TD Waterhouse Canada Inc. today announced the establishment of the Private Giving Foundation. The brokerage firm says the foundation is the first program of its kind offered by a Canadian financial institution that enables individuals to establish an endowment fund.

Contributors will have a donor-advised account opened in their own name or designated in memoriam to an individual or a special cause, and will then recommend the charities that will receive grants from the foundation.

TD Waterhouse says the program offers donors the advantages of a private foundation without many of the associated expenses or administrative tasks and with a much lower minimum contribution.

Donors to the foundation start with a minimum irrevocable contribution of $10,000 in cash or securities. Additional contributions of $1,000 or more can be made at any time. The principal is invested in the TD Balanced Income Fund, which is advised by Jarislowsky Fraser Ltd.

Each year, the foundation will distribute, in accordance with Canada Revenue Agency guidelines, the net income and a portion of the net capital gains received from the fund to charities recommended by donors. In addition to maintaining low administration fees for the Foundation and a reduced MER of 1% (excluding GST) for the fund, TD Bank will provide an initial contribution of $250,000 to the foundation that will be directed towards innovative work in the charitable sector.

The board of directors of the foundation includes: Marcia Lewis Brown, managing director at TD Asset Management Inc.; Rudyard Griffiths, founder and executive director of the Dominion Institute; Michael Sherman, senior manager, government and community relations, TD Bank Financial Group; David J. Thomson, former president of Great West Life Properties; and Julie Toskan-Casale, founder and president of The Toskan Foundation.

TD Waterhouse say that endowment funds and private foundations in Canada have until now been available only to institutions or very wealthy individuals due to the significant initial contribution, set-up fees, annual meetings and other administrative tasks.

It says the foundation overcomes these obstacles by pooling the funds of individual donors for investment purposes.

“Canadians are generous people, and many want to take a more strategic approach to charitable giving,” said Jo-Anne Ryan, executive director of the Private Giving Foundation, in a release. “The foundation offers them a comfortable way to achieve their charitable goals through a structure that will offer a long-term source of funding for the charities they recommend.”

TD Waterhouse says there are significant tax benefits for donating through the foundation. Donations are eligible for a charitable tax receipt in the tax year in which donations are made, which can be carried forward for credit in future years.

Those donating publicly traded securities that have appreciated in value are taxed on only 25% of the capital gain instead of the usual 50% with a private foundation. Contributions to the foundation can grow tax-free.

Any public charity registered with Canada Revenue Agency is eligible to receive a foundation grant.