Post Updated: Tom Williams responds to David Baines’ Vancouver Sun article
February 21, 2008 by Tris Hussey
Filed under Business
David Baines wrote an article in the Vancouver Sun on Saturday about GiveMeaning. From the quick skim I did and Tom’s response, it sounds like David is raising questions about financial disclosure at GiveMeaning. This is an excerpt from Tom’s response:
Nevertheless, his main contention is that GiveMeaning Foundation has spent more money building the GiveMeaning brand and service than it has raised money for its projects. This is not only not in dispute but not surprising to anyone that knows anything about a start-up business. GiveMeaning launched its re-vamped website in late September of 05. Prior to that, our web presence was in Beta and very little transactions flowed through. The numbers that Baines is reporting on is our first full year of collecting tax-receipted donations in Canada for the GiveMeaning website. Given that our
average donation through the website is about $40, our first-year tally of money raised for projects is not surprising. It’s also not surprising to anyone that understands the nature of a start-up that in the first few years of operation that start-up costs will exceed revenues. It took eBay eight years to make a profit. Source: The $5 philanthropist: My response to David Baines’ article this past Saturday
I’ve talked with Tom on several occasions and even met him in person. I find talking with him energizing and inspiring. I think any organization like GiveMeaning is going to attract scrutiny. Personally I like Tom’s response, it’s clear and straightforward. I hope that now this will put any and all questions to rest.
Update Feb 21, 2008: It’s been almost a month since I wrote this post and as of this moment there are 63 comments on it. I have a lot of mixed feelings about this post. At first I thought, wow Tom is getting a bad wrap. But I’ve been reading the comments with an open mind and well now I don’t know.
A couple weeks ago Tom emailed me privately to express his concern about some of the comments. He asked that I take down defamatory comments, or he will be forced to take legal action. I read through all the comments, as did the content and executive team of b5media, and found one that I thought was over the line so I deleted it. Since then I haven’t been approving all comments. There have been two in the last couple days that I will not post.
After deleting the one comment, I told Tom and offered that he could be on my BlogTalkRadio show to give his side of the story. Tom hasn’t replied to that offer. This week I received a letter from GiveMeaning’s lawyers, which is now in the hands of our lawyers.
I stand by freedom of speech. I stand for open conversations. I can’t abide ad hominem attacks though.
I decided to update this post to let you know that I still read all the comments and my offer to Tom is still open. If Tom accepts I would have callers on the line unless he agrees.
I also still believe the idea of GiveMeaning is great, however I think there are legitimate questions about the site/company/foundation that need to be answered and addressed.
I would like to know if all the questions and criticisms can be answered. Right now, however, I have my doubts about that as well.
Steve, I think that I see what you mean.
The 2007 filing for the Givemeaning Foundation, 868487307RR0001, does not indicate that any of the four directors (Thomas Williams, John Bromley, Christopher Richardson and Mark Dowds) were directors/trustee at the 2007-09-30 year end.
This could be an indication that all four have left; that the information return was not filed correctly; or that the data was entered incorrectly by the CRA.
The 2006 return does indicate whether or not the directors/trustees were directors/trustees at year end.
Thanks for your response. how do i look into CRA results for givemeaning, scuze my ignorance…
Steve, go to
http://www.cra-arc.gc.ca/ebci/haip/srch/sec/SrchLogin-e?login=true&searchType=Registered
and enter ‘GiveMeaning’ in the charity name box. That takes you to the two GiveMeaning Foundation listings, and you click on GIVEMEANING FOUNDATION.
That takes you to the header page, and clicking Registered Charity Information Return takes you to the yearly filings.
David Baines has written another article, commenting upon the latest CRA filing;
http://www.canada.com/vancouversun/news/business/story.html?id=7dab553a-abce-452c-abd8-d7a73b093a58
Mystery surrounds charitable dealings
David Baines, Vancouver Sun
Published: Saturday, June 14, 2008
dbaines@png.canwest.com
© The Vancouver Sun 2008
GiveMeaning, a Vancouver-based organization that acts as a middleman for charitable donors and donees, has filed an updated financial statement with Canada Revenue Agency.
I had hoped this statement would resolve some of the questions and concerns I had raised in earlier columns, but no such luck. In fact, it raises even more questions and concerns.
GiveMeaning is a sort of Craigslist for charities. People trying to raise money for specific projects can register on GiveMeaning’s website, and people wanting to donate to those projects can contribute through the website.
GiveMeaning is the brainchild of Tom Williams, 29, a self-described former Silicon Valley whiz kid who claims to have turned his back on the material world and committed himself to philanthropy.
As outlined in earlier columns, his story doesn’t stand up to scrutiny. I discovered that he has stumbled from one business and personal failure to another, and generated a lot of ill-will in the process. Also, a lot of the money raised by GiveMeaning ends up in his pocket.
During the year ending Sept. 30, 2006, GiveMeaning received $982,705 in donations and spent $493,204, or 50 per cent, on administrative expenses.
Of the remaining $489,501, only $171,979 — or 17.5 per cent of total donations — flowed through to charities (the balance remained on GiveMeaning’s books).
One of the biggest expense items was Williams himself. He drew a salary of $90,000 per year, and his wife, country singer Jessie Farrell, drew another $30,000 for her part-time work. This is very generous compensation for such a small charity.
Williams acknowledged that administrative costs were high, but attributed it to normal start-up costs. He said GiveMeaning’s financial return for the year ending Sept. 30, 2007, would show a greater percentage of overall donations going to charity.
That return has just been posted on the Canada Revenue Agency website. At first glance, it looks like Williams’s prediction was correct…
David Baines has written another article, commenting upon the latest CRA filing;
http://www.canada.com/vancouversun/news/business/story.html?id=7dab553a-abce-452c-abd8-d7a73b093a58
Mystery surrounds charitable dealings
David Baines, Vancouver Sun
Published: Saturday, June 14, 2008
dbaines@png.canwest.com
© The Vancouver Sun 2008
…That return has just been posted on the Canada Revenue Agency website. At first glance, it looks like Williams’s prediction was correct.
Donations and sundry revenue nearly doubled to $1,908,038. Of this amount, $1,391,118 or 73 per cent, flowed through to charities. This is a big improvement over the 17.5 per cent the previous year.
Administrative expenses, meanwhile, increased by 72 per cent to $851,198. But relative to total donations, administrative expenses dropped from 50 per cent to 44 per cent. Still very high, but better.
However, when I dug a little further, the picture took a turn for the worse.
The financial return shows that $500,000 of the roughly $1.4 million in donations that flowed through GiveMeaning was donated to Star of the Sea Parish, a Roman Catholic charity in Surrey.
The odd thing is that Star of the Sea is not listed on GiveMeaning’s website and did not solicit any funds through GiveMeaning. It is not the sort of mom-and-pop charity that typically uses GiveMeaning’s services.
Paul Schratz, spokesman for the Archdiocese of Vancouver, said the donation was a private donation of securities made by a parishioner. He said the donor received legal advice that he should funnel the securities through GiveMeaning.
He said the people who run the Star of the Sea charity had “no knowledge whatsoever” of GiveMeaning. It was simply a conduit…
David Baines has written another article, commenting upon the latest CRA filing;
http://www.canada.com/vancouversun/news/business/story.html?id=7dab553a-abce-452c-abd8-d7a73b093a58
Mystery surrounds charitable dealings
David Baines, Vancouver Sun
Published: Saturday, June 14, 2008
dbaines@png.canwest.com
© The Vancouver Sun 2008
…Another $40,000 cash donation flowed through GiveMeaning to Canadian Food for Children Co-Workers, a Langley-based charity which distributes food to needy people throughout the world.
Once again, this charity is not listed in GiveMeaning’s website, and president Joseph Krentz said he did not solicit any funds through the site. He said the donation came from a longtime supporter, and he has no idea why the donation was funnelled through GiveMeaning.
Another $35,000 cash donation was flowed through GiveMeaning to the Agape Street Ministry, which helps drug addicts and prostitutes in the Downtown Eastside. Once again, this charity is not listed on the GiveMeaning website. President Dan Dobin said the cheque just arrived in the mail. “I just about fell over,” he said.
He said the donor, a couple, was identified to them, but he has “no idea” why they ran the money through GiveMeaning. “It’s a mystery,” he said.
Otto Forgacs, chairman of the Mind Foundation of B.C., which helps schizophrenics, had an almost identical story about the $35,000 it received from a private donor who is known to them. So did Yvonne Douma, executive director of the Pro-Life Society of B.C., who similarly received $35,000 from a donor who is also known to them.
So who is the mystery person (or persons) who is counselling these people to funnel their donations — a total of $645,000 — through GiveMeaning, and why are they doing it? Williams refused to be interviewed….
David Baines has written another article, commenting upon the latest CRA filing;
http://www.canada.com/vancouversun/news/business/story.html?id=7dab553a-abce-452c-abd8-d7a73b093a58
Mystery surrounds charitable dealings
David Baines, Vancouver Sun
Published: Saturday, June 14, 2008
dbaines@png.canwest.com
© The Vancouver Sun 2008
…So who is the mystery person (or persons) who is counselling these people to funnel their donations — a total of $645,000 — through GiveMeaning, and why are they doing it? Williams refused to be interviewed.
I don’t know what, if any, value-added GiveMeaning provides in this exercise. They appear to be simply accounting entries. On the other hand, there may be substantive financial or administrative reasons. We just don’t know.
One thing we do know: the $645,000 in donations that ran through GiveMeaning on an unsolicited basis had the effect of increasing the percentage of donations that GiveMeaning flows through to charities, and reducing administrative expenses as a percentage of total donations.
If we subtract the $645,000, the total amount that GiveMeaning flowed through to charities drops to $746,118. Meanwhile, GiveMeaning racked up $851,198 in administrative expenses. The bottom line is that it spent more on overhead than it flowed through to charities that actively solicited and utilized GiveMeaning’s services.
This is a pretty ugly picture. Maybe Williams could paint a better picture, but he’s not talking.
Unpeeling those financials a bit further:
1…a donation of $40,032 was sent to Hope for Nations. A trustee of this registered charity is Ralph Bromley.
2…the filing shows that GiveMeaning issued tax receipts for publicly-traded securities/mutual funds which it received as non-cash gifts. A charity is required to report, at line 5600, the total eligible amount of tax-receipted non-cash gifts (gifts in kind) which it received and issued tax receipts for. This amount is not filled in on the filing.
3…the liabilities show amounts owing to non-arm’s length parties of $39,182 and an amount of $300,000 as other liabilities. IMO, if these were to be repaid, the charity would be in straitened circumstances.
4…2007 management and administrative expenditures/overheads totalled $851,198, which is $70,933 per month. It is now almost the end of June, and GiveMeaning has been operating for nine months in the current fiscal period, which means that another $638,000 should have been expended on overheads.
5…total tax-receipted gifts and amounts received from other registered charities total $1,768,732. Only $1,391,118 was remitted to qualified donees, leaving a shortfall of $377,614. The filing does not show assets in an amount sufficient to cover this amount.
This is very telling. I read the article. Thanks DG.
I see GiveMeaning’s money schemes in the news again. Revisiting, I find it even more encouraging to see that Dayo is doing such fine research, and that Tris is still carrying on with this thread – despite earlier reports of bullying by Tom Williams.
If the authorities show a fraction of the perseverance and integrity of what you’re displaying, the games by Williams, Blake Bromley et al will be curtailed before too long.
Robert, this is a real cash-burner of an operation, not for the faint of heart or shallow-pocketted.
This is a post I made on another thread which recaps some of the posts above (M Tippitt, who has posted here http://www.nowpublic.com/money/media-mud-fight-local-reporter-vs-charity-operator#comment-107150)
In 2006, GiveMeaning had three full-time employees making between $40K and $79.9K, and one head honcho making $80K to $119.9K. GM took in $234,643 in tax receipted donations, and $730,350 from other registered charities (we never did find out the identity of these charities which were moved enough to give almost $750,000 to cover GM’s start-up costs), with $250,000 of the $730,350 being designated as specified gifts. Management and admin burned up $493K out of $494K (auto & travel, $24K; professional & consulting, $199K; and full-time wages and burden, $153K), and gifts to donees totalled $171,979, with $87,383 of that going to Amazing Grace (Give Meaning’s implementing organization).
In 2007, Give Meaning had progressed to a reported six full-time employees, with four of them making between $40K and $79.9K, and one making $80K to $119.9K. GM took in $878,732 in tax receipted donations (we’re ignoring the $740,000 in flow-throughs which didn’t make a donate-to-me pitch on the GiveMeaning website), and $150,000 from other registered charities. Management and admin burned up $851K out of $860K (auto & travel, $79K; professional & consulting, $237K; and full-time wages and burden, $339K), and gifts to donees totalled $651,118 (we’re again ignoring the $740,000 in flow-throughs), with $126,098 of that going to Amazing Grace (Give Meaning’s implementing organization).
Over two years, $1,344,000 expended on management and administrative costs to raise $1,113,375. In two years, $880,350 was given to GiveMeaning by other (and mainly unknown) registered charities so that GM could cover a portion of the $1,344,000 in management and admin costs (there is a $300,000 other liability on the 2007 balance sheet, along with a $39K amount owing to non-arm’s length parties, which seems to make up the deficiency).
Ignoring the $740,000 in flow-throughs, tax receipted gifts taken in over the last two years total $1,113,375, yet gifts to qualified donees going out total only $823,097, leaving a shortfall of $290,278.
Year 2007 assets total $337,773, and liabilities total $365,445 (and $339,000 of the liabilities is mentioned above).
On another happy note, 2007 management and administrative expenditures/overheads totalled $851,198, which is $70,933 per month. It is now almost the end of June, and GiveMeaning has been operating for nine months in the current fiscal period, which means that another $638,000 should have been expended on overheads.
Looks like some unknown angels will have been casting their bread upon the GM waters by ponying up another $750,000 (from other registered charities???) to keep the ark afloat.
Sheesh. Give Meaning spent $436,918 on professional and consulting fees over the last two years. Whatever happened to talking things over with your pastor or parish priest?
In 2006, Give Meaning reported to the Charities Directorate on its September 30 filing that other registered charities had given it $730,350 ($250,000 of this was designated as specified gifts). Next year, on its 2007 filing, GiveMeaning reported that it received another $150,000 as a gift from registered charities.
That’s $880,350 in two short years, and GiveMeaning’s 2007 liabilities show another $339,000 in advances/loans from other unspecified and unknown entities.
However, GiveMeaning is pleading on its website (http://www.givemeaning.com/project/givemeaning ) for cash to cover its operating costs, saying that it needs $500,000, and that only $99,353.19 has been received to date. But, but, but…what has happened to the accounting records?? How did $780,997 seemingly fall through the cracks ($880,350, less $99,353), unrecorded?
The GiveMeaning list of donors to the $500K target presently shows that the Seraphim Foundation made a donation. Why did the Seraphim Foundation, 859365371RR0001, report on its December 31, 2006, filing that it gave $25,000 to GiveMeaning (used to help GM with overheads)? Seraphim got $101,000 in tax-receipted gifts, and why was it moved enough to give 25 per cent of its take to Tom Williams and GiveMeaning as an unspecified gift?
3. Seraphim Foundation
http://www.givemeaning.com/project/givemeaning
http://www.cra-arc.gc.ca/ebci/haip/srch/sec/SrchLogin-e?login=true&searchType=Registered
2006
Registered Charity Information Return
for
SERAPHIM FOUNDATION
Fiscal Period End 2006-11-30
BN/registration number 859365371RR0001
Qualified Donees – SERAPHIM FOUNDATION
Name of Qualified Donee: GIVEMEANING FOUNDATION
Location: VANCOUVER, B.C.
BN/Registration Number: 868487307 RR 0001
Total Amount of Gifts: $25,000
Amount of Specified Gifts: 0
Associated Charity: No
Thanks Dayo. What do you think this means?
“What do you think this means?”
I hope that it means that those entities (and I personally doubt that if all of their names were to be fully revealed that their activities would fill my expectations of what a charity should do) which fronted GiveMeaning the $880,350 to cover overheads, and also those other entitiies which advanced the other $339,000 to GM in 2007, will be called to task by the CRA.
It also likely means that the Seraphim Foundation’s $25,000 donation to GM has brought Seraphim’s activities to the public’s attention.
The CRA is not toothless.
http://www.cbc.ca/canada/story/2008/06/25/banyan-charity.html
CRA probing Banyan Tree issuing $208M in tax receipts with little paid in charitable donations
Dayo Gould or anyone else, have you read TW’s response to the last DB article on his blog? Surprise, surprise…He still denies everything and avoides the issues. His “team” has lost players as well.
This still has legs, and it is interesting that Amy O’Brian refers to GiveMeaning as “Williamss’ charity business”.
Still has legs.
http://www.canada.com/vancouversun/story.html?id=19ba31a7-5552-4d16-97b0-6fea7103d472
Amy O’Brian, Vancouver Sun
Published: Wednesday, July 09, 2008
“…Farrell and her husband, Tom Williams, have had their share of worries in the past year with the publication in The Sun of several pieces by business columnist David Baines. The columns, which began in January, raised serious questions about the integrity of Williamss’ charity business, GiveMeaning….”
Steve, I’m sorry that I missed your response until now.
I just read Tom William’s undated update to his blog, which seems to have been posted prior to June 26, 2008.
The response is extremely long on rhetoric but short on explanations, as it gives out nothing in the way of a clarification about the flow-throughs from the original donors to GiveMeaning and then from GiveMeaning to the Star of the Sea, etc., and makes no apology for the increased and bloated management, travel and consultancy expenses in 2007.
There are a few more anomalies which are apparent in the CRA filing, and I’ll throw them out for discussion next week.
However, Mr. Williams’ statement, “GiveMeaning, a service which has helped hundreds of charities across Canada achieve their goals without charging any costs to them or their donors”, disingenuously glosses over the fact that some persons, by way of advances from some other registered charities, have chosen to hand over to GiveMeaning $880,350 to cover GM’s overheads, and other entities have advanced another $339,000 to GM in 2007.
That $880,350 must have been expensed as a “cost” to those other, unnamed charities’ donors, because it’s not showing as a liability on GM’s CRA filings.
Should GM be unable to repay the $339,000 advanced to it (and those financials are bleak), then the entities which advanced the $339,000 will also have to bear the “cost” of the bad debt.
I speculate that those entities are other registered charities, and the bad debt would then be expensed and become a “cost” to them and their donors.
Thank you DG.
The Independent World Television Foundation, 815799671, has filed its October 31, 2007, Registered Charity Information Return.
Its financials are interesting, showing amounts receivable from non-arm’s length parties of $2,179,783 and $1,509,665 in cash and short-term investments, and other liabilities of $4,117,260.
The only charitable thing which it seems to have done in 2007 is to hand over another $150,000 to GiveMeaning, and the charity’s assets at line 4110 (amounts receivable from non-arm’s length parties) have increased by $2,097,209, and other liabilities at line 4330 have increased by $2,117,260.
INDEPENDENT WORLD TELEVISION FOUNDATION
2007-10-31
815799671RR0001
(604) 683-7006 (this is Benefic’s telephone number)
Total gifts to qualified donees, excluding enduring property 5050 $ 150,000
Qualified donees
1 Name of Qualified Donee: GiveMeaning Foundation
Location: Vancouver, BC
BN/Registration Number: 868487307 RR 0001
Total Amount of Gifts: $ 150,000
Amount of Specified Gifts: $ 0
Associated Charity: No
http://www.canada.com/vancouversun/news/business/story.html?id=40c97404-2157-47fc-8edb-63e499354804
David Baines
• “…In 2006, the television foundation donated $150,000 to GiveMeaning to help pay overhead. This struck me as unusual, as GiveMeaning has nothing to do with the television business…
“… later learned that the television foundation had been funded by a $2-million loan from an unidentified party. Foundation president Paul Jay said that, for confidentiality reasons, he could not disclose the name of the lender, but he said the lender had been introduced by Bromley.
Whomever the lender was, he or she clearly had a soft spot for GiveMeaning. Jay said a condition of the loan was that the television foundation donate $150,000 to GiveMeaning to help finance overhead…
The CRA grinds slowly, but it does grind away.
http://www.cbc.ca/canada/story/2008/09/20/banyan-tax.html
The federal government has revoked the charitable status of the Toronto-based Banyan Tree Foundation.
In a notice published in the Canada Gazette Saturday, the Canada Revenue Agency (CRA) said Banyan failed to meet requirements in the Tax Act.
In June, CBC News reported that CRA had called the charitable foundation a “sham,” and was forcing donors to pay back close to $100 million to the government.
The foundation has said it distributed more than $200 million to charities, such as the Calgary Red Cross and Parkinson’s Society of the Maritimes. But the figure was nowhere near $200 million.
Banyan gave clients a tax receipt for donations, and also offered many of its clients loans to increase their donations.
But the government has refused to honour the charitable receipts the foundation gave to those donors, requiring them to repay the tax avoided.
Banyan Tree president Robert Thiessen has denied the government’s allegations, saying in June “they’re wrong.”
“I am turning human greed into philanthropic work, and I make no apologies about that,” he said.
Still grinding away.
http://www.canada.com/vancouversun/news/business/story.html?id=0403e438-92fd-418c-858d-24b375a24eff
Organization loses charity status
Pinnacle Foundation’s tax-shelter scheme fails to satisfy agency
David Baines, Vancouver Sun
Published: Tuesday, November 18, 2008
The Canada Revenue Agency has revoked the charitable status of Pinnacle Foundation, a Vancouver-based organization that has been running a charitable donation tax-shelter scheme.
In a release Monday, the revenue agency said the foundation issued tax receipts for $6.7 million in cash and property donations, but received only $20,253 in property rental income in 2004 and gifted only $18,000 to qualified recipients in 2005.
“The charity’s sole activity during the audit period was its participation in the donation arrangement; no charitable activities have been conducted by the charity prior to or after its participation aside from the gifting of approximately $18,000 to qualified donees,” CRA stated in a notice.
According to annual financial returns filed with the agency, the foundation’s directors during the period in question were: Gerry Worden, an Abbotsford certified management accountant; Richard Widden, a Winnipeg lawyer and Queen’s counsel; and James Vancoughnett, whose residence and occupation are not known.
The foundation’s website lists the directors as Worden, Widden and Fred Schneider, a Vancouver insurance broker. Schneider is also listed as the contact person on the foundation’s financial returns, although he said in an interview he has not been involved with the foundation for about five years.
The foundation’s address on its financial returns is Suite 1555, 1500 West Georgia St. in Vancouver, which is the address of The Benefic Group, a consulting firm that provides legal and tax advice to charities. It is run by Vancouver tax lawyer Blake Bromley.
According to the foundation’s website, “Pinnacle will accept donations of property, receive net proceeds from the rental and/or sale of the property and make distributions from these receipts to other Canadian charitable organizations.”
Here’s how the scheme works, as described on its website:
An unidentified Bahamian resident donates the right to use condominium units at the Regattas of Abaco, a resort in the Bahamas, to a Canadian trust called the Regattas Trust.
The trust then identifies “suitable beneficiaries” to whom it donates the property. The beneficiary, however, must promise to repay a loan for $8,000.
The beneficiary then donates the property to Pinnacle at its fair market value, which is said to be $26,560. This generates a tax refund of about $12,000 which, after repaying the $8,000 loan, leaves the donor with a $4,000 profit.
These charitable tax schemes, which almost invariably contain an offshore component and an “independent” appraisal generating a tax refund that exceeds the donor’s out-of-pocket costs, have come under attack by CRA.
During the past year, the agency has announced it is reassessing thousands of taxpayers because of donations that have resulted in the issuance of hundreds of millions of dollars worth of tax receipts.
Although not mentioned in the CRA notice, it is likely that taxpayers who participated in the Pinnacle scheme will also be reassessed.
dbaines@vancouversun.com
© The Vancouver Sun 2008
Interesting, missed this article. Thanks for the update, Dayo. SC
The CRA works slowly, but it also works surely.
http://www.vancouversun.com/business/Taxman+goes+after+questionable+charitable+donation+schemes/1070600/story.html
Taxman goes after questionable charitable donation schemes
By David BainesDecember 13, 2008
Over the years, I have written more than a dozen stories warning people about charitable donation tax-shelter schemes that promise to turn philanthropy into profit. I don’t think they have done much good.
A few days ago, Canada Revenue Agency issued a press release saying it has reassessed more than 65,000 taxpayers and disallowed more than $2.5 billion in donations claimed under these schemes.
There’s more to come. CRA says it plans to audit every one of these something-for-nothing schemes, which means more taxpayer grief to come.
The amazing thing is, in the midst of this government-sponsored eradication program, these little time bombs are still being actively marketed in B.C. and elsewhere in Canada. Apparently, the fish are still biting.
One of these schemes is called the Universal Healthcare Trust Donation Program, which is still being promoted by the Destiny Group of Companies in Markham, Ont.
The Destiny Group is run by David Singh, who has had many run-ins with securities regulators in both B.C. and Ontario. In 2000, he was banned from the Ontario securities market for five years.
Incredibly, given his regulatory record, the Surrey Teachers Association invited him in May 2007 to make a presentation on retirement planning, which he used as an opportunity to market his donation scheme.
According to his promotional material, a taxpayer could donate $1,000 to a charity and get a tax receipt for that amount. A philanthropic trust, based in St. Lucia, would then give the taxpayer $5,000 worth of medical supplies, which he could donate to a charity and receive a tax receipt for that amount, too.
The bottom line is that, for a $1,000 cash donation, the taxpayer would get a $6,000 tax receipt, which would generate a $2,600 tax refund.
What happens in all these schemes is that the deemed market value of the donated product is far in excess of its actual cost. This creates an inflated tax receipt which, in turn, provides a big refund, courtesy of us taxpayers.
When Singh made his pitch, the scheme was being marketed in the Vancouver area by Gail Zuccolini, managing director of Afton Management Ltd.
She insisted the scheme posed no greater risk of reassessment than any other tax shelter, a rather specious remark considering these donation schemes were already under intense government scrutiny.
Sure enough. In April this year, the government sent reassessment notices to taxpayers who claimed deductions for the 2006 tax year on account of the Universal program.
“CRA has concluded that the trust purchased the property — purportedly having a fair market value of $115,205,056 Cdn — with $3,481,234 US in cash,” the notice stated, driving home the fishes-and-loaves aspect of this scheme.
CRA argued the primary motivation of donors was not to assist in humanitarian aid, “but rather through a series of transactions to make a profit from the tax credits so obtained.”
The agency said the donation was not a true gift, rather it depended on the philanthropic trust giving the taxpayer a supply of medical supplies valued at far more than the taxpayer’s cash contribution.
“Although it appears from the promotional material that beneficiaries had the option to keep the property rather than donate it, in reality the option was limited to such a degree as to be effectively non-existent,” CRA stated in its letter to taxpayers.
“Furthermore, we remain unconvinced that the title to the property was legally transferred to you to allow you to gift it to the charity. You cannot give what you do not own.”
The same month, I wrote another column about a similar scheme, the Canadian Humanitarian Trust Donation Program, based in Mississauga, Ont.
Taxpayers make a cash donation to a registered charity and receive a receipt for that amount. Then the donor applies to become a beneficiary of the Canadian Humanitarian Trust, domiciled in the British Virgin Islands.
The trust buys drugs at a bulk discount (it is not clear where the trust gets the money) and transfers them to the taxpayer at a value far exceeding the amount of his donation. The taxpayer then donates the drugs to a charity and receives a tax receipt for the full amount.
According to a marketing materials, a donation of $26,100 would generate a tax receipt worth $99,900 and a tax refund of $43,656, for a net return of $17,556, or 67 per cent.
“This has been set up strictly in compliance with the Income Tax Act,” Terence David, who markets the program in B.C., told me at the time.
“People are initially very skeptical, as you are. Fair enough. I expect people to think it’s too good to be true. But when they receive the tax refund, they are satisfied with the results and they tell their friends.”
Alas, a few months after my column, CRA started sending out notices of assessment to people who claimed deductions on account of this program from 2003 to 2006.
David is still marketing the program in B.C., but he says it has been altered to meet CRA objections. That doesn’t mean participants won’t be subject to further reassessments, though. The program was tweaked twice before, but that did not spare participants from CRA’s pogrom.
The puzzling aspect of these deals is that the gathering storm has been apparent to all, but it doesn’t seem to worry the promoters or the participants.
“I wouldn’t expect CRA to just roll over and say keep the money,” David said. “They would be derelict in their duty if they didn’t challenge it. We appreciate that is the nature of the beast.”
He insists that the reassessments are not the program’s fault. They are CRA’s fault: “CRA takes a diametrically opposed view of what the Income Tax Act allows,” he says.
The Canadian Humanitarian Trust, like many others, has established a legal defence fund to challenge any reassessments. Promoters use these funds as marketing tools, to instil confidence in consumers. For me, they highlight just how risky these deals are.
dbaines@vancouversun.com
© Copyright (c) The Vancouver Sun
I’ve followed this chap’s career with a great deal of interest. I first ran across him here in Victoria as a gr 6 student. He was articulate, imaginative and a terrific story teller. To some degree, he was a (and perhaps still is) a charming fantasist, a bit of a Peter Pan. Tom’s strengths at that time were a prodigious memory,verbal precocity, and chutzpah. I recall him telling me with great certainty that he had read and thoroughly understood Joyce’s Ulysses when he was 10. His early brush with computers was to produce some nifty little stories in Hypercard on the old Mac Plus. Unfortunately at that time, the school system was easily impressed with the dog and pony show that was pre-dominated in the computers in schools movement. The industry was scavenging for any evidence that the massive investment in computers was creating tangible gains in student learning; Tom was promoted to child-star in this tragicomedy. Overwhelmed by the acclaim, he must have been amazed at how the adults around him were so easily swayed. His schooling was interrupted and he was absorbed into the world of hype that was the tech industry of the 80’s. I’ve often wondered how much he might have accomplished if he’d been shaped by a rigorous academic program during the critical adolescent years rather than being left to his own devices. Like any lost child star, the acclaim and easy access that have stamped his teen years will pursue him like Morley’s ghost. I wish him well, but I won’t send be sending any money his way.
To the developers of this web site (a suggestion): I think these “survey pop-up” windoes really dont help when I want to read the original article and the opinions in responce to the article. If I were one of the editors I would consider removing a “more non invasive” approach to survey taking. an “optional form” if or should the viewer wishes to participate in such a survey. Having popup windows in ones face each time I read the article is rather distracting when I read sites like this one or many others. Thank you, otherwise both the article its self and the discussion in hand are very interesting never the less. Keep up the good work, thank you.
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The implosion continues.
http://www.vancouversun.com/business/Whiz+charity+scheme+loses+momentum+donations+plunge/1738698/story.html
‘Whiz Kid’s’ charity scheme loses momentum as donations plunge
By David Baines, Vancouver SunJune 27, 2009
The financial situation at GiveMeaning, a Vancouver organization that acts as a middleman for charities, is going from bad to worse. Donations are way down, expenses as a percentage of donations are way up, and the organization is growing deeper in debt.
GiveMeaning is a sort of craigslist for charities. People who are trying to raise money for specific projects can register on GiveMeaning’s website, and people wanting to donate to those projects can contribute through the website.
The business is the brainchild of Tom Williams, 30, a self-described former Silicon Valley whiz kid who claims to have turned his back on the material world and committed himself to philanthropy. As outlined in earlier columns, his story doesn’t stand up to scrutiny. In fact, he has stumbled from one business and personal failure to another, and generated a lot of ill will in the process.
It is also debatable as to whether Williams is motivated entirely by philanthropic ideals. In previous years, he has drawn $90,000 per year, plus expenses. His wife, Jesse Farrell, a part-time employee, has collected $30,000 per year. This has proved to be unsustainable.
Financial returns show the flow of charitable dollars through GiveMeaning is shrinking at a rapid rate. During the year ending Sept. 30, donations totalled $728,165, down 62 per cent from the prior year. Expenses totalled $442,346, down 49 per cent from the prior year.
Because donations fell more dramatically than expenses, the ratio of expenses to donations jumped from 45 per cent to 61 per cent — an extremely high percentage.
GiveMeaning promises that every cent of every dollar that is donated goes to the designated charity. How does it do this if an amount equal to 61 per cent of its total donations is consumed by expenses?
Williams originally hoped people would be so supportive of his business model that they would donate money to cover overhead costs, at least until the website attracted enough advertising revenue to sustain itself. But that didn’t happen, so he is borrowing the money.
As of Sept. 30, GiveMeaning’s liabilities totalled $554,259, consisting of $9,327 in trade credit, $244,932 owing to “non-arm’s length parties” and $300,000 categorized as “other liabilities.”
Who these lenders are is not known. They are not identified in the financial return and Williams did not return my calls.
As of Sept, 30, GiveMeaning had $166,280 in assets against $554,259 in liabilities, for an overall deficit of $387,979. That means that, if and when its loans come due, the whole ship will sink unless there is an infusion of new capital.
The overall impression I get is one of waning business. The website lists dozens of philanthropic projects that are coming nowhere close to their stated donation targets. Williams, once a prolific blogger, has gone quiet. He still tells the whiz kid story, but it’s getting very tired, and tiring.
dbaines@vancouversun.com
© Copyright (c) The Vancouver Sun