Perhaps you’ve never even heard of stripped
bonds. Perhaps you’re already using them as a vehicle for your own investments.
In either case, they may be “just the right way” for you to make a gift to the
Diocese of
What is a Stripped Bond?
For
many years, governments and corporations have borrowed money from individuals
by issuing bonds. As the lender, you purchase the bond at its “face value” and
then receive interest at a fixed percentage until the bond “matures” and the
face amount is refunded to you. (Bonds may also be bought and sold on the
“secondary market” at current market prices; in that case you receive the stated
interest for whatever time you own the bond.)
A
stripped (or zero coupon) bond is a financial product sold by bond and
securities dealers. Basically, it is a corporate or government bond from which
the interest coupons have been stripped away. Instead of paying income to the
holder, it is sold for much less than its future redemption value. It will
often double or triple in value before it matures.
An
individual who buys and holds a stripped bond must pay income tax each year on
the growth in the bond’s value. However, when the bond is purchased and donated
to the Church, neither the buyer nor the Church is taxed, so its value
increases tax–free.
For Example¼
Robert B. wishes to establish a named endowment with
the Diocese of
Selecting a Bond to Fit Your Goal
The
cost of the stripped bond you purchase for the Diocese of Edmonton (or your
parish, or another Anglican entity) will depend on the years to maturity and
the amount you want the Church to receive. Bond prices and yields fluctuate
frequently. Contact an investment dealer to obtain rates.
If
you intend to use a stripped bond to establish a named endowment, as Robert B.
did in the example above, its present value must equal or exceed the
established minimum for a new named fund. For a gift to a previously
established general or named endowment fund, a bond of any size may be used.
Purchasing a Stripped Bond
Any
investment dealer can provide a stripped bond, though you may wish to obtain
quotations from more than one to ensure that you get the best price. You may
consult your own dealer or ask us for suggestions.
If
you have an account with an investment dealer, you may use it to make your
purchase and instruct the dealer to register the bond in the name of the
Diocese of Edmonton (or another Anglican entity) and deliver it to us. Alternatively, you may give us a cheque for
the required amount and we will purchase the bond. The settlement contract with
the investment dealer or your cheque to the diocese will be the basis of your
tax receipt.
We’re Here to Help
If you would like our help in arranging
your gift, please feel free to call on us. We also recommend that you review this
information with your financial advisor to determine its appropriateness to
your situation.
If you would like more information, in
confidence and without obligation, please complete and return the Request
for Planned Giving Information form.