Corporate Matching Programs are a Fundraising Tool all Arts Organizations Should be Aware of
August 07, 2012
Donors and supporters of arts organizations should be aware of the benefits of matching programs. It can be surprising how often your supporters aren’t aware of, or don’t take advantage of the corporate matching donation programs offered by their employer. This is a charitable giving program where the business matches donations made by employees (typically through a payroll deduction program) to eligible non-profit organizations.
These programs are widely in place in large businesses, and are easily established by smaller businesses. Some corporations establish a focus for corporate giving, but the majority only require that donations will be matched and paid to a non-profit organization registered with the Canada Revenue Agency. In addition to payroll deduction programs, some organizations also provide ‘volunteer grants’ – a fixed dollar donation to a non-profit organization where the employee is an active volunteer. These programs are often even less well known than corporate matching.
Benefits of Employer Matching Programs
The benefits to the employee and the organization are simple and tangible:
Additional funds are raised and matched which benefit the arts organization
Employees who participate usually become repeat donors
A matching program is often an incentive for the employee to increase their average donation
Donations are easily completed through payroll deduction processes
The donation amount is matched. Most organizations will match $1 for $1 up to a defined limit
For the business, the corporation benefits from recognition in their local community. There are also tax benefits to the business for their matching contribution. Corporate matching programs are an excellent way to engage employees in developing the program, establishing guidelines and supporting volunteerism in the local community. It is a tool that supports employee morale and retention.
As an arts organization, your role is to know the businesses in your community who offer employee matching programs. Share that awareness with your donors, supporters and board members. Board members, who are business owners, may not currently offer an employee program - you can provide information and education on how to set one up and its benefits. Don’t overlook the value of annual volunteer grants by the corporation to/on behalf of employees who give their volunteer hours/time to support your arts mission. Consider approaching a business owner to ask if there is information they might require from your arts organization to help with employee awareness, or to help shape a matching program that might be more focused.
The Benefits of Security Donations
July 16, 2012
Canadian tax laws are structured to encourage philanthropy, and for many donors, an outright gift of cash is simple and most attractive. Our tax laws offer significant benefits to donations of securities to a registered charity and it is surprising that donors are not as familiar with the benefits of this approach. If you are considering making a gift to an arts organization and intend to use a security to raise the funds, it is far more tax effective to gift the security to the charity, as opposed to selling the asset and then donating the cash equivalent.
Change in Tax Laws
In 2006, the Federal budget eliminated the taxation of capital gains arising from donations of listed securities to a public charity or private foundation. The exemption applies to donations of publicly traded securities (stocks, bonds, mutual fund units which are publicly traded). As a taxpayer, you receive a charitable receipt equivalent to the fair market value (closing price on the day the security is received by the charity from you/your broker). The tax treatment works in this way:
Sell shares and then donate cash
Donate shares directly to charity
Fair market value
Your tax cost (ACB)
Taxable capital gain (50%)
Tax credit on donation (46%)
Tax on capital gain (46%)
Net tax saving
The total benefit to you of donating $10,000 of securities that have a capital gain in contrast to an equivalent gift of cash is $1,840. If you sold the asset, and then donated cash, you first have to pay tax on the capital gain. Making the donation of the security directly to the charity results in a charitable receipt of $10,000, and you pay no capital gains tax. You end up with a tax credit of $4,600 which is $1,840 more than had you sold the security and then made a cash donation. It is much more tax efficient.
Every individual’s situation will be different and this example is very general to illustrate the benefits. If you aren’t familiar with the concept, we recommend you speak with your financial advisor as well as staff at the organization you wish to benefit for more detailed information. Canada’s tax laws continue to evolve and the charitable sector is working with the Canada Revenue Agency to expand this concept to other types of assets such as private company shares and real estate.
The Economic Impact of Arts and Culture
July 03, 2012
Most if not all, arts organizations are able to articulate the intangible, cultural benefits of their arts programs to their community and to society. Defining the economic impact, particularly when seeking funding, can be a tougher task. Arts and cultural organizations achieve much more than their specific art form. Arts programming contributes to a community at many levels. Documenting the positive impact of an event/arts program is important at the time the organization is seeking a grant renewal or discussing funding opportunities with a private donor or corporate sponsor.
Direct and Indirect Economic Contribution
It is straightforward for an arts organization to identify the direct economic contribution made – all spending by visitors who attend an event, as well as wages, taxes and goods and services purchased in the community. A second positive impact, but more difficult to quantify is the indirect economic contribution related to spending in the local community by visitors and participants of an arts program, event or performance.
A new US study, “Arts and Economic Prosperity” issued by Americans for the Arts relates how arts and culture impact the economy. It begins to quantify how arts and cultural organizations leverage additional event related spending by audiences into the local economy. The objective is to try and identify for funders that arts is an important component to a local economy and a support to economic recovery. It firmly suggests that private donors, corporations and government funders need not feel that a choice exists between arts funding and other means of economic prosperity. Both are important as our Vice Chair John McKellar stated in “The Arts Mean Business”.
The research indicates that every attendee of an arts event generates local income, an average of $24.60 in addition to the cost of admission. Non-local visitors to an arts event spend more ($39.96 vs. $17.42 ) than local attendees. A thriving arts community supports residents who spend ‘local’ but also attract visitors who spend money and further support local economic activity. Comparable data at the community or national level is not as available in Canada. We notionally know this, and referencing the American findings may be a useful tool for arts organizations when making funding requests or speaking with their donors.