October 24, 1996

Proposed law could spur big gifts

A $10 million donation from Charles Bronfman (left) and his family resulted in the creation of the McGill Institute for the Study of Canada headed by Professor Desmond Morton (right). A new Quebec government bill could encourage other large gifts to the University.

by Daniel McCabe

If all goes according to plan, McGill should soon be receiving something that is increasingly rare--good financial news from the provincial government.

No, Quebec City hasn't decided to stop reducing the amount of money it spends on universities. Faced with its own imposing debt, the Bouchard government's cutbacks are likely to continue for quite some time.

But the province's Minister of Education, Pauline Marois, has tabled legislation that could go a long way towards helping McGill cope with those cutbacks. The law in question concerns tax benefits for donors who make large-scale gifts to universities and it's the sort of legislation that McGill administrators have been lobbying the government to pass for years.

The law would allow Quebec's universities to establish Crown foundations for fundraising purposes. By making a large gift to a university through a Crown foundation, a donor would be able to protect up to 100% of her annual income from being taxed.

Under Quebec's current income tax laws, a donor making a substantial gift to one of the province's universities can use that donation to shield only 20% of her income from taxation

"We're very pleased to see that Madame Marois is so committed to this matter," says McGill's government relations director, Ginette Lamontagne. "It will make it much more attractive to make large donations to universities."

Now that the proposed legislation has been tabled, Lamontagne believes it's only a matter of time before it officially becomes law.

"We've been talking to the Liberals about this and we know they're in favour of this law. They've already indicated that they will give their support to it."

Crown foundations already exist in most other provinces. In fact, because of federal tax laws that require all provinces to recognize Crown foundations in other provinces, fundraisers at McGill and Quebec's other universities have been operating at something of a disadvantage.

"Quebec donors could actually benefit from their gifts more if they made them to the University of Toronto or Queen's than they could if they gave the money to us," says John Limeburner, McGill's treasurer. "The rules in place encouraged money to leave the province. That's one of the arguments we used to convince the government."

The first province to create Crown foundations for its universities was British Columbia, in 1988. "It had a huge impact," recalls Clark Warren, associate director of development for the University of British Columbia. "During our last capital campaign, the university received several very substantial gifts and I'm certain some of them simply wouldn't have happened had this law not been in place."

Both Warren and Limeburner hasten to point out that tax incentives are only one factor that influence donations to universities. "Charitable intent is still the primary reason behind a donation," says Warren. Limeburner agrees, but adds that donors can't be blamed "if they want to shop around for the best bang for their buck."

If, as expected, Quebec passes the Crown foundation legislation soon, the province's universities will have an edge over other organizations that seek philanthropic support. The ability to accept donations through Crown foundations would be given to universities alone.

"It will be interesting to see how (other organizations) react," says Lamontagne. "Other worthwhile charitable organizations such as hospitals, CLSCs, museums--they might well say, 'If you're doing this for universities, why can't you do this for us.'"

In Ontario, public hospitals, public libraries and some museums are allowed to create their own Crown foundations.