Building A Solid Foundation For Foundations!

With the growing level of wealth in Canada, an increasing area of interest is the use of Private Foundations.

In working with families, the topic of planned, philanthropic giving frequently arises in conversations.

Although there are a variety of personal reasons for families wanting to establish such structures, two key questions are commonly asked:

1. How do we setup a Foundation?

2. How do we operate it?

Below, I address both questions:

Foundation Setup:

At HighView Financial Group, our expertise is restricted to the prudent management of client assets – not the financially structuring of their wealth. As a result, for these matters, we frequently work with specialized accountants and lawyers for this structural expertise – which also includes private foundations. Before establishing a foundation, a number of factors need to be considered. Our experience, though, has been that for families with less than $5 Million of investable assets to place in a foundation, the setup and ongoing operational costs may not make economic sense. For this reason, HighView has partnered with a Canadian based public foundation firm named Benefaction.  Through our direct and Advisor clients, we work with Benefaction to provide their public foundation solution to our affluent and high net worth families using HighView’s asset management solutions.  Nicola Elkins, the CEO & Founder of Benefaction, is an experienced wealth management professional and well-known to the partners of HighView Financial Group.

Benefaction is a public foundation registered with the Charities Directorate of the Canada Revenue Agency (CRA). Benefaction is authorized to receive philanthropic donations, issue official donation receipts and make grants to registered charities and other qualified donees through the donor-advised funds and endowment funds we administer. Charitable Registration No. 80421 3759 RR0001.  Benefaction is a leader in helping high net worth Canadians make strategic giving an integral part of their wealth management plan. They focus on streamlining the grant process and providing tools and support to help Benefactors and their advisors work together to accomplish philanthropic goals while minimizing tax implications.  They pride themselves on upholding the highest ethical standards, and they demand the same level of integrity and focus in each charitable organization they support. Benefaction believes in doing the right thing, the right way: Giving conscious consumers the opportunity to create meaningful endowments for the causes they value most.

Foundation Operations:

Although there are a variety of administrative matters to be considered when operating a foundation, one of the critical elements which is often overlooked is how will the people appointment to oversee the Foundation (ie: the Stewards), conduct themselves from an investment governance perspective. In other words, how do the Stewards ensure that they are fullfillfing their fiduciary duties and diligently pursuing the objectives of the Foundation.  For this reason, we’ve created a document called, Return of the Investment Steward which addresses this matter.  Although it was originally written in October 2008, the principles discussed in this article remain valid today for anyone sitting on the board of a foundation.

To review this article, click here.