Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

Building a Solid Foundation – Giving Edition

By Rebecca Ashley, BComm, CFP, FMA, CLU (Part I)
& Margarita Vasquez, CFP (Part II)

With the turbulence we are facing in today’s economy, it is easy to forget just how fortunate we truly are. Countless people at home and abroad face squalor, hunger and illness every day. Without trivializing the challenges we each face in these difficult times – for many, “difficult times” is a way of life.

In fact, it is times like these when the need becomes even greater. Unfortunately, it is also a time when resources are scarcest. How can we assist the less fortunate during lean times? How can we continue supporting our favourite charities year after year? How can we help?

Perhaps it’s time to rethink the way we give. At Nicola Wealth Management, we are constantly trying to think outside the box and find ways to help our clients meet their objectives, including charitable giving. Consequently, a good number of our clients have participated in NWM’s own charitable foundation, the Philanthropy Preceptorship Fund (PPF), to make their giving more effective. As an integrated part of their financial plan, PPF creates tax efficiency to maintain giving during lean years and even increase gifts as one prospers.

To begin, Rebecca Ashley will present the stories of two of our clients, both of whom effectively used charitable foundations to continuously support the causes they hold dear. In part two, Margarita Vasquez explains exactly how a charitable foundation such as PPF works for our clients, along with the benefits and advantages it provides.

We hope the stories in this newsletter inspire you. At NWM, we want to support your generous spirit during these times, and simply helping you rethink the way you give can make all the difference in the world.


PART I – “To find a need and fill it.”

It inspires me seeing how much our clients do for our communities, both on our streets and across the globe. I recently had the opportunity to speak with a few individuals to learn more about the substantial difference they are already making and how the use of charitable foundations has furthered their goals.

Our first clients (who wish to maintain their privacy) started off by using PPF as their method of charitable giving, which has since evolved into their own foundation that supports a variety of local and world-wide organizations. As with many of us, their sense of giving started with family:

“I grew up in a family who always found ways of giving. My mother always told us as children that, no matter how much we gave away, we would always receive that and more in return. Watching her as a child and growing up, I found out that it was true. Along with receiving back much more than I ever gave away, I also experienced the joy and fulfillment in giving.”

After a profitable real estate venture, they were certain they wanted to give back. At that point, it was a matter of getting sound advice and finding the right method:

“I had thought of starting my own Foundation, but until that time had not done so. After discussing my situation with John Nicola, he told me about the PPF that Nicola Wealth Management managed for their clients. Since this vehicle was already in place, I decided to use it to my advantage, putting a considerable amount of the cash that I received into PPF. This gave me the flexibility to donate smaller amounts of money to several charities over a number of years.”

Since starting with PPF, they have created their own foundation to support the multitude of valuable projects desperately in need of funding:

“The object of our Foundation is ‘to find a need and fill it.’ We are primarily funding projects that have to do with children and young people. We have funded an orphanage in Brazil, a school for 500 students in an area of Liberia with a population of 10,000 that did not have a school. We have funded container loads of school supplies, food etc. to Liberia, Honduras, Guatemala, Haiti and other countries. Plus we donate to local charities dealing with young people, the homeless and the disadvantaged.

“My wife and I often ask the question, ‘Why were we so privileged to be born in Canada when there are masses of people who live in disadvantaged countries?’ We really believe the answer is so that we can give out of our abundance to those who are not equally blessed.”

So what do they say to those who ask “Why?”

“Try it and you will find out that the satisfaction that comes from giving cannot come in any other way.”

Another client with whom I was able to speak, is Volker Wagner. Volker is a successful local businessman who, through his hard work, dedication and creation of a charitable foundation, plays an integral role in a community transformation initiative in Bulembu, Swaziland (www. As a result of his accomplishments in the business world, Volker realized that he had far more to offer: “Once you achieve a certain level of success, you start to look around and say, what’s next?” In our conversation, we covered everything from why he started his foundation to the impact he hopes it will have on his family’s future generations. Here is his story.

Volker is co-founder and a director on the board of Bulembu Ministries. Motivated by his faith, he decided to draw on his entrepreneurial nature and enhance the lives of the poor, vulnerable and unemployed by helping them become self-sufficient. This passion is what drew him to Bulembu, a small town in Swaziland abandoned by the mining industry in 2001 and left with a bleak future. Today, Bulembu Ministries’ vision is to create a totally self-sustaining community, restoring health, education, commerce and providing care for the town’s children by 2020.

Consequently, Volker formed the Bulembu Foundation to assist in raising funds for this initiative. His goal was to set up a vehicle by which Canadians could make donations to the Bulembu community, while providing the same tax benefits as other registered Canadian charities. Knowing that the intention was to sustain substantial giving over many years, Volker felt that setting up a foundation was well worth the cost and ongoing administration. In his opinion, for those that want to start out smaller, PPF has definite advantages – one gets all the benefits with no administrative costs or hassles.

For Volker (as with our first story), charity involves strong family ties. He likes the idea of building a lasting legacy in which his wife, children and future grandchildren can be involved as directors. Being a part of Bulembu provides a fulfillment that one cannot get through personal financial gain. As Volker told me, “Wealth alone does not create generosity – it is an attitude that exists regardless of your financial success. Not much holds more weight in life than sharing with those less fortunate.”

As you witnessed through these two stories, many of our clients do extraordinary charitable work and we are extremely proud to see our clients working hard to better the world. We consider it our goal and responsibility to help them develop the resources to accomplish great things on our streets and across the globe! I would like to express my sincere thanks to both of our clients for allowing us to share their passion for these charitable activities with you.

Photography by Trevor Meier


Part II – Philanthropy Preceptorship Fund

Similar to the stories you’ve just read, you also probably support a charity that, for personal reasons, is very close to your heart. Your annual contributions help them accomplish all those great goals while providing you with tax credits that translate into savings for you and your family; a win-win situation.

This perfect synergy of giving and receiving can be greatly enhanced with a donor advised account (DAA) such as the Philanthropy Preceptorship Fund. After all, having a sophisticated charitable giving strategy does not need to be exclusive to private foundations.

PPF is Nicola Wealth Management’s own program that works as an alternative to a private foundation, allowing donors to enjoy administrative convenience, cost savings and tax advantages by conducting their grant-making through the fund.

Each donor subscribes by setting up an investment account within PPF where contributions are deposited and managed. Donations are subsequently made from the investment account to any eligible charity of the donor’s choice. An official tax receipt is issued every time new contributions are made to the foundation, allowing the donor to enjoy a tax benefit and the flexibility to make a gift to the charities of their choice when they are ready. The following is one example of how this can work:

Rita is a dentist interested in setting up a donor advised account within PPF. She subscribes to the foundation by opening an investment account and depositing her initial donation of $50,000. As a result of this donation, she receives a tax receipt in the calendar year the gift was made. The funds are subsequently invested and, assuming they earn a 6% cash yield, Rita’s original investment generates $3,000 every year. Rita has the option to donate these profits in perpetuity to the charities of her choice or to periodically designate that a certain amount is distributed to the various charities she supports. In addition, she is able to donate assets with unrealized capital gains to the foundation, eliminating the capital gains tax and consequently increasing the size of her donation.

Benefits of a Donor Advised Account

  • As a donor, you do not have to decide immediately on a particular charity in order to obtain a tax receipt. For example, as with our first client story, you may receive a large bonus or other significant income near the end of the year and may not have time before year’s end to decide which charities to support. With a PPF account, you obtain an immediate tax deduction for your charitable contribution. You can then recommend grants to qualified charities at a later time when you are ready to make those decisions.
  • The convenience and flexibility of a PPF account allows you to make substantial contributions to your account in profitable years and to sustain a similar level of giving to your favourite charities in leaner times.
  • Donations can be made in cash or in kind. In-kind donations include mutual funds, stocks, shares of private corporations, bonds, real estate property, etc. Later in this newsletter we will briefly review the benefits of making in-kind donations as opposed to selling the property and donating the proceeds.
  • Any potential asset growth within the PPF account accumulates tax-free, offering the potential for greater charitable grants in the future.
  • Contributions provide tax savings up front that amount to a tax deduction of approximately 43.7%1.
  • Your PPF account can be named as the beneficiary of your registered assets, subsequently eliminating any tax liability that arises upon death from the disposition of your RRSP or RRIF.

Donating Property In Kind

One of PPF’s significant advantages is its flexibility to accept donations of property. Donating property in kind provides an excellent planning opportunity for those who wish to contribute securities with unrealized long-term capital gains instead of selling the assets and then donating the proceeds. In-kind donations can include publicly traded securities, bonds, mutual funds, life insurance and even real estate. In fact, by setting up a donor advised account within PPF, one can enhance their tax savings by up to 40%.

To learn more about how PPF can enhance the effectiveness of your charitable giving, contact your advisor and ask about our Philanthropy Preceptorship Fund Information Piece, which goes into greater detail by:

  • breaking down the financial results of donating in kind;
  • explaining corporately owned donations and the impact of being over or under the Small Business Limit;
  • discussing some of the planning strategies made available by PPF; and
  • going over what is required to set up a PPF account.

We hope this article has opened your eyes not only to some of the worthy causes in need of support, but also to the advantages of using a charitable foundation such as the Philanthropy Preceptorship Fund. Many of you are already giving, and now you have the opportunity to significantly enhance the effectiveness and flexibility of your gifts while making it an integral part of your financial plan.

1 This is the highest combined Federal and Provincial tax rate for BC residents. In actual fact, charitable donations generate a tax credit to the tax payer; however, the net effect is equivalent to a deductible expense at the individual’s Marginal Tax Rate (MTR).