Here's the dilemma: Each year government funding to the 75,000 registered charities in Canada continues to be dramatically reduced. This leaves many of these charities in precarious financial situations, facing the reality that they may be unable to maintain the same level of service in the future. There has never been a better time for private and corporate citizens to offer their support by making a charitable donation.

What is the opportunity? Many people would like to donate more to their favorite charity but feel financially unable to do so. Life insurance can help. Life insurance increases the size of your gift to the charity you’ve chosen and it provides you, the donor, with significant tax benefits.

How does it work? You have a number of choices available when giving a gift of a life insurance policy to a charity. You can purchase the insurance yourself and name the charity as beneficiary. Or, you can own the policy yourself and name your estate a beneficiary and provide direction in your will to gift the funds. You may also choose to make the charity the owner of the insurance policy outright with you paying the premiums on the charity’s behalf. Each of these options provides the charity with the policy’s proceeds when you die.

What are the benefits to you? Not only will you achieve peace of mind knowing your gift will make a difference, but you will also receive tax benefits. If you purchase the insurance policy and name the charity as beneficiary or have your estate gift the insurance proceeds to the charity, the charity will issue a charitable receipt when it receives the funds. If the charity owns the policy and you make the premium payments on the charity’s behalf, the charity will issue a charitable receipt each year for the amount you pay. In both situations, you can use the receipt on your tax return to reduce the amount of tax you pay.