The OAF Blog

Arts and Business Exploring Collaboration “In Kind”

August 27, 2012

Since joining the OAF two years ago, I’ve constantly been impressed with how creative and entrepreneurial arts organizations are in managing sometimes ‘scarce’ resources as they deliver creative and outstanding programs.

 

Culture Professionals Network

The Guardian in the UK publishes an interesting blog:  Culture Professionals Network .  A recent update (13/08/12) describes how UK arts organizations are being entrepreneurial in other ways, by exploring collaboration with business beyond the purely financial. As an example, a theatre company secures reduced rent for their office needs, and occupy otherwise unutilized office space. That  collaboration might see the arts organization delivering arts programs, or workshops to the business’s employees. Space and infrastructure are secured in exchange for providing arts education and programming to the staff. It is one more way to develop future audiences and arts supporters.

The collaboration can create a sense of community and a commitment to helping each other out, thereby building a stronger, deeper relationship with an organization. The arts organization can use the opportunity to stage performances, installations and deliver community projects. It isn’t a substitute for financial support, but can be one way to expand an arts organizations ‘reach’, grow audiences and through the collaboration, cost effectively manage part of operating expenses. 

 

 

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                             $10,000  $10,000
 Your tax cost (ACB)  $2,000   $2,000
 Capital gain $8,000  $8,000
 Taxable capital gain (50%) $4,000 $4,000
 Tax credit on donation (46%) $4,600 $4,600
 Tax on capital gain (46%) $1,840 $0
 Net tax saving $2,760 $4,600

 

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.

 

 

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