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.
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.
As stated previously, 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. 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. That risk is mitigated by an indemnity built into the transaction documents.
Watch
Philanthropy Friday - How Flow-through shares enhance donations, with Peter Nicholson
Questions
Start with the Primer.
A guide to the tax benefits and mechanics of flow-through shares. One transaction, completely outlined, start to finish. It answers much of what people ask me at the start of their investigation.
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If you’d rather I speak with your accountant first, send them the For Accountants page. I’m happy to take it from there.
