According to Jordan Romano, associate legal counsel at PearTree Canada, his company has an innovative financial model to support Canadian charities while providing vital financing for Canada’s mineral exploration sector. He describes PearTree as a “charity flow-through provider,” which developed the “Flow-Through Share Donation Platform” (FTSDP) almost 20 years ago. PearTree’s FTSDP is an established and important strategy that helps high-net-worth Canadians donate to charities in a tax-efficient way. PearTree accounts for over $500 million in structured flow-through share financings every year. Since its founding in 2007, PearTree Canada has become a leader in the space, completing more than 700 flow-through financings.
How PearTree’s Flow-Through Share Donation Platform works
The Canadian flow-through share tax regime dates to the 1970s but was transformed by PearTree in 2007 with the creation of the FTSDP. This model introduced a new, efficient way for donors to increase their charitable contributions while reshaping how capital is raised for the mining sector.
Romano outlines the process: “A mining company issues Flow-Through Shares → PearTree donors subscribe to these shares generating a tax deduction equivalent to their value as well as additional tax credits → The donors then gift the shares to registered Canadian charities of their choice, with donors receiving donation tax receipts → Finally, charities sell the shares to any global accredited investor (strategic, institutional or high net worth), who buys at a discount to the donor’s original premium subscription price. All steps happen the same day, without market risk.”
“It’s a true win-win-win,” says Romano. “Donors enjoy valuable tax benefits, charities gain vital funding, and mining companies secure the capital necessary to push exploration forward. It’s a model that creates benefits across the board, from philanthropy to mineral exploration.”
Supporting Canadian charities and Indigenous communities
PearTree’s influence extends well beyond the mining sector. The firm is a key supporter of charitable organizations, helping to accelerate donations by reducing the after-tax cost of giving. This approach enables donors to make larger, often transformative contributions. Since its inception, over 5000 charities have benefitted from this strategy, directing more resources to impactful projects that drive meaningful change.
By amplifying dollars for charitable causes and mineral exploration, PearTree’s platform is funding jobs in northern, remote and Indigenous communities. In many Indigenous communities, mining plays a central role in the local economy, providing essential stability and job opportunities, as the industry is the largest employer for Indigenous communities in Canada. Over the past nearly two decades, PearTree has facilitated billions of dollars in investments through flow-through shares, contributing to economic growth and job creation in resource-dependent regions across Canada.
Romano joined PearTree in part because of its strong commitment to supporting mineral exploration in Canada’s north. He values the company's focus on backing exploration efforts in remote and underserved regions, which aligns with his dedication to Canadian mining.
Adapting to regulatory changes and a look to the future
PearTree is a recognized leader in the Canadian mining sector, and navigating regulatory complexities can be challenging. Despite these regulatory shifts, the company has consistently shown resilience and adaptability. Romano notes that PearTree's model is particularly sensitive to changes in tax policy and mining legislation – areas frequently under scrutiny by the Canadian government.
One example is the removal of oil and gas projects from the flow-through share regime, reflecting a broader government shift towards cleaner energy and critical minerals. While oil and gas were not a significant part of PearTree’s business, this change highlights how regulatory adjustments can directly influence the sectors it supports. Romano sees these challenges as opportunities to strengthen PearTree’s commitment to sustainable and forward-looking investments.
“Our business can be influenced by government regulations and changes in law,” Romano acknowledges. “But we are confident in our model and the strength of the mining sector. Our approach is adaptable, allowing us to stay ahead of regulatory trends and continue supporting the Canadian mining industry.” His confidence highlights PearTree’s ability to navigate a shifting landscape while maintaining a strong commitment to the sector.
Romano points to recent changes in the capital gains inclusion rate and the alternative minimum tax (AMT), which have directly affected the flow-through share regime. “Although these changes reduce the amount donors can contribute and limit the amount of funding available to mining companies for exploration projects, the integrity of the structure for which Peartree has obtained several advance tax rulings from both CRA and Revenu Quebec, remains intact.”
Looking ahead, Romano shares that PearTree regularly engages with key government stakeholders on regulatory issues, and as a recognized expert in this area, has been successful in having some of the recently proposed changes revised to ensure that there are no unintended or disproportionate consequences on the mineral exploration sector in particular since flow-through shares are deemed to have a nil cost base for tax purposes, therefore inflating any capital gain on disposition of the shares. While government policies can impact PearTree’s operations, Peartree has demonstrated its ability to both educate and work with government and to adapt to legislative changes over almost two decades of being in business. “We’re well-prepared to navigate these changes,” he says, highlighting PearTree’s resilience in a shifting regulatory environment.
A day in the life of PearTree’s legal counsel
As a member of PearTree’s in-house counsel team, working alongside Jessica Stern, general counsel, Sean Kim, senior legal associate, and a broader team of legal services associates, Romano's role combines securities and tax law. He participates in due diligence on mining companies conducted to assess risks that could affect PearTree’s investments and reviews legal documents to ensure compliance with Canadian tax, corporate, and securities legislation.
The responsibilities of Peartree’s legal team go beyond tax and securities. They handle a range of in-house legal tasks, from advising on corporate governance to evaluating risks and providing strategic guidance. This variety keeps them engaged in the financial services sector, balancing the precision of regulatory work with broader business needs. “The blend of detailed legal analysis and strategic counsel is what makes the legal roles at Peartree both challenging and rewarding,” Romano says.
A unique blend of legal and financial expertise
Romano believes that legal professionals are vital to the future of Canada’s mining sector. PearTree’s success stems from integrating legal and financial insights. Its team includes investment bankers, marketing specialists, sales experts, and current and former tax and securities lawyers, enabling PearTree to navigate this complex market as an industry leader.
“Our expertise allows us to innovate, create new financial products, and support the future of mineral exploration in Canada,” says Romano. He is confident in PearTree’s ability to adapt to industry changes, maintaining its leadership in flow-through financings and charitable giving.