BY DENNIS BROOKS, P.ENG., P.GEOPH.
President, The APEGGA Education Foundation
The APEGGA Education Foundation, like all registered
charities, must submit an annual return to the Income Tax Department of
the Canadian Customs and Revenue Agency. In appearance, it is quite a
bit different than your personal return, but still we report our revenues
This is intended to keep charities honest. For example,
80 per cent of tax receipted donations each year must go to the objects
of the charity -- in our case, scholarships. This will be of some comfort
to you, knowing that whenever you give to a registered charity, most of
your money must be going to the right place.
There is a complication to this requirement, however. Each year APEGGA
donates about $40,000, which is not tax receipted because APEGGA itself
is a non-profit association and therefore pays no income tax. APEGGA also
collects an assessment on our behalf made on Summit Award® tickets,
which totals about $38,000 and is tax receipted by us.
In addition, we get voluntary contributions, mostly
from members of APEGGA such as you, which are expected to exceed $30,000
in 2001. So $68,000 of our donations are tax receipted and that means
$54,400 (80 per cent of $68,000) must go to scholarships.
In the year 2000, we awarded $56,000 in scholarships.
We are getting close to having to give out more money. More seriously,
the importance of the 80 per cent is that only the remaining 20 per cent,
together with some special funding, is available to add to our endowment
funds, and then only after we pay our other expenses.
There are ways to make donations that can go directly
to endowments without invoking the 80 per cent rule. These seem to be
a closely guarded secret of the income tax department; it has taken me
a year to get a lead on them.
One is donations that come from another charity or an organization such
as APEGGA. Another is through donated life insurance policies, either
whole life or term.
The donated policy has to be absolutely assigned to the Foundation, which
must become the registered beneficiary. The donors get a tax credit benefit
in the amount of the cash surrender value of the policy at the time, and
can continue to get credits if they keep paying premiums. NAIT has used
this effectively where members of its staff have given policies taken
out when they are relatively young and their premiums are low. Of course,
the benefit to the charity comes much later.
Most insurance agents know the details, but you may wish to inform yourself
better by asking the Canadian Customs and Revenue Agency to send you Interpretation
The other type of gifts for endowments are called
10-year gifts. These are obscure, but are mentioned in Section 149.1(1)
of the Income Tax Act. The donor must identify them as 10-year gifts,
and the charity is prohibited from using anything but the income from
them for 10 years, although they are permitted to change the investment
This could be valuable for those of you who can make a substantial gift.
But you should get professional advice, first. If you are in the position
to give a 10-year gift, contact us and we can point you in the right direction.
The revenue agency used to have Information Circular 80-10 covering this,
but it is out of print and no substitute document is named.
Bequests Also Help Us
Every member should have a will and in it you can
make provision for monies to go to our Foundation. One member I spoke
to, who is in mid-career, said she already had us in her will. We are
named in the event that there are no other surviving family members.
This is an unlikely circumstance, but we never know how our lives will
unfold. This is a provision everyone of us could have in a will. It ensures
your money will be put to your intended uses and not left to some arbitrary
decision by an executor.
A Human Face
In another matter, the APEGGA Education Foundation
Board wants to put a human face to its work. I have not yet been successful
in this. The scholarship recipients are not members-in-training at the
time of the award, so are not entered in APEGGA's database. Some may move
away, change address and even name, or not register.
So tracking these human faces is difficult. I'm sure there are interesting
stories to be told about how their scholarship aided their career. I can
only hope that some of these people will come forward so we can get their
stories in The PEGG.