The Charities File: On Board
Fundraiser’s Receipt Book
4/6/2015
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Module Overview
The purpose of this module is to provide a registered charity’s chairs of
fundraising committees, events or campaigns with general information
needed to understand Canada Revenue Agency’s new fundraising guidelines,
its requirements for receipting, the limits of providing recognition gifts to
donors, calculating the Fair Market Value of donations as well as other
information and resources related to fundraising activities and receipting.
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Fundraising Activities
Fundraising is not an inherently charitable activity
• As a registered charity your day-to-day activities must be the delivery
of your charitable programs (i.e. food bank, day care program, etc.)
• All resources (including volunteers) must primarily be used to deliver
your programs.
• Fundraising can also have an impact on the Disbursement Quota (DQ)
 The DQ is the amount a charity must spend on charitable
activities, it is based on the charity’s previous fiscal years’
activities
As a guide, ensure that at least 80% of your resources are devoted to the
delivery of charitable activities.
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Fundraising Activities Evaluation Grid
Fundraising Costs vs. Fundraising Revenue
Fundraising
Costs
Fundraising
Revenue
Charity Nets
Rarely
Acceptable
$8,000
$10,000
$2,000
More than 70%
Generally Not
Acceptable
$6,500
$10,000
$3,500
Between 50%
to 70%
Potentially Not
Acceptable
$4,500
$10,000
$6,500
Between 35%
to 50%
Generally
Acceptable
$3,000
$10,000
$7,000
Between 20%
to 35%
Acceptable
$1,500
$10,000
$8,500
Less than 20%
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Fundraising
costs are:
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Small and Rural Charities
Fundraising Checklist
If your total revenue* is less than $100,000 and you can answer Yes to all the questions in either Part
I or Part II below, you will generally satisfy CRA’s requirements related to your fundraising activities.
Yes
No
PART I


Fundraising is done by volunteers;


No more than $10,000 is spent on the services and supplies used for fundraising activities; and


The charity accurately completes its annual Form T3010, Registered Charity Information Return.
or
Yes
No
PART II


Fundraising expenditures are not more than 35% of total revenues*;


Only contracts with parties at arms length if it contracting for fundraising services or supplies;


For staff or contracted fundraisers, the charity does not use commission-based compensation or other
compensation based on the number or amount of donations;


Charity can show it takes adequate measures to control costs and receives best value in its fundraising
activities; and


It accurately completes its annual Form T3010, Registered Charity Information Return.
* As a guide use Box 4700 from your previous fiscal year’s T3010 Information Return
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Fundraising Activities
•
Charities may choose to raise funds through lotteries, bingos, and
charity casinos.
 In addition to following CRA’s guidelines, registered charities should
contact the relevant provincial, territorial, and municipal government
departments before engaging in these activities, to obtain any
necessary permissions, permits, or licenses.
•
A charity must be aware of their Registered Charity Information Return
(T3010B) reporting requirements
 Fundraising committees can assist in meeting this requirement by
tracking their activities and any compensation paid to fundraisers
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Allowable Fundraising Activities
• Registered Charities may also conduct fundraising through a Related
Business. Provided that it is a commercial activity, i.e., revenuegenerating, that is:
 related to a charity's purposes, and
 substantially run by volunteers.
 For more information on Related Business please see Info Sheet 5
Related and Unrelated Business.
• Fundraising to disburse funds to Qualified Donees (that are not registered
charities)
 For more information on Qualified Donees please see Info Sheet 9
Qualified Donee
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Fundraising Methods to Avoid
• Below are some of the fundraising methods you should avoid, specifically:
 Commission-based compensation or other compensation based on
the number or dollar amount of donations
 To operate an unrelated business
 Sole sourced fundraising agreements without proof of due diligence in
obtaining the best price available
 Activities where most of the gross revenues go to a contracted noncharitable party
An unrelated business is a commercial activity, i.e., revenue-generating,
that is not either related to a charity's purposes, or substantially run by
volunteers.
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What is a gift?
• A gift (donation) is the voluntary transfer of property without the donor
expecting to receive anything in return. To qualify as a gift, all three of the
following conditions must be met:
1. The donation, either in the form of cash or a gift-in-kind, is given by a
donor to a registered charity.
2. The donation is given voluntarily; the donor must not be obligated to
make the donation, for instance as the result of a larger contract or a
court order.
3. The donor is making the donation without expecting anything in
return. No benefit of any kind may be provided to the donor or to
anyone designated by the donor as a result of a gift.
A gift-in-kind can be art supplies for a day-care program, canned food for a food
bank, etc. The donation of services does not qualify as a gift
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Use Receipting Practices that Respect CRA Guidelines
• The total value of receipted donations received by a charity is the critical
factor in the calculation of the Disbursement Quota for a charity
• There are clear expectations about receipting practices
 CRA provides specific direction for charities
• Split-receipting is required when the donor
receives an advantage
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Does the donation qualify as a Gift?
An official receipt cannot be issued for:
•
Services – unless this two step process is followed
 The service-provider issues an invoice which the charity pays
 The service-provider would make a cash donation to the Charity for
the same amount
•
Membership fees
 Unless they give the donor no more than the right to vote or receive
the charity’s reports
•
•
•
•
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Admission fees
Purchase of goods
Loose collection
Pledges
• Gifts of little or no value
• Purchase of lottery/raffle ticket
• Payments to specific beneficiaries
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Establishing Fair Market Value (FMV)
• Generally, if the FMV of the property is less than $1,000, a member of the
registered charity, or another individual, with sufficient knowledge of the
property may determine its value.
 The person who determines the FMV of the item should be
competent and qualified to determine the value of the property being
donated.
• If the FMV is expected to be more than $1,000, CRA strongly recommends
that the property be professionally appraised by a third party (that is,
someone who is not associated with either the donor or the charity).
• If the property is appraised, the name and address of the appraiser must
be included on the official donation receipt.
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General Receipting Guidelines
•
•
•
•
•
•
Prepare all official receipts in duplicate
Retain copies of all receipts issued
Ensure official receipts are individually and sequentially numbered
Make sure each receipt has an authorized signature
Retain copies for two years (except for receipts issued for ten year gifts)
Receipts must contain all the required information, otherwise they may
be disallowed at the local filing office
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Components of a Valid Receipt
Receipts must include the following information:
• The charity’s name, address, BN/Registration #
• Date donation received
• Total amount received by charity
• Who it was donated by, address of donor
• Date receipt issued, location receipt issued
• Authorized signature of charity
• Listing of CRA charities website
Some receipts (Split Receipting) must include other elements if they involve
Non-cash gifts and Valued Added Benefits that the donor received.
• The Eligible Amount of Gift for tax purposes
• Description of property
• Value of Advantage
• Appraised by, and Address of Appraiser
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Situations Involving Split Receipting
•
Occurs when a donor receives a benefit or an advantage (i.e. tickets, tshirt, mug, etc.); in this situation the receipt reflects the total amount of
the donation less the value of the benefit or advantage
Donation
Value of Advantage* (gift to donor)
=
Eligible Amount of the gift (receipted
amount)
Example A
Example B
$100.00
$15.00
=
$85.00
$100.00
$9.00
=
$100.00
All three
values
must be
included
on the
receipt
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Two Types of Advantages
There are two types of advantages:
A. Advantages linked to the object of the fundraising activity
•
These advantages include items or services that are integral to the
fundraising activity.
i.e. Gala (meal cost), Golf tournament (golf cart, golf fees,
meal),Fundraising concert admission price of concert ticket
•
These advantages must be calculated at their FMV and subtracted from the
donation amount.
B.
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Complimentary items – subject to “de minimis threshold”
•
The value of the advantage must be determined and is subject to the “de
minimis threshold” calculation. De minimis threshold” is the lesser of 10%
of the value of the donation given or $75; whichever is less (i.e. the value of
the advantage in Example A is greater than 10%; therefore the receipted
amount is adjusted accordingly. In Example B the advantage is less than
10%; therefore the receipted amount is not adjusted)
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Is the Gift Eligible for a Receipt?
• CRA has established an “intention to make a gift threshold”
 This test is used to determine whether the donor made the gift
because of the advantage or with a benevolent intention
 The amount of the advantage cannot exceed 80% of the Fair Market
Value (FMV) of the donation
 To qualify for a tax receipt the donation must meet this test
• For example, a donor gives a gift of $40.00 in return the charity gives the
donor a pair of hockey tickets valued at $35 as a thank you
 The “intention to make a gift threshold” is 80% of $40.00 = $32.00
 The FMV of the tickets exceeds the threshold; therefore no receipt
can be issued
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Receipting for Gifts in Kind and Non-Cash Gifts
Gifts in Kind or non-cash gifts
• artwork
• land and buildings
• equipment
• publicly traded securities
• certified cultural
• ecological property
A contribution of service - time, skills or efforts
• is not property and, therefore, does not qualify as a gift or gift-in-kind
Note: a charity can pay the individual’s or business’s invoice providing
the service; who can in turn donate all or part of the amount back to
the charity as long as it is done voluntarily
Establish Fair Market Value before receipting any gift-in-kind
• receipt can be only for eligible amount
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Sample Receipt – Cash Gift
Receipt
number
must be
sequential
and unique
The “Total
amount
received by
charity” and
“Value of
advantage”
are used
only when
the donor
receives an
advantage
(i.e. tickets,
t-shirt, mug,
etc.).
Note: If a
receipt is
voided; the
number cannot
be re-used.
Your records
must show that
the receipt
number was
voided.
All non-highlighted text are mandatory for each Cash Gift receipt
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Sample Receipt – Non Cash Gift
Receipt
numbers
must be
sequential
and unique
The “Total
amount
received by
charity”
and “Value
of
advantage”
are used
only when
the donor
receives an
advantage
(i.e. tickets,
t-shirt,
mug, etc.).
Note: If a
receipt is
voided; the
number
cannot be reused. Your
records must
show that the
receipt
number was
voided.
All non-highlighted text are mandatory for each Non Cash Gift receipt
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Utilize professional advice for complex issues
Challenging to understand some issues
• Capital gains, capital gains pool, capital gains reduction
• Disbursement Quota
• Enduring property (bequests, planned giving)
• Types of gifts (specific, exempted)
• Gifts in Kind
• Loan backs (reduction of Fair Market Value)
• Non-qualified investments and securities
Registered Charities must meet their DQ
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In Conclusion
• Further clarification of the topics covered during the workshop can be
found in:





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The accompanying notes
Associated Info Sheets and Checklists
The Charities File website
http://thecharitiesfile.ca/
Charity Central
http://www.charitycentral.ca/site/
CRA’s Policy on fundraising by Registered Charities
http://www.cra-arc.gc.ca/tx/chrts/plcy/cps/cps-028-eng.html
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