The Canadian Charity Law Podcast | Reasons to Start a Private Foundation in Canada

In this episode we explore the advantages of establishing a private foundation in Canada.

Key benefits include maintaining control over donated assets, engaging family members in philanthropic activities, and customizing supported charitable causes.

Additional advantages are operational flexibility, building a sustainable asset base, enhanced privacy, and the potential for increased public recognition.

Bottom line: private foundations are a powerful tool for impactful and enduring charitable giving.

This episode is sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm serving charity and not-for-profit clients across Canada with registration and governance, and B.I.G. Charity Accounts Group, a bookkeeping firm serving Canadian charities with all their financial and tax filing needs.

https://www.charitylawgroup.ca/
P: 416-488-5888

https://www.charityaccountingfirm.ca/
P: 289-301-8883

Creators & Guests

DJ

Producer

Dov Goldberg, J.D.

Dov Goldberg is a manager partner at B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm Providing Services Exclusively to Charities Across Canada

What is The Canadian Charity Law Podcast ?

Exploring the ins-and-outs of Canadian Charity Law in a way that can be understood by the layperson, including Charity Registration, Not-for-Profit Incorporation, Charity Governance, Charity Fundraising, Tax Receipting, and much more!

David: 00:00

Ever dream of, like, setting up your own charitable foundation.

Sara: 00:02

Yeah. Like, a real serious foundation.

David: 00:05

Not just, like, donating a few bucks here and there.

Sara: 00:08

Right. Like, leaving a lasting legacy.

David: 00:10

That's what we're diving into today, private foundations in Canada.

Sara: 00:14

It's, there's a lot to unpack. It can be a bit complex.

David: 00:19

Yeah. For sure. But also kinda inspiring, Brad.

Sara: 00:22

Oh, absolutely. Huge potential for, you know, making a real difference.

David: 00:26

So first things first. What exactly I as a private foundation? Like, how is it different from just, you know, writing a check to your favorite charity?

Sara: 00:36

It's more about creating a structure, you know, a dedicated organization.

David: 00:42

So it's not just about the money.

Sara: 00:43

Exactly. You're setting up an an entity with a mission, a purpose.

David: 00:47

And that purpose is?

Sara: 00:49

Well, that's the beauty of it. You get to decide.

David: 00:51

Woah. So it's like totally personalized giving.

Sara: 00:54

Totally. If you're passionate about, say, environmental conservation

David: 00:57

You could have a foundation dedicated to planting trees.

Sara: 01:00

Exactly. Or funding research or supporting the arts, whatever you're passionate about.

David: 01:05

That is so cool. You're basically building your own little philanthropic empire.

Sara: 01:09

In a way, yeah, but with a serious purpose. And, important to know, it has to be a charitable purpose under Canadian law.

David: 01:16

Right. So no funding your pet rock collection.

Sara: 01:19

Uh-huh. Right.

David: 01:20

Okay. One thing I found really interesting is how foundations can be a way to get families involved in giving.

Sara: 01:26

Oh, absolutely. Huge potential there.

David: 01:28

More than just, like, everyone shipping in for a donation.

Sara: 01:31

Way more. It can be a way to, you know, instill values in younger generations.

David: 01:36

Oh, so, like, passing on a legacy of giving.

Sara: 01:38

Exactly. Imagine, say, a family sets up a scholarship fund in their grandfather's name.

David: 01:44

Wow. That's, like, a really powerful way to honor someone's memory.

Sara: 01:48

And it gets the whole family talking about the causes they care about working together.

David: 01:52

It's like building family bonds through philanthropy.

Sara: 01:55

Exactly. And it can evolve over time as the family grows, new generations come in.

David: 02:00

That's amazing. Okay. So besides getting the family involved, what else makes these private foundations so special?

Sara: 02:06

Well, there's a lot of flexibility in how they operate. You're not just limited to handing out grants.

David: 02:11

Wait. Really? I thought that was the whole point of a foundation.

Sara: 02:14

It's definitely a big part of it, but you can also run your own charitable programs.

David: 02:19

So you could actually create, like, a whole new program from scratch.

Sara: 02:23

Absolutely. Let's say you're passionate about, early childhood education.

David: 02:29

You could set up a foundation that runs its own preschools.

Sara: 02:32

Exactly. You have that kind of control and flexibility.

David: 02:35

That's incredible. It's like having a philanthropic Swiss army knife. You can choose which tool works best for you.

Sara: 02:42

And adapt as needed. The world changes, needs change, and your foundation can evolve too.

David: 02:48

I love that. Okay. I gotta ask. The control aspect, is that a big draw for people?

Sara: 02:53

It's definitely a factor. Many donors want to be actively involved.

David: 02:56

It makes sense. Right? You've worked hard for your money.

Sara: 02:58

Exactly. And you wanna make sure it's used effectively for the causes you care about.

David: 03:03

So it's about more than just writing a check. You're actually guiding the process.

Sara: 03:08

And using your expertise, your knowledge to maximize the impact.

David: 03:13

Now something we can't overlook is the legacy aspect.

Sara: 03:17

Right. Building something that lasts.

David: 03:19

And that's where endowments come in.

Sara: 03:20

Exactly. An endowment ensures your giving continues even beyond your lifetime.

David: 03:26

Okay. But break it down for me. How does an endowment actually work?

Sara: 03:30

Think of it as a a a permanent fund. You invest the initial donation.

David: 03:35

Okay. So the money is not just sitting in a bank account.

Sara: 03:37

Right. It's invested, hopefully, growing over time.

David: 03:40

And then

Sara: 03:41

And then the earnings from those investments. That's what's used for the charitable work.

David: 03:45

So the principal stays intact, and the earnings fund the grants, the programs.

Sara: 03:50

Exactly. It's like setting up a perpetual motion machine for good.

David: 03:54

That's an incredible image. Yeah. Okay. So let's say someone's listening and thinking, hey, maybe a private foundation is for me. What would you say is the most important thing to consider?

Sara: 04:03

That's a good question. I'd say, really get clear on your goals.

David: 04:09

Like, what do you want to achieve with your giving?

Sara: 04:11

Exactly. What are your values? How do you wanna be involved?

David: 04:14

Do you wanna run programs, give grants, get the family involved?

Sara: 04:17

It's all about finding the right fit, the right structure for your vision.

David: 04:21

This has been seriously eye opening. I never realized how much goes into setting up a private foundation.

Sara: 04:28

It's definitely a commitment. But for those with the means and the passion It's

David: 04:33

a chance to make a truly meaningful difference in the world.

Sara: 04:35

A chance to leave a legacy that reflects your values, your vision for a better future.

David: 04:41

Wow. Powerful stuff. So for anyone out there dreaming of making a big impact, maybe starting a private foundation is the way to go.

Sara: 04:47

It's certainly an option worth exploring. Just remember, it's about more than just the money. It's about the vision, the commitment, and the lasting legacy you wanna create. So what legacy will you leave?