Some DAF Things to Know
The donor makes an irrevocable gift to a Canadian registered charity. The charity invests the funds and allows the donor to provide direction on how to distribute the principal and earnings to qualified donees, as defined by the Canada Revenue Agency (CRA) here: Qualified Donees.
The specifics of how the CCCC Community Trust Fund (CTF) sets up and administers DAFs for individuals are set out in responses to this series of questions commonly asked by donors:
What are the key benefits for donors considering a DAF?
- active participation to distribute funds to qualified donees
- full tax receipt up front at the time of the gift being received by the CTF
- privacy, should the donor wish to give anonymously
- time & cost savings over giving individual gifts and receiving multiple tax receipts
- additional tax benefits (i.e., if gifting qualifying securities)
- time savings and convenience - reduces administration by the recipient charity
- increased flexibility (e.g., to support qualified donees regularly and to respond to special appeals).
- separation between the distribution of the gift and the need for an immediate tax receipt
- simplicity of setting up a Pooled Donor-Advised Fund account under the care of the CTF Trustees instead of the donor needing to set up their own Private Foundation with CRA.
How do DAFs operate at CTF?
A donor irrevocably donates to CCCC a gift of money or securities, held within the CTF. The donor receives an immediate official receipt for tax purposes when the original donation is made, as well as any subsequent donations that are made into the DAF account. The CTF sets up a Pooled Fund to hold the donations.
The Pooled Fund accrues investment earnings proportionally shared with each individual DAF account. These earnings also may be directed to the charities of the donor’s choice, but no additional tax receipts are provided for these earnings as the funds are no longer owned by the donor, but by CCCC via the CTF. The donor assigns the CTF the right to invest the capital funds with the understanding the donor may suggest beneficiaries of both the capital and investment earnings, provided such beneficiaries are qualified donees. The donor provides CCCC with written directions for the distribution of gifts periodically, or at set times (e.g., monthly, or annually), or a combination of these options, as the donor determines.
The CTF investments are based on the CCCC Investment Policy and the CCCC Investment Advisors guidance—done within the requirements of the Ontario Trustee Act (i.e., commonly known as the “prudent investor principles”).
CCCC’s minimum dollar value to set up a DAF is $100,000. However, exceptions will be considered if a donor has longer-term plans to provide gifts that will total to, or exceed, this minimum within a reasonable time period.
CCCC Pooled Donor-Advised Fund administration fee schedule is:
*Subject to minimum annual administration fee $750 per year, prorated for partial years.
At this fee structure, the donor can make 24 disbursements to qualified donees. Anything greater than 24 disbursements is assessed at $25 fee per cheque issued.
Some donors may choose to distribute additional funds to CCCC beyond these fees to further the charitable work of CCCC. These gifts are greatly appreciated.to wind up the account with a final distribution of its balance, if the donor’s will does not include such direction to the CTF as to which qualified donees the estate wishes the balance to go to.
Upon the donor’s or surviving spouse’s death or incapacitation, the Trustees of the Community Trust Fund assume authority