Like any other charitable donor, anonymous donors want the tax benefits that go with being philanthropic.

In fact, tax credits play a significant role in inspiring people to donate, says Peter Broder, corporate counsel at Imagine Canada in Toronto. More than 53% of Canadian charitable donors polled in 2005 said that they would give more to charity if the government offered more generous tax credits, he says.

Unfortunately, the process established by the Canada Revenue Agency by which anonymous donors get their tax credits can be a bit of a nightmare, says Robert Hayhoe, partner and charity law lawyer with Miller Thomson LLP in Toronto.

In 1994, says Hayhoe, the CRA began allowing law firms to act in trust on behalf of clients wishing to make anonymous donations. The charitable tax receipt would specify that the account was in trust and it, along with the original trust document, would be disclosed to the CRA.

“The CRA would accept that the donor made that gift,” says Hayhoe.

In 2002, the rigid rules slackened slightly, with the CRA stating it would be willing to accept the same trust arrangement for anonymous donations — but without the need to go through a law firm. Donors needed only agents from then on, Hayhoe says. Those agents could be advisors, accountants or even friends.

However, he adds, lawyers still must draft the trust agreements and anonymous donors still have to follow strict rules: the donor appoints an agent, who agrees to hold funds in trust; the donor tells the agent to make the gift; the agent directs the charity to issue a receipt to the agent in trust; the agent forwards the receipt along to the donor, who then files it with the tax return along with the trust agreement

A revision to the rules in 2005 directs that one trust arrangement cannot be used for a number of charities, says Béatrice Fénelon, spokeswoman for the CRA in Ot-tawa. Instead, a trust agreement must be drawn up for each anonymous donation.

Donors interested in giving anonymously to more than one charity need to contact the CRA in writing, says Fénelon, and outline the details (donor name, charities, amount designated to each) to ensure that all is in order.

An alternative to taking this route, says Hayhoe, is using community foundations, which are more than happy to take money and direct it to a chosen charity on a donor’s behalf.

“That’s, frankly, in most cases, probably easier than this rigmarole,” Hayhoe says.

Another alternative, suggests Broder, is to donate to a charity. Charities will respect a client’s desire for privacy. “You would disclose who you are but make a request not to be contacted again,” he says. This eliminates the need to assign an agent.

Some donors merely want to keep their names from the public eye or from a charity’s board, says Elena Hoffstein, a tax and charity lawyer with Fasken Martineau DuMoulin LLP in Toronto.

“Most charities have probably developed procedures around that,” she says.

In her experience, charities will bend over backward to respect a donor’s wishes.

“If they need to walk an extra step to accommodate a donor, they will try to do that,” she says. IE