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How to optimize your charitable giving while supporting Canada’s green energy sector

This Canadian boutique financial services firm’s flow-through share structure powers innovation and philanthropy
Photo via: LSOphoto/iStock.

It’s a little-known and underutilized tax incentive with benefits that border on immeasurable.

Flow-through shares have been in the Canadian tax code since 1954 and support the domestic mining and exploration sector in Canada – a sector that serves as a major employer and accounts for a significant portion of the nation’s gross domestic product (GDP).

In more recent years, the Canadian government has highlighted the importance of critical mineral exploration to fuel our green energy future, with several initiatives contributing to its 2050 carbon-neutral pledge.

Enter the charity flow-through share structure offered by Wealth Creation Preservation & Donation Inc. (WCPD). This structure is tailored to those earning more than $225,000 annually and provides an incentive that reduces tax – making an after-tax return – or allows you to give those proceeds to charities of your choice.

“The biggest advantage that we provide is that these flow-through shares are just like venture capital,” explains WCPD president and founder Peter Nicholson. “One time out of 10, they get something exciting in the drill bit; one time out of 100, it becomes a junior mine; and one time out of 1,000, it becomes a massive mine that pays billions of dollars of income tax and hires tens of thousands.”

Going green has never been so simple

Think of lithium, graphite, nickel, cobalt, copper and other rare-earth elements being mined in the Canadian north – all of them are central to Canada’s carbon neutral pledge by 2050 and are necessities for an electric future that will power windmills, solar panels, electric vehicles and more.

This mining market provides the most jobs to Indigenous populations in the north and will shift the balance of power in doing business on a world scale. Currently, China and Russia have an 85% market share in rare mineral extraction, but the flow-through share model can tip that balance back in Canada’s favour.

 “Canadian mineral exploration has never had an issue with human rights; we have many rules and regulations around the environment, and it’s in a much better place than other regions of the world,” Nicholson explains.

WCPD enters into the fray when investors purchase flow-through shares and donate them to charities of their choice: hospitals or universities, for example.  The shares are then sold to a pre-arranged liquidity provider — an institution or a mutual fund — to avoid stock market volatility. 

In other cases, investors keep the cash proceeds from the liquidity provider and enjoy an after-tax rate of return between 20 and 30%.

Making a difference while mitigating risk

This structure carries no stock market risk, and WCPD clients can decrease their costs to donate from 50 cents to a dollar, all the way down to a one-cent cost.

Through its flow-through structure, WCPD has facilitated more than $350 million to charities across Canada; more than 10,000 cheques have been issued on behalf of clients to charities through the WCPD Foundation; and there have been no issues with the Canada Revenue Agency across more than 8,000 personal tax returns filed by clients using this structure.

“People used to really frown upon mining, but in this case, critical minerals can be the saviour of our environment,” Nicholson says.

To learn more about this lucrative model and how you can go with the flow, visit