If you’re like many successful entrepreneurs, you’ve worked endless hours to grow your company, built a bit (maybe a lot) of capital, and now have the opportunity to enjoy the fruits of your labour. That could mean relaxing lakeside at your cottage this summer or maybe touring your favourite overseas destination. Or perhaps you’re looking to make a difference and “give back” with that hard-earned income.
In many cases, successful entrepreneurs will look to support one or more of their preferred causes, either personally, through their business, or both. Now, cutting a cheque and making a one-time donation is always appreciated, but many find it is more appealing to make a longer-term impact with those funds. That’s why business owners will serve on boards of charities or will seek to steer their donation in a certain direction—to fund the purchase of specific equipment for their local hospital or to support a program delivered by a local charity in their community.
Most entrepreneurs lack the time to serve on multiple boards and donating to various charities can be a tax headache. The good news: in Canada we have the option of establishing a private foundation or a donor advised fund to manage donations and glean the same tax benefits.
Whatever direction you take, it’s important to put the process behind your philanthropy. Why? First, there are those aforementioned potential tax savings, particularly if you’ve had a very good year financially, incurred a major tax bill and need to find creative ways to lower it. Funding your favourite charities through a donor-advised fund (DAF) can deliver that result—a point I’ll be covering in much greater detail in the months ahead.
Managing donations through a DAF also helps to avoid the constant solicitation and pressure that business owners and regular donors experience. That’s because once you find yourself on the major donor list of charities, you can expect to be inundated with constant requests to give more. While that solicitation is perfectly understandable, it can be a time-consuming nuisance. If you have a foundation or donor-advised fund, on the other hand, you or your administrators can make it known that you’ll look at grant requests once or twice a year—and no more.
Most importantly, organized philanthropy helps donors put greater thought into their giving. It allows them to properly assess what matters most to them and their families, then makes their charitable gifts accordingly. It’s an opportunity to bring children into the conversation and make philanthropy a part of their lives from a young age. We have some Canada Gives clients who assemble their families, often at Thanksgiving or Christmas, to divvy up the year’s giving decisions. Everyone comes with their charity wishlist and the family picks the recipients together. Philanthropy has created an opportunity for them to spend time together while still making a difference.
For entrepreneurs, putting the process behind their philanthropy also helps to maximize the joy they get out from making their communities a little bit brighter, helping those in need and leaving a lasting legacy that extends beyond the success of their business.
It’s a heartwarming experience that’s difficult to articulate. You just have to feel it to know how special it can be.
J. Denise Castonguay is the founder and CEO of Canada Gives, a Toronto-based organization committed to helping philanthropists build and grow high-impact foundations. For more information, visit www.canadagives.ca