The Montreal Heart Institute Foundation is offering its richest donors the opportunity to make a donation of $50,000, which will cost them barely $500 by multiplying the tax advantages.
On its website, the foundation extols the merits of donating flow-through shares of mining companies. In a document available online, we explain how to make a donation with a real cost of only 1% of its value.
“The donation comes back to you between 1% and 5% of what you invested, that’s what’s interesting. You have so many tax advantages that you can recover almost everything afterwards,” said the advisory director for major and planned donations, Mélissa Brinant, to the representative of our Investigation Office who posed as an interested client.
The Montreal Heart Institute Foundation organizes each year an evening popular with Montreal’s elite, the Grand Bal des Vins-Coeurs, to collect donations. Last September, the event took place at New City Gas.
Photo taken from the Montreal Heart Institute Foundation Facebook page
Last October, the Foundation found itself in the headlines when six former prime ministers of Quebec criticized the reform of the Minister of Health, Christian Dubé. People said they feared for the ability of foundations like the Heart Institute to continue to raise funds.
Personalities
The Foundation is not the only one to promote this type of tax-advantageous donation for large donors, but it is the one that promises the greatest benefit.
Several personalities regularly use this strategy to make donations, notably to the Jewish Community Foundation of Montreal, which has raised approximately $200 million this way.
The donation of flow-through shares to mining companies has exploded in the last decade in the country. They were set up to stimulate research in risky sectors such as the mining and oil industry. In return, they allow you to receive a generous tax credit.
For the rich
To be able to take advantage of this tax shelter, you must be one of the taxpayers who earn the most (salary of at least $235,000), and therefore who pay the most tax.
“It’s something that we offer to our biggest donors,” recognizes Mélissa Brinant, who specifies that we must be able to initially extend the value of the donation up to three times to obtain the maximum from the tax authorities.
The Heart Institute Foundation declined to answer our questions. His spokeswoman instead directed us to his website and to firms that act as intermediaries to buy and resell donor shares like WCPD and PearTree.
Thanks to these intermediaries, the purchase and resale of shares is done in just a few days. In this way, we allow the donor to benefit from the tax advantages linked to mining exploration without risking losing money (see infographic).
On the side of the Quebec University Hospital Foundation, we are dangling a donation at a real cost of 4.5%.
“This real cost comes to us from an illustration provided by finance specialists who implement the strategy for certain donors,” says Nabiha El-Hafi, communications advisor for the foundation. She specifies that this type of donation has been accepted since 2016, but that it only represents a small fraction of their fundraising.
Screenshot of a document provided by the Montreal Heart Institute
Easy and popular
Dozens of generous business people, public figures, politicians and even corporations have donated shares of mining companies in recent years through the Jewish Community Foundation of Montreal (FCJM).
This is the case of host Véronique Cloutier, minister Pierre Fitzgibbon and even the former director of the site XXX Pornhub Feras Antoun (see the video above), according to notarized documents consulted by our Investigation Office.
Even companies like real estate giant Olymbec or a private daycare in Westmount have made this type of tax-advantaged donation.
“Promoters work with us because it’s easy,” says Robert Kleinman, estates and trusts advisor at FCJM.
Quick resale
The risk is minor for them since the flow-through share donation system is well-established.
“They buy the shares at 10 in the morning and sell them at 11,” he says with a laugh. For donors, it is therefore an effective and almost risk-free way to make a donation while benefiting from the tax credits granted for mining research.
In some cases, donations are then redirected to other foundations or community organizations.
The foundation was one of the first in the country to accept this type of donation.
“There were $320 million in donations like that in Canada last year,” says Robert Kleinman.
Interest in certain critical minerals linked to the battery sector has increased demand for this type of donation, according to him.
The advisor explains that even if the government deprives itself of taxes from rich people, it is a form of financing for the mining sector.
“Instead of giving $100 million to a mining company, he does all that with this system (of tax advantages for flow-through shares),” he maintains.
