Give the same amount for about half the cost.
Or give a great deal more for the same cost.
Structured correctly, the transaction cuts the net out-of-pocket cost of a donation roughly in half. Or conversely it can allow the same out-of-pocket amount to fund a substantially larger gift.
For the technical detail on donation structures and donor-advised funds, read the Primer →
Who this is for
You give meaningfully. Four to six figures or more in a given year, to a foundation, a hospital, a university, a religious institution, or your own donor-advised fund. You enjoy the tax break but it’s more about helping cause(s) you feel passionate about - and you’d like to give more if you could.
It also applies to registered charities themselves. Development offices can use it to show a donor that the gift they were already considering can be materially larger at no extra cost to them. I make myself available to provide group information sessions and presentations to those who are interested.
What changes
Two things stack. The deduction from the renounced exploration expenses (includes the 15% or 30% tax credit), and the donation tax credit on the gift itself. The gift the charity receives doesn’t change. What changes is what it costs you.
The basic cost of a structured flow-through assisted donation will cost about half a regular donation - or 25 cents per dollar donated instead of the typical 50 cents. In certain cases, with enough capital available up front, the net cost of donating a dollar can come down to as low as one penny. Think of the potential. For example a $100,000 gift can end up costing just $1,000, a $10,000 gift at $100 out-of-pocket.
What it doesn’t do
It doesn’t increase what the charity receives - unless you decide to give more. It lowers your cost.
It doesn’t remove issuer risk, but that risk is limited. If the company fails to spend the funds on eligible exploration expenses on time, the tax benefits can be reduced or denied, in whole or in part, while the gift, once made, is irrevocable. If your deduction is reduced, the issuer is contractually required to pay you an amount equal to the resulting tax. Before any transaction proceeds, WCPD carries out thorough due diligence on the issuer’s finances.
Watch
Philanthropy Friday - How Flow-through shares enhance donations, with Mark Halpern and Peter Nicholson
Questions
Start with the Primer.
A practical guide to how the transaction works, its tax treatment and its risks. It answers much of what people ask me at the start of their investigation.
No call required. I may send occasional writing on the same topic. Unsubscribe any time.
Ask a question, or book a meeting.
If you’d rather I speak with your accountant first, send them the For Accountants page. I’m happy to take it from there.
