Saturday, June 28, 2008
The Toronto Globe and Mail reports that the Canada Revenue Agency has disallowed $208 million in donations to the Banyan Tree Foundation. The Foundation apparently used a giving program under which donors, through the Foundation, pledged part of a donation to another charity and supposedly made loans to provide for the rest of the pledged donation. The Foundation purportedly used the loans to purchase millions of dollars in term annuities from an insurance company, with the payments from the annuities to be used to fund the rest of the pledged donation. A Revenue Agency investigation found, however, that the Foundation never provided the insurance company with the loan funds to support the purchase of the annuities. Instead, it appears that just enough funds were provided to the insurance company to ensure that the purported annuity payments would be made to the various charities, but these payments ceased in 2008. The Revenue Agency's conclusion is that the program was a sham to make it appear that that there were legitimate loans being used for charitable purposes, which apparently would create significant tax benefits for the donors, when in fact those loans never existed. The Foundation is challenging the Revenue Agency's claims, according to letters available on the Foundation's website.