FAQs

A DAF is essentially a "charitable investment account" where donors "deposit" (donate) funds into a separately held account and then "withdraw" (grant) funds to support registered charities in Canada or other qualified donees. DAFs provide the advantages of establishing a personal charitable foundation, with significantly lower costs and complexity. Benefaction DAFs allow donors to manage all charitable donations through one vehicle to reflect their philanthropic goals and values.

The donor (which can be an individual or corporation) makes an initial, irrevocable gift to their personalized DAF. A donor can name their DAF after themselves, a loved one, a specific cause, etc. The donor recommends charitable grants to Benefaction Foundation and the Foundation will issue the grants to the charities.

There is a $25,000 minimum that we ask is maintained over the life of the DAF and no maximum account size. In Canada, donors may donate up to 75% of their net income in a taxation year, including to a DAF. Excess amounts over this threshold may be carried forward for up to five years.

The donor does not have any "out-of-pocket" costs because all costs and fees are drawn directly from the assets they have donated and for which they have received a full fair market value donation receipt. However, Benefaction does charge fees to cover our operating costs and the DAF is responsible for any investment management fees incurred.

Benefaction charges a donation fee of 1% on initial and subsequent donations to a DAF below $1 million. Funds which have accumulated donations of $1 million but below $2 million, pay a donation fee of 0.5% on donations. Funds which have accumulated donations of $2 million but below $3 million, pay a donation fee of 0.35% on donations. Donation fees for cumulative donations of $3 million and above can be negotiated with Benefaction. In addition, Benefaction charges an annual charitable administration fee for its ongoing administrative services. This is an annual fee of 0.50% of the Fund value up to $1 million, 0.35% on the next million and 0.15% on the remainder, and is collected quarterly.

DAFs can earn investment income, which is reinvested and may increase the asset value of the DAF. All investment income and gains made in a DAF account will grow tax-free since Benefaction is a registered charity. Returns on investments generated in the DAF are not eligible for a donation receipt and will not be returned to the donor.

Benefaction specializes in working with our donors' own advisors to manage the charitable funds in their DAF. The chosen advisor manages the assets and customizes the investment portfolio in accordance with Benefaction's Investment Policy Statement. Licensed Portfolio Managers can manage DAF accounts on a discretionary basis in accordance with the IPS. Other advisors can select approved mutual or other funds that collectively adhere also. Some of our partners have proprietary products offered in their respective programs.

Benefaction will accept gifts of cash, publicly listed securities, privately held shares, registered plans, life insurance policies, and bequests. Review our Gift Acceptance Policy or contact us for more details.

Yes! Additional donations can be made at any time. Donors will receive a donation receipt for all donations above $50 in value. Any 3rd party (eg. friends or family) may donate to a DAF and will receive a donation receipt in their own name.

Donors can recommend grants to their desired charities at any time throughout the year and/or grants can be set up on a recurring basis. There is no requirement to grant to the same charities each year. Donors can detail their grant recommendations in their Donor Agreement, by using the Grant Recommendation Form, or by providing written instructions, including by email. The minimum grant amount is $250.

The minimum annual disbursement requirement is 5% of the average DAF assets, in accordance with Canadian Revenue Agency regulations. The calculation is based on the quarter-end market values for the previous two calendar years. The disbursement requirement is subject to the current minimum grant amount of $250, as outlined in Benefaction’s Grants Policy. However, Benefaction has no cap on granting so donors are more than welcome to grant above this minimum. Donors will be contacted towards the end of the calendar year if they have not met their disbursement quota and have no outstanding grants in place.

Under normal circumstances, a grant recommendation will be processed within 10 business days of the receipt of the funds into a Benefaction bank account. Grant Recommendations made after November 15th are processed on a best-efforts basis before year-end.

No, you will not receive a tax receipt for a grant distributed from your Fund. You receive tax receipts when you make donations into your Fund, both when you first open the Fund and any additional donations over time.

That depends on how the donor wants to be recognized. They can choose to be anonymous, share only their DAF name, or they can choose to have their full name and address provided to recipient charities.

The selection of grant recipients is totally in the donor's control, provided it is a registered Canadian charity or meets CRA's qualified donee criteria. Upon request, Benefaction or its consultants can provide assistance and research to help donors in selecting which organizations to support.

Yes! The busiest season for charitable giving is at year end, so to avoid the December rush, Benefaction has a couple of deadlines to keep in mind. If you’re making a cash or cheque donation it must be accompanied by a Gift Form and be deposited on or before December 31st. If you are donating securities, you will need to complete and return the Gift Form and your investment advisor must be instructed to transfer the securities in-kind. The transfers department at your broker may have a number of people away over the holidays, so make sure your instructions are submitted at least 10 business days prior to year end.

The donor has the following options to facilitate the ongoing management of their DAF. The information can be provided when the DAF is first established or any time thereafter in writing prior to incapacity or death.

• The donor can appoint a successor(s) to assume the role of making annual granting recommendations.

• The donor can recommend standing instructions that name specific charities to receive grants from their DAF each year.

• The donor can recommend disbursement of all or part of the assets in their DAF to support specific charities.

If there is no successor advisor(s) named and the donor is no longer able to provide Benefaction with instructions, the Board of Directors will be responsible for making grant recommendations. The grant decisions are based on written guidance from the donor and if no such guidance exists, it will be based on past granting activity from the DAF.

Yes, donors receive a quarterly report that includes a financial summary for the period and since inception, donation and grant activity, a summary of the DAF's grants by charitable sector, and the annual disbursement quota. The expected timeline to receive a donor report is 4-6 weeks after the end of the quarter.

Additionally, donors receive confirmations after each grant is made (unless it is set up to transpire monthly).

Yes, donors have the option to leave a bequest to an existing DAF or set up a DAF that is funded upon their death. Bequests can be specific or residual. Check out our Bequest Basics Guide or contact us for more details.

For further information please contact us at info@benefaction.ca or give us a call at 416-915-0700 or toll-free at 1-866-910-8227.