Guidelines for Types of Gifts

There are many gift-planning options.  Development & Advancement Services staff works with donors and their advisors to design gifts that meet each donor’s philanthropic objective while maximizing tax and other benefits, and that meet the university’s needs.  The following guidelines are established to ensure that gifts accepted by the university will be cost effective:

A) Bequests

B) Canadian Cultural Property

C) Charitable Remainder Trusts

D) Gifts in Kind

E) Life Insurance

F) Real Estate

G) Reinsured Gift Annuity

H) Residual Interest Gifts

I) Shares in Privately-Owned Companies & Other Business Interests

 

A. Bequests
Bequests have historically been the most frequent kind of deferred gift, and have contributed significantly to the building of institutional endowment funds. The encouragement of bequests is one of the highest priorities of the university.

Guidelines:

  • Sample bequest language for unrestricted, designated and restricted gifts, including endowments, will be made available to donors and their lawyers to ensure that bequests are properly designated. Donors will also be invited to provide information about their bequest provision and, if they are willing, to send a copy of that section of the Will naming the university, or other documentation to assist Development & Advancement Services to determine the donor’s intent.
  • Where the university is a beneficiary of an estate, the manager of gift planning, in consultation with the university's legal counsel, will communicate with the Executor and/or lawyer of the estate.
  • Bequests to the university can be arranged through a will as a specific bequest or on a contingent or reversionary basis. Bequests can specify an amount, a portion or the residue of a person’s estate, or a property such as life insurance proceeds, stocks, bonds or other tangible assets.  In the case of tangible, personal or real property, the acceptance policies and procedures covered elsewhere in this document apply.
  • Since arrangements made in a will can be changed at any time, bequests are considered revocable, and as such, are not eligible for Receipts during the life of the donor.
  • Receipts are issued to the estate of the donor upon transfer of the gift, which can be credited against taxes that may be due from the Estate.
  • Unrealized bequests are not included in the university’s formal financial reports.

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B. Canadian Cultural Property
The Cultural Property Export and Import Act (hereinafter “the Act”) encourages Canadians to keep significant cultural property in Canada by providing incentives for Canadians who give this type of property to designated institutions and public authorities.  The university is designated to receive this type of property thus enabling the donor to receive the enhanced tax benefits described below.

Guidelines:

  • The Canadian Cultural Property Export Review Board must certify such gifts as being of outstanding significance and national importance. 
  • Once certified, Receipts for Certified Cultural Property are issued at fair market value. The Receipt can be used as a credit against taxes due, not subject to the usual limitations. Any excess can be carried forward for up to five years. 
  •  Certified Cultural Property is exempt from any capital gain. Capital losses can be deducted within specified limits. 
  • Although there is no minimum value for applications for certification, a gift valued at less than $1,000.00 may not result in a tax savings for the donor beyond that which the institution is able to offer through regular Receipts. 
  • For more information, donors should contact the Canadian Cultural Property Export Review Board and request a document entitled Applications for Certification of Cultural Property for Income Tax Purposes.

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C. Charitable Remainder Trusts
The charitable remainder trust is a form of a residual interest gift. The donor ("Settlor") transfers property to a trustee who holds and manages it.  Trusts are powerful and flexible planning tools.  Typically, the income from the trust is paid to the income beneficiary, which is usually the donor or his or her family. The university is named the capital beneficiary of the trust and entitled to the trust’s remainder when the trust is collapsed, which is normally at the death of the settlor.  When the trust terminates (either at the death of the income beneficiary(ies) or after a term of years), the trust remainder is distributed to the university. As with all charitable remainder trusts, in which the university is named as a beneficiary, the Settlor is entitled to a Receipt for the present value of the remainder interest.

Guidelines:

  • The minimum amount required to establish a charitable remainder trust is $250,000.
  • A charitable remainder trust may be funded with cash, securities or real estate.  
  • If the donor (Settlor) selects an outside trustee, the trust may be funded with any property of any value acceptable to the trustee.
  • The university will not normally act as Trustee of charitable remainder trusts.  If the university agrees to be the trustee:
    1. The income beneficiaries must be at least 75 years old; and
    2. If real estate is to be contributed, the real estate shall first be subject to a thorough review as described in Section VIII E Procedures for Gifts of Real Estate.

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D. Gifts in Kind

Art
 Donors may make gifts of privately owned art or other valuables.  The university will not accept art or similar property that is registered as a tax shelter.

Guidelines:

  • Gifts of art may be offered to the university itself or through the School of Art or other faculties or units.
  • The university reserves the right to sell, display or store the materials at its sole discretion.
  • Receipts are issued for the fair market value of the gift, subject to satisfactory appraisal.
  • The university reserves the right to inquire as to the ownership of the property, the cost when acquired, determine when the property was acquired and by whom, and collect any other information that is essential to determining the correct eligible amount for the gift.

Books, Manuscripts, etc.
Donors may make donations of books, manuscripts and papers that are of interest and/or value to the university.  Refer to the University of Manitoba Libraries Gift Acceptance and Administration policies, as they may be revised from time to time.

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E. Life Insurance
There are various methods by which a life insurance policy may be contributed to the university. A donor may:

  • Assign irrevocably a paid-up, permanent policy to the university;
  • Assign irrevocably a permanent life insurance policy on which premiums remain to be paid;
  • Name the estate as the beneficiary, with a bequest of equal value included in the will;
  • Name the university as a primary or successor beneficiary of the proceeds.

Guidelines:

  • Any of the above types of life insurance gifts are acceptable to the university. 
  • In the event a policy is contributed on which premiums remain to be paid, the university will pay the premiums, provided the donor makes equivalent contributions for that purpose.  A Receipt will be issued for the amount of the premium.
  • Should the donor choose to suspend premium payments, the university may either cash in the policy in exchange for its cash surrender value or continue to make the payments on behalf of the donor.
  • When ownership is irrevocably assigned to the university, the donor is entitled to a Receipt for the net cash surrender value (if any) and for any premiums subsequently paid.  If there are policy loans outstanding, donor repayment of the loans after ownership of the policy is assigned to the university are eligible for a tax receipt.
  • When the Estate is named as beneficiary and a bequest of equal value is left to the university, a Receipt for the proceeds is issued to the Estate at the time the gift is transferred.
  • When the university is named as a primary or successor beneficiary of the proceeds, a Receipt for the amount received is issued to the deceased for use on the final tax return.  Insurance proceeds bypass the estate and are not subject to probate or other challenges on the estate.

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F. Real Estate 
Gifts of real estate may be made in various ways: outright, residual interest in the property, or to fund a charitable remainder trust. The following guidelines pertain to gifts of real estate in general. The Gift Acceptance Policies described elsewhere in this document apply. Where real estate is transferred to a charitable remainder trust, additional requirements of the trustee must be met.  All gifts of real estate will be referred to the Gift Acceptance Committee for approval.

Guidelines:

  • The university shall secure a qualified, independent appraisal of the property.  The cost of the appraisal will be recovered from the sale of the property or from the unit that will ultimately receive the property.

    The donor must sign a “Letter of Intent” prior to any action being taken by the university.  A Receipt will be issued for the appraised value (or present value of the residual interest computed on the appraised value, in the case of residual interest gifts). The university reserves the right to secure its own appraisal and issue a Receipt based on it.
  • The university shall determine if the donor has clear title to the property.
  • In accordance with its Gift Acceptance Policies, The university shall review other factors, including zoning restrictions, marketability, current use and cash flow, to ascertain whether acceptance of the gift would be in the best interests of the university.
  • The university shall conduct an environmental assessment, which may include an environmental audit, and accept the property only if:
    • it contains no toxic substances; or,
    • they are removed or other remedies taken assuring the university assumes no liability whatsoever.
  • The property will be disposed of pursuant to the “Letter of Intent”.

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G. Reinsured Gift Annuity
The gift annuity is an arrangement whereby a donor transfers property to the university pursuant to an agreement authorizing the university to purchase a commercial prescribed annuity that will pay a stipulated amount to the donor. Funds in excess of the amount required for purchase of the commercial prescribed annuity are retained by the university and used for purposes specified by the donor and acceptable to the university. A tax receipt will be issued for the amount retained by the university provided the value of the payments to the donor does not exceed 80% of the total funds contributed.

Guidelines:
 The university will not issue gift annuities but may accept property from a donor, pursuant to an agreement authorizing the university to:

  • Use a portion of the property to purchase a commercial prescribed annuity paying a stipulated amount to the donor and/or other annuitant; and
  • Retain the remaining assets for charitable purposes.
  • The minimum amount the university will accept for a reinsured gift annuity is $20,000.
  • The cost of the commercial annuity generally should not exceed 70 to 75 per cent of the total funds transferred in order to result in a significant gift for the university.
  • The donor may designate the purpose of the gift (amount retained by the university) subject to the consent of the university.
  • A commercial insurance company shall be selected, and the terms of the annuity contract negotiated by representatives of Development & Advancement Services.

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H. Residual Interest Gifts
A residual interest gift refers to an arrangement under which property is deeded to the university, while the donor retains use of the property for life or a term of years. For example, the donor might give a residual interest in a painting and retain possession of it.  All gifts of Residual Interests will be referred to the Gift Acceptance Committee for approval.

Guidelines:

  • The terms of the gift and responsibilities for expenses shall be specified in a deed of gift executed by the donor(s) and the university.
  • Pursuant to the terms of the Deed of Gift, the donor shall continue to be responsible for real estate taxes, insurance, utilities and maintenance after transferring title to the property unless the university, upon prior approval of the acceptance committee, agrees to assume responsibility for any portion of these items.
  • The university reserves the right to inspect the property from time to time and to assure that its interest is properly safeguarded.
  • The donor is entitled to a Receipt from the university for the present value of the residual interest.

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I. Shares in Privately-Owned Companies and Other Business Interests
Donors may make gifts of privately owned shares and business interests. The university may accept these provided that the university assumes no liability in receiving them. In some instances, the corporation is willing to redeem privately owned shares, or other stockholders are willing to purchase them.  All gifts of privately held securities will be referred to the Committee for approval.

Guidelines:

  • In the case of privately owned shares, these may be accepted if they likely can be sold in the future to the corporation, other stockholders, or to others interested in acquiring the corporation. If an independent valuation of the shares is required, such services will be provided by a Certified Business Valuator (Certified by the Canadian Institute of Certified Business Valuators).  The cost for such valuation will be paid by the donor or the unit that will benefit from the gift.
  • The university will not accept partnership interest or proprietorships, as they are likely to expose the institution to cash calls or financial liability or have adverse tax consequences.
  • A Receipt will be issued for the shares as follows:
    1. The value received when the shares are sold.

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Gift Acceptance Policy

Gifts to the University

Definitions

Philanthropy and Tax Credits

Gift Appraisal, Acceptance and Disposition

Issuing of Receipts

Stewardship

Guidelines for Types of Gifts