Donations and Tax Receipts

What is a donation?

A donation is a gift given without the expectation of reciprocity. But donations can be more than just revenue; they have the opportunity to be a continued relationship and a sign of support and community between yourself and the donor.

Who to ask

Hank Rosso, who wrote Achieving Excellence in Fund Raising, came up with the Concentric Circles of Giving:
Image of the Concentric Circles of Giving - your immediate circle in the middle, lesser known connections as you moving further out

The people closer to the center of the circle are most likely to give.
In the performance world the inner circle includes: friends, family, artists who worked on the project.
The next round includes volunteers, audience members, arts colleagues.
Followed by people who used to be engaged with you, but are no longer.
Then people interested in the arts within your universe.

Stages of Fundraising

You can think of fundraising in several stages:

  1. Prospecting - Identification and Research
  2. Cultivation - Building the connections, preparing your ask
  3. Solicitation - Make the ask
  4. Stewardship - Thank the donor, continue the relationship

How to Accept Donations

There are at several Canadian organizations that are set up to receive tax receiptable donations for you. Both allow all types of payment and will issue the tax receipt on your behalf. They take a percentage of your donation in exchange for this service. They are:

  • CanadaHelps
  • Chimp
  • Zeffy - also available for use by non-profits that are not registered charities, and/or for donations that do not require a tax receipt - no transaction fees

You can receive donations by any means of payment. Cash and cheques are easy to manage, but if you want to take donations with credit cards you can set up services like Square or PayPal.

Tax Receipts

What is Tax Receiptable?

In Canada, registered charities can issue tax receipts for donations given to the organization. Tax receipts allow the donor to receive a tax advantage for their gift.
Many organizations set a limit of minimum amount to issue tax receipts for, such as $20 or $25, but tax receipts can be issued for any amount. Read through the CRA's Guidelines on what is tax receipt-able here. If you are not a charity, you can receive donations in whatever way you wish and provide whatever rewards you want for them. Crowdfunding is the most popular way of soliciting donations.

Issuing Tax Receipts

If you are a charity, ensure you know what is tax receiptable and how tax receipts must be issued.
Read through the CRA Guidelines on issuing receipts here.

What goes on a Tax Receipt?

Tax receipts must contact specific information to be recognized by the CRA. Link to their checklist here.

Do the official donation receipts of the charity contain these mandatory elements:
For gifts of cash:

  • a statement that it is an official receipt for income tax purposes
  • the name and address of the charity as on file with the Canada Revenue Agency (CRA)
  • the charity's or RCAAA's registration number (not required for other qualified donees)
  • the serial number of the receipt
  • the place or locality where the receipt was issued
  • the day or year the donation was received
  • the day on which the receipt was issued if it differs from the day of donation
  • the full name and address of the donor
  • the amount of the gift
  • the value and description of any advantage received by the donor
  • the eligible amount of the gift
  • the signature of an individual authorized by the charity to acknowledge donations
  • the name and website address of the Canada Revenue Agency

For non-cash gifts (gifts in kind), these additional elements:

  • the day on which the donation was received (if not already indicated)
  • a brief description of the property transferred to the charity
  • the name and address of the appraiser (if property was appraised)
  • the deemed fair market value of the property in place of amount of gift above

Refer to the CRA website for sample tax receipts.
You can also buy Charity Receipt Books at stationary stores like Staples.

Crowdfunding and Tax Receipts

Many charities will use crowdfunding platforms like IndieGoGo or Kickstarter to fundraise. These platforms do not issue tax receipts. However, as long as you have all the necessary information about your donor, you can issue them a tax receipt directly. However, pay attention to the value of any rewards you offer as they will be considered a gift or advantage and will need to be deducted from the donation amount for the tax receiptable donation amount at fair market value. Read more on the CRA website about Gifts or Advantages.

More resources on Tax Receipting

Created by admin. Last Modification: Thursday May 30, 2024 19:06:07 EDT by mmackenzie.