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Planned Giving Policy

The Navy League is authorized to encourage donors to make both outright and deferred gifts.

The types of deferred gifts to be offered include bequests, reinsured gift annuities, gifts of residual interests, charitable remainder trusts, gifts of life insurance policies and proceeds, and such other gift arrangements as the Board of Directors (hereinafter "the Board") may from time to time approve.

POLICY

  1. The policy of the Navy League is to inform, serve, guide or otherwise assist donors who wish to support the NLOC's activities, but never under any circumstances to pressure or unduly persuade.
  2. Persons acting on behalf of the Navy League shall in all cases encourage the donor to discuss the proposed gift with independent legal and/or tax advisors of the donor's choice so as to ensure that the donor receives a full and accurate explanation of all aspects of the proposed charitable gift.
  3. The National Executive Director is authorized to negotiate planned gift agreements with prospective donors, following programme guidelines approved by the Board.
  4. All planned giving agreements requiring execution by the Navy League shall first be reviewed and approved as to form by the Navy League's legal counsel. Where substantially the same agreement is used repeatedly, only the prototype needs to be approved.
  5. The following planned gifts must be reviewed and approved by the Board. Before acceptance, relevant information about the gift shall be ascertained, including a copy of any appraisal secured by the donor. The Navy League also reserves the right to secure its own appraisal.
    1. Outright gifts of real estate, shares in privately-owned companies, tangible personal property, partnership interests, and other property interests not readily negotiable.
    2. Residual interest gifts.
    3. Charitable remainder trusts.
  6. Outright gifts of cash, publicly-traded securities, life insurance, and reinsured gift annuities do not require approval by the acceptance committee. Any gift, however, may be referred to the acceptance committee if subject to possibly unacceptable restrictions.
  7. The Navy League will not issue gift annuities but may accept assets from a donor, pursuant to an agreement authorizing the Navy League to:
    1. use a portion of the assets to purchase a commercial annuity paying a stipulated amount to the donor and/or other annuitant; and,
    2. retain the remaining assets for charitable purposes.
  8. The Navy League will serve as trustee of charitable remainder trusts at the request of the donor. If they prefer, donors may also select a trust institution, or other qualified trustee, to manage the trust.
  9. The following guidelines are established to assure that planned gifts accepted by the Navy League will be cost effective

GUIDELINES

Outright Gifts

An outright gift refers to a contribution of cash or property in which the donor retains no interest and which can be used currently by the Navy League . Securing outright gifts is our highest priority, and donors who are able to make outright gifts will be encouraged to do so.

Administration
  1. The Navy League will accept an outright gift of any amount, though gifts to establish a named endowment must meet the minimum funding requirements set by the Board.
  2. The Navy League welcomes outright gifts of property as well as cash, but all property other than publicly-traded securities and life insurance policies must be approved by the Board before they can be received.
  3. A donor may complete a gift in a single transaction or make a pledge to be paid over whatever period of time is mutually acceptable to the donor and the Navy League.

The Reinsured Gift Annuity

The gift annuity is a contractual arrangement whereby a donor transfers assets to the Navy League pursuant to an agreement authorizing the Navy League to purchase a commercial prescribed annuity that will pay the stipulated amount for the life of the annuitant(s) or for a term of years. Assets in excess of the amount required for purchase of the commercial annuity are retained by the Navy League and used for purposes specified by the donor and acceptable to the Navy League.

Administration
  1. The minimum amount the Navy League will accept for a reinsured gift annuity is $10,000.
  2. The cost of the commercial annuity generally should not exceed 70-75 percent of the assets transferred in order to result in a significant gift for the Navy League.
  3. The donor may designate the purpose of the gift (amount retained) subject to the consent of the Navy League. One option is for the Navy League to invest the gift (minimum of ten years) until it accumulates to an amount sufficient for a named endowment.
  4. The commercial insurance company shall be selected, and the terms of the annuity contract negotiated, by the Navy League's chief financial officer or by another person or persons to whom this responsibility is delegated by the Board. Only highly-rated companies shall be selected to reinsure an annuity obligation.

Gift of a Residual Interest

A gift of a residual interest refers to an arrangement (ordinarily in the form of a trust) where property is irrevocably committed to the Navy League, but 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 residence and continue to live in it or in a painting and retain possession of it. The donor is entitled to a gift receipt from the Navy League for the present value of the residual interest.

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

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. If the property is income producing, the net income will be paid to the donor and/or other named beneficiary.

When the trust terminates (either at the death of the beneficiary(ies) or after a term of years), the trust remainder is distributed to the Navy League. If the trust is irrevocable, the donor is entitled to a gift receipt for the present value of the residual interest.

Administration
  1. A charitable remainder trust may be funded with cash, securities or real estate. If real estate is to be contributed and the Navy League is the trustee, the real estate shall first be subject to a thorough review as described in the guideline pertaining to real estate (#6 below).
  2. Where the Navy League is the trustee, it is recommended that the minimum trust size be $50,000 and that beneficiaries be at least 50 years of age. The Board, however, has discretion to make an exception to these recommendations in special circumstances.
  3. If the donor selects an outside trustee, the trust may be funded with any property of any value that is acceptable to the trustee.
  4. The trust agreement shall be either drafted by or reviewed by the donor's own legal counsel. The Navy League may make prototype agreements available to the donor's legal advisor but shall execute no agreement until that person has determined that the trust agreement is in the proper form and that the gift is appropriate for the donor's situation.

Life Insurance

There are various methods by which a life insurance policy may be contributed to the Navy League. A donor may:
  1. Assign irrevocably a paid-up policy to the Navy League;
  2. Assign irrevocably a life insurance policy on which premiums remain to be paid; or
  3. Name the NLOC as a primary or successor beneficiary of the proceeds.

When ownership is irrevocably assigned to the Navy League, the donor is entitled to a gift receipt for the net cash surrender value (if any) and for any premiums subsequently paid.

Administration
Any of these types of life insurance gifts are acceptable to the Navy League. In the event a policy is contributed on which premiums remain to be paid, the Navy League will pay the premiums provided the donor makes equivalent contributions for that purpose.

Gifts of 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. Where real estate is transferred to a charitable remainder trust, additional requirements of the trustee must be met.

Administration
  1. The donor shall secure a qualified appraisal of the property.
  2. Unless the Navy League has reason to believe this appraisal does not reflect the property's true value, a gift 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). However, the Navy League reserves the right to secure its own appraisal and issue a gift receipt based on it.
  3. The Navy League shall determine if the donor has clear title to the property.
  4. The Navy League shall review other factors, including zoning restrictions, marketability, current use and cash flow, to ascertain that acceptance of the gift would be in the best interests of the Navy League.
  5. The Navy League shall ordinarily conduct an environmental assessment, which may include an environmental audit, and accept the property only if (a) it contains no toxic substances, or (b) they are removed or other remedies taken assuring that the Navy League assumes no liability whatsoever.

Gifts of Shares in Privately-Owned Companies and Other Business Interests

Donors may make gifts of privately-owned shares and partnership interests. These can be accepted by the Navy League so long as the Navy League does not assume any liability in receiving them and would not be subject to penalties. In some instances the corporation is willing to redeem privately-owned shares, or other stockholders are willing to purchase them.

Guidelines
  1. To be considered for acceptance, partnership interests must not subject the Navy League to cash calls or other liability and must not have adverse tax consequences to the Navy League.
  2. Privately-owned shares may be accepted if they will not subject the Navy League to penalties and if they can likely be sold in the future to the corporation, other stockholders, or to others interested in acquiring the corporation.

PAYOUT POLICY – ENDOWMENT FUNDS

Distributions from Endowment Funds must be to further forward the NLOC’s Mission or to fulfill a donor's directive. This policy is designed to allow a predictable overflow of funds while protecting original principal and ensuring fund growth to sustain purchasing power with the rate of inflation.

POLICY

This policy will govern all donations exempt from the CRA’s 80/20-disbursement quota rule and any other funds that may be internally restricted by the NLOC’s Board of Directors.

The adoption of a fixed payout policy will achieve the following objectives:
  1. Maintain purchasing power.
  2. Achieve better overall investment performance by allowing a more flexible environment for investment managers.
  3. Provide predictability and smooth fluctuations of the Navy League’s annual budget.

The amount that the Navy League makes available will be calculated by multiplying a percentage by a base.

The percentage will normally be the historic rate of return from assets invested in a manner consistent with the Navy League’s Investment Policies less the historic rate of inflation.

The base will be the annual moving average of the market value of the Navy League’s restricted assets.

The determination of the percentage factor described above will be reviewed periodically in light of evolving trends with respect to investment returns and the Bank of Canada rate of inflation, and adjustments will be made when it is considered appropriate. It is the Navy League’s judgement (as of March 2002) that a percentage factor (real rate of return) of 5% (7% interest - 2% inflation) is appropriate.

The Navy League recognizes that the extremely unusual circumstances with respect either to financial markets or to the need of the communities it serves may, in rate instance, require temporary departures from the strict application of this Payout Policy.

Example:
The annual spending limit is calculated by multiplying a percentage by a base. 5% * ($500,000) = $25,000

Exceptions

Externally restricted funds will be spent according to the express wishes of the donor in those instances where this is specified.

Performance Management

This policy will be reviewed annually by the Finance Committee.

NAMED ENDOWMENT FUNDS

The Navy League encourages donors to establish Named Endowment Funds to support its work.

POLICY

Canada Revenue Agency Rules Pertaining to Endowed Funds.

Canada Revenue Agency's rules specify that registered charities can receive gifts that are subject to a donor's written trust or direction that they be held by the charity for 10 years or more. This allows for the charity to bypass the 80/20-disbursement quota (where 80% of the contribution must be spent on charitable activities in the fiscal year following the year the contribution is made). As well, investments or other property later substituted for the original 10-year gift are also excluded for the disbursement quota. However, when 10-year gifts are spent, they must be included in the disbursement quota.

Therefore, donors will be asked to provide a written request to hold their endowed contributions for a minimum of 10 years.

Types of Funds that can be established:
Donors have the option of establishing two types of Funds:
Restrictions made by donors:
Donors may establish either unrestricted Funds or restricted Funds by directing their contributions to a particular area of interest. Gifts that are designated for a particular purpose will require the prior approval of the Finance Committee of the Navy League in consultation with the Executive Committee.

Source of Income:
Minimum limit required to establish fund:
The Fund will only be recognized when contributions to the Fund total at least $10,000. Donors will be encouraged to set up the fund and make regular instalments to build up the fund to the minimum level.

The net investment income from the instalments will be deposited into the Fund to assist in building it up to the minimum level. ("Net investment income" means the balance remaining, if any, after allocation of the investment income from the general endowment fund as per the rate determined by the Navy League's Payout Policy - Endowment Funds. For example the current allocation rate is 5% of the base in the general endowment fund. If the actual investment income were 7%, there would be 2% (which equals 7%-5%) that would be left to be prorated among the individual Funds.)

Time limit for fulfilling the minimum commitment:
The Fund must be at the minimum contribution level within 5 years from the date of its establishment.

If the Fund is not fully financed within 5 years, the Fund will be collapsed and become part of the general endowment fund. The 10-year spending restriction will also apply to the collapsed monies. Any restrictions made by the donor under the "Named Endowment Fund Agreement" would still apply, however the collapsed monies would not be designated as a "named fund".

Investment & Administration:
The principal of this Fund shall be retained, invested, administered and managed by the Navy League and will be in accordance with the Navy League's policies and procedures.

Allocation of monies from the named Fund:
The Navy League of Canada's Payout Policy - Endowment Funds apply in all cases except where spending restrictions are applied by the donor.
  1. If the Fund is restricted to a designated area, the allocation shall be determined by the Board of Directors of the Navy League in consultation with the Executive Director.
  2. In the case of an unrestricted Fund, the allocation will be made at the discretion of the Board of Directors of the Navy League.

Agreement with donors:
When the donor wishes to establish a Named Fund, an Agreement will be drawn up between the donor and the Navy League, which would include the purpose of the Fund and the method of funding.

Each Agreement must also contain a "Power to Vary" clause where, if changed circumstances at some future time make it impractical to continue using the principal or income from this Fund for the designated purposes, the Board of Directors may designate the principal or income for other purposes which are compatible with the original intent of the Fund.

Reporting to Donor:
A report containing information about the amount of money allocated and to where the money was allocated will be sent to the donor on an annual basis.

For any questions or clarification regarding this Planned Giving Policy, please contact the National Office by email at national@navyleague.ca.
September 2026