable income from 50 per cent. In 1997 the capital gains inclusion rate for appreciated marketable securities was cut in half and the related donation claim was also increased. Those measures, as well as the May 2006 budget measure that eliminated capital gains tax on donations of securities to charities created immediate increases in donations.

"Health care and education costs are two big-ticket items that have traditionally relied almost entirely on government support but this has changed now because of the enormous cost. Consequently, more and more individuals are being called upon to contribute to the charities that they care about and they are increasingly able to do so as the wealth in Canada has increased significantly," said Ricker.

"However, there is real donor fatigue out there in the sense that people are overwhelmed by the smaller $50 and $100 requests. Many Canadians would rather give a significant amount and know that their money is going to be used in a way that is meaningful and will have an impact," she said.

Ricker also acknowledged the contribution of a former colleague, Donald K. Johnson who is a past vice-chairman of BMO Nesbitt Burns and currently serves as a senior advisor to BMO Capital Markets. Mr. Johnson has been an outspoken advocate for the measures that the government has taken to increase Canadians' philanthropic deeds. "The charitable sector owes a great debt to Don Johnson for his relentless pursuit of the government on this issue over the past several years," said Ricker.

Mr. Johnson stated, "The complete capital gains exemption on gifts of stock to public charities in the May 2, 2006 budget has stimulated substantial increases in charitable giving. The commitment to extend the capital gains exemption on stock donated to private foundations will further increase charitable giving. It will encourage philanthropists to establish private foundations that will provide additional support to the not-for-profit sector for future generations."

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