Foundation helps donors "think bigger"

With more than $100M in giving, the Foundation (WCPD), based here in Ottawa, assists high-end donors by taking a more strategic approach to philanthropy
Photo of Peter Nicholson
Peter Nicholson, the President of the Foundation (WCPD), has specialized in philanthropy tax planning for 11 years. His firm has generated more than $100 million in giving for generous donors and their charities.
Editor's Note

This story originally ran in the November 14, 2017 edition of the Giving Guide

When it comes to his charitable giving, Dr. Pradeep Merchant isn’t satisfied with the status quo.

As the Site Chief for the Division of Neonatology at The Ottawa Hospital (Civic Campus), Dr. Merchant watches over society’s most vulnerable population: premature babies, often with serious medical complications. It’s a calling that goes beyond simply showing up to work.

It perhaps comes as no surprise that he also feels compelled to give back to the neonatal program, among other worthy causes, through targeted donations. And that doesn’t mean handing over a cheque and receiving a tax receipt in the mail.

Picture of baby receiving hospital care
Laura Vono-Tremblay, who was born at 25 weeks and five days, weighed 492 grams and spent her first 123 days in hospital. The Neonatal Intensive Care Unit (NICU) is in the midst of a fundraising campaign to provide much-needed facility upgrades. PHOTO BY IZABELA VONO

Instead, after being introduced to the concept almost a decade ago, Dr. Merchant took a strategic approach to his charitable giving. He started thinking about philanthropy differently.

Picture of a child
Laura, seen shortly after turning four years old in March 2017. PHOTO BY IZABELA VONO

“From a healthcare perspective, we may end up getting capital dollars from the government, but it is never enough,” he said.

“We can’t solely rely on government. Even if the walls get constructed, you require so much more to become a world-class medical centre. Public engagement and strategic philanthropy become essential tools, in my mind. There is no question we need to engage people more on this topic.”

The Foundation (Wealth, Creation, Preservation & Donation - WCPD), headquartered in Ottawa since 1991, does exactly that – educating and assisting Canada’s generous donors to give many times more than they normally would, with donations going towards their charity of choice. While it might seem like something completely new, or perhaps even too good to be true, the Foundation (WCPD) has been helping Canadians get the most out of their donations for more than a decade.

Michel Tilsley, a Director at the Foundation, states “our usual donor’s cost (which includes all fees) to donate a dollar is 15 cents, not the standard 50-cent cost after tax savings. This means most of our donors will donate three times more, or $3, for no additional cost.”

Through its philanthropic tax planning strategy, the Foundation (WCPD) has issued more than 4,500 cheques to charities, been included in over 3,400 personal tax return filings since 2006 and facilitated north of $100 million to charities all across Canada.

But beyond the numbers and cents, the Foundation (WCPD) operates under a simple principle: you and the charity deserve more.

“We want philanthropy to really make an impact and create change. We care about the return on investment (ROI),” said Peter Nicholson, the President and Founder of the Foundation (WCPD). “First and foremost, giving back comes from the heart. Tax savings seem a low priority, right? But should it be? Our clients are among the most successful and generous people in society. Most want to know – what is the best and most tax efficient way to give? And the best way to give is through public flow-through shares with a liquidity provider.”

Picture of a mining operation
Flow-through shares, issued by junior Canadian mining companies, are an essential ingredient in philanthropic tax planning strategies. Since 1954, the government has provided significant tax deductions for this sector to bolster economic growth, employment and development of the north.

Unlocking tax benefits

Here’s how it works.

Since 1954, the Canada Revenue Agency (CRA) has offered a 100-per-cent tax deduction on flow-through shares, which are stock issued by junior mining (and oil/gas) companies in Canada to fund drilling and exploration.

Most mining occurs in the north, an area with a sparse population and limited employment opportunities. Taking advantage of Canada’s vast, mineral-rich frontier makes sense on several levels. Apart from the obvious tax benefits to the government should an exploration drilling hit the jackpot, mining companies assist in the development of remote areas in Canada, while offering good jobs to those that live there. For example, mining is the No. 1 employer among Aboriginals.

“We want philanthropy to really make an impact and create change. We care about the return on investment.”

To unlock the tax benefits, clients purchase these public flow-through shares and then immediately sell them at a discount to an institutional buyer, or liquidity provider, for cash. This liquidity provider takes on the stock market risk, not our donors – one of the key benefits. The donors give the cash proceeds of the sale to the charities of their choice and receive another 100-per-cent tax deduction for this donation.

In effect, donors are supporting Canada’s mining industry and charities by combining two distinct tax policies so they can reduce tax and give much more to a cause that touches their heart. The Foundation (WCPD) takes care of the entire process, from beginning to end.

“I like to think about it as the ability to pay your taxes to your favourite charities,” Nicholson added. “You get to be the prime minister for the day and decide where some of your tax dollars are going.”

Some of the Foundation’s clients have their own private foundations to distribute the funds. For Dr. Merchant, he takes advantage of the public WCPD Foundation, a registered “donor advised” foundation that easily disperses his cash donations from the cash proceeds of the flow-through sale in an efficient manner based on his direction. Anytime he wants to make a donation to a charity, whether big or small, he contacts an associate at the Foundation (WCPD) to carry out the transaction. There is no deadline or specified time period to disburse all his cash flow-through donations to his favourite charities, and no additional fee for using the Foundation’s services. The client can even give his or her foundation a unique name, like the Johnson Family Foundation, for example, which would then rest under the umbrella of the Foundation (WCPD).

In addition to individual donations, the Foundation (WCPD) has also assisted larger fundraising initiatives. A few years ago, when Winnipeg’s Museum for Human Rights needed a boost to raise millions from Canadian donors, this tax structure helped get the project’s fundraising goal across the finish line. The Foundation (WCPD) serves as an innovative tool in the fundraising toolbox.

How it works:

Step 1:

Buy flow-through shares issued by a Canadian mining company. Every dollar invested in these shares is 100% tax deductible

Step 2:

Immediately sell these shares to a pre-arranged buyer (liquidity provider) at a pre-arranged contractual price for cash. This step eliminates any stock market risk to the donor.

Step 3:

Donate the cash proceeds to your favourite charity. Receive a charitable tax receipt based on the cash value.

The result:

By combining two tax policies (flow-through shares and donations), the Foundation (WCPD) can help reduce your taxes and allow you to usually give three times more at no additional cost.

 

Twinkle Gala

In Ottawa, the Foundation (WCPD) was a proud supporter of Twinkle Gala, held this past summer. Organized by Dr. Merchant, The Ottawa Hospital’s chief of obstetrics Dr. George Tawagi and Lift charitable foundation co-founder Gary Zed, the event raised significant funds towards the rebuilding of the Neonatal Intensive Care Unit (NICU).

Picture of Gary Zed with Pradeep Merchant and George Tawagi
Gary Zed co-chairs the Twinkle Gala with Ottawa doctors Pradeep Merchant and George Tawagi in support of The Ottawa Hospital's Neonatal Intensive Care Unit at its General campus. PHOTO BY CAROLINE PHILLIPS

The evening attracted many of the city’s biggest names in philanthropy and business. Taking on a whimsical theme of Alice in Wonderland, guests strolled through an elaborate time portal and were greeted by characters in costume, colourful decorations, world-class musical entertainment and a harvest-style spread of food prepared by local chefs. 

Picture of people at a gala event
The Twinkle Gala, held last June at a private home in Rockcliffe, brought together many of the city’s leaders to help raise significant funds for the updated neonatal intensive care unit (NICU) at Ottawa Hospital’s general campus. Many of these donors use the Foundation’s philanthropic tax planning strategies to increase what they can give to the cause. PHOTO BY CAROLINE PHILLIPS

The Twinkle Gala very much reflects Dr. Merchant’s mantra of unique public engagement and strategic giving.

It was a grassroot effort to close in on the $5 million needed in the community, with the other $5 million to be matched by the government. Many of the donations from the event have taken advantage of WCPD’s philanthropic tax planning structure to get the most out of those charitable dollars.

“It’s about thinking differently. Thinking bigger,” Dr. Merchant said. “And we need to educate people, but also educate the accountants as well.”

Gary Zed, a seasoned tax lawyer and well-known philanthropist in the Ottawa community, has spent the better part of a decade not only taking advantage of philanthropic tax planning strategies, but also informing others that there’s a better way to give.

"I think they are not taking advantage of the opportunity to give more."


Calling the method “entrepreneurial” and “innovative,” he noted that many of Canada’s largest donors in healthcare, education and the arts are already taking full advantage of this tax structure. That said, Zed said there is still a tremendous lack of awareness about strategic investment options to giving.


“The approach is no different than our personal investment portfolios,” he explained. “I have spent an inordinate amount of time with extremely affluent and generous people who are doing amazing things in the community. Sometimes, they are just too busy to understand it, or they are still non-believers. I don’t think their donations are being wasted, but I think they are not taking advantage of the opportunity to give more.”

In other words, philanthropy is another financial and tax savings instrument, albeit with a different purpose.

Failing to leverage philanthropic dollars is akin to not maximizing your RRSP.
Evolution of philanthropy Traditionally, the world of philanthropy has been conservative: you make a donation, you receive a tax receipt. It’s simple. But as the world’s problems grow, and become more complex, philanthropy has grown with it.

The term “social impact investing” is now in vogue among the world’s top philanthropists, fundraisers and corporations, with names such as The Rockefeller Foundation and the Bill & Melinda Gates Foundation leading the charge. Closer to home, entities such as the MaRS Centre for Impact Investing, located in Toronto, operates under the motto: “Big problems require bold solutions.”

By the numbers

9 - Advanced CRA tax rulings on this exact structure, with flow-through shares.

1954 - The year CRA introduced flow-through shares as a 100% tax deduction – three years older than RRSPs.

3,400 - Number of personal tax return filings since 2006 using a flow-through tax receipt and a charity tax receipt.

$100M+ - Amount of charitable giving facilitated by the Foundation (WCPD).

4,500 - Number of cheques issued by the Foundation (WCPD) to more than 600 charities in Canada, as directed
by clients.

11 - Years the Foundation (WCPD) has specialized in philanthropic tax planning.

 

These organizations are bound by the common belief that savvy investments in companies or funds can pay dividends for society and also generate a financial return. Doing good for others, while also for yourself, are not mutually exclusive ideas.

This corporate approach to the charitable sector is being felt among professional fundraisers as well.

Nonprofits and foundations across Canada have become more attune to the needs of modern-day philanthropy, at a time when the sector has continued to struggle with staff retention and attracting top-quality executives. Known as the “leadership gap,” the charitable sector is seeking new ideas to entice the best professionals and pay competitive salaries while also increasing the amount and size of its donations.

According to a 2015 discussion paper by Imagine Canada, the broad charitable and nonprofit sector employs around two million people, or 13 per cent of the total workforce. It went on to mention that the total sector accounted for approximately eight per cent of GDP.

In other words, the charitable sector is an industry in itself, in need for constant improvement and innovation.

Nicholson agrees with Zed: Thinking differently about philanthropy requires a constant re-education on what it means to give. It means not just giving your money away, but also putting it to work. But it is a rewarding process as well, when donors give $30,000 to charity instead of $10,000, for example, or $300,000 rather than $100,000. And it feels even better when the charities receive the bigger cheque.

Donors are making tough choices on where to invest their charitable dollars. While these decisions are nothing new, more and more philanthropists are looking to take a leading role in their giving.

Philanthropists want value for money. They want to leave a legacy. And philanthropic tax planning lets donors do more, with less, without leaving any change on the table.

“Talk to some influencers in the community to get some comfort around it,” Zed explained, to those considering the structure.

“It is no different than going to a doctor or going on a diet. Ask someone: ‘What do you think of it?’ In a lot of cases, it is just a matter of getting peace of mind. From there, it is about really just finding that time with their accountant, with their advisors, and walking them through it.”

WCPD's Philanthropic Advisory Council

Peter J. Nicholson Sr.

Chairman of WCPD‘s Philanthropic Advisory Council. Previously he was the inaugural President of the Council of Canadian Academies (now retired) and was Deputy Chief of Staff for policy in the office of the Prime Minister. Other past positions include advisor to the OECD in Paris, Chief Strategy Officer for BCE and Senior Vice-President to the Chairman of Scotiabank. He is a member of the Order of Canada, awarded in recognition for his contributions to business.

Leonard Farber

Senior tax advisor with Norton Rose in Ottawa. Previously, Mr. Farber was General Director of Tax Policy responsible for all tax legislation developed by the Federal Department of Finance. At Norton Rose, Mr. Farber advises clients on tax policy issues, assists in the resolution of tax disputes and provides a valuable resource to members of the firm’s tax practice in connection with tax planning advice.

David Laidley

Chairman Emeritus of Deloitte & Touche LLP (Canada), where he served as a partner from 1975 until his retirement in 2007. He was elected Chairman of the firm in 2000 and served in that capacity until 2006. Mr. Laidley was appointed to the Board of Directors of the Bank of Canada in June 2007 and currently serves on the boards of Nautilus Indemnity Limited (where he is Chairman), Aviva Canada Inc., ProSep Inc., EMCOR Group Inc., Groupe Aeroplan Inc., the Cole Foundation, the Lester B. Pearson College of the Pacific, the McGill University Health Centre Foundation and the Desautels Faculty of Management of McGill University.

Hilary Pearson

President of Philanthropic Foundations Canada, an association for 134 of Canada’s top private foundations with a combined total of $23 billion in assets. Ms.Pearson is a member of the Charities Advisory Committee, an advisory committee to theMinister of National Revenue. Ms. Pearson serves on several nonprofit boards, includingthe Stratford Festival of Canada, Imagine Canada and Centraide de Montréal.

Lawson Hunter

One of Canada’s pre-eminent regulatory and government relations counsel, drawing on a wide range of experience in business, government and private practice. Formerly Canada’s senior civil servant in charge of competition policy and enforcement, Mr. Hunter was primarily responsible for the drafting of the federal Competition Act. From 1993 to 2003 he was a partner of Stikeman Elliott and head of the firm’s Competition Group. From 2003 to 2008 he served as Executive Vice-President and Chief Corporate Officer of Bell Canada and BCE Inc., where he was responsible for overseeing regulatory, governmental relations and corporate affairs. In September 2008, he rejoined the Ottawa office of Stikeman Elliott as counsel and recently assumed the role of head of the Competition/Antitrust Group. Mr. Hunter advises a wide variety of Canadian and multinational corporations on all aspects of federal and regulatory law and policy.

Elly Alboim

A Principal of The Earnscliffe Group and leader of its strategic communications practice. He specializes in public policy and was a senior advisor to the Right Honourable Paul Martin throughout his tenure as Minister of Finance and Prime Minister. Currently, Mr. Alboim is an Associate Professor in the School of Journalism and Communication at Carleton University.

George Anderson

Retired President and CEO of the Forum of Federations. He served in Canada’s federal public service for more than 30 years, where his positions included Deputy Minister of Natural Resources (2002‐2005) and Deputy Minister for Intergovernmental Affairs in the Cabinet office (1996-2002). He has degrees in political science from Queen’s University and Oxford University, and a diploma from the École nationaled'administration in Paris.

Peter Nicholson Jr.

President and founder of WCPD Inc. and WCPD Foundation.Since 1993 Peter has qualified for the Million Dollar Round Table, which is the premierassociation of financial professionals. The annual qualification is limited to the top 1% of financial professionals in the world. Peter has specialized in tax reduction since 1995 through Canadian tax assisted investments, and philanthropic tax planning. Since 2004, Peter has been marketing gorgeous resort real estate in the tax-free country of the Bahamas. Peter is a member of President Clinton’s Global Initiative (CGI), the Canadian Association of Gift Planners (CAGP), the Association of Fundraising Professionals (AFP), and the Association for Healthcare Philanthropy (AHP), all of which promotes philanthropy throughout the world. Over the last 11 years, donor clients at the WCPD Foundation have given over $100M to more than 600 charities across Canada.

To schedule a free consultation with the Foundation (WCPD), you can contact Michel Tilsley, Director of Financial Services, Tax Planning and Philanthropy, at 613-596-3277, or email him at Michel.Tilsley@wcpd.com. You can also learn more about the company by visiting its website at http://www.wcpd.com

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