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FAQ
Frequently asked questions
Here are the top questions our clients ask before getting started.
What is a DAF?
A Donor Advised Fund (DAF) is a structure within a registered charity that acts as an endowment. Effectively a family make a contribution to the M&G DAF, and it will issue the family member or members who make the donations a charitable receipt for the entirety of the donation. The DAF then invests the funds and holds it in a specific account for each family or family member, as the family determines. Every DAF is required by law to distribute between 3.5% and 5% (depending on how much is in the endowment) of the income from the investments to other registered charities or to spend those funds for charitable purposes. The family/family member directs the DAF (this is where the Donor-advised part comes in) which charities to make grants to or what charitable functions it should perform.
What is the M&G DAF?
The M&G DAF is a not-for-profit corporation created under the federal Corporations Act. It is also a registered charity with the Canada Revenue Agency.
Are there any restrictions on the investments in the DAF?
Yes, the managers of the DAF are subject to the Trustee Act to manage the funds as would any “prudent [person] of business” would manage their own funds. There are also restrictions on ensuring that the DAF does not use the funds in a way that would personally benefit the donor or persons not at arm’s length to them. However, that does not mean that we cannot make investments that make sense and have the potential for growth. We have to balance risk with return in a way that allows the DAF to meet its distribution obligations, and at the same time us the investment to do more than just meet the distribution obligations.
What about the name?
The McGillicuddy & Garbutt Donor Advised Fund? Why? Most DAFs are named generically. However, those names mean nothing. Who runs those DAFs? Who is responsible for the money? Do you know? How would you find out? If something went wrong, who’s reputation would suffer? The reality is that generic naming a DAF is an easy way to avoid personal responsibility and reputational damage if there is a problem. We put our own names on it because we want the donors to know who is responsible for protecting their legacy. We are putting our names and reputations on the line, front and centre.
What distinguishes the M&G DAF from other DAFs?
There are mostly two other kinds of DAFs - Financial Institution DAFs and Operating charity DAFs. So for example, Canada’s big banks and other financial institutions all have DAFs. Those DAFs invest funds according to conventional traditional methods of a diverse portfolio. That portfolio gives returns that can then be distributed, and the donor can direct those funds to whatever charity they want. It provides professional asset management in the most conventional manner. The other most common form of DAF are foundations connected to a large operational charity. Donations to those DAFs are also invested conventionally to give returns that are then usually directed to the specific charity connected to the DAF. We are a little different. While we also have to meet our distribution obligations, we are focused much more on finding creative ways to both meet our distribution obligations while actually having an impact on Canadian clean, green and health technologies and building the next generation of businesses in a sustainable manner.
Is the focus of the DAF only on Neurodiversity?
Yes and No. The DAF was founded originally for the purpose of creating a new paradigm for the development of supported living and working spaces for people on the Autism spectrum. We continue to do that work. The DAF has also created an entity called the Homewood Academy in Aurora Ontario, whichh is a school to meet the needs of neurodiverse children, so yes we are heavily involved in advancing the well-being of the neurodiverse and specifically neurodiverse children and young adults. Please contact us if you would like to know more about that aspect of our DAF. However, given our focus on working with families to achieve their legacy through catalytic co-investment in early-stage, often pre-revenue clean, green and health technology companies, we have a broader scope of interests.