1. Definitions

In this Policy, the following words shall, unless the context otherwise requires, have the following meaning:

“Board of Directors” or “Board” means the Board of Directors of the Organization.

“CRA” means the Canada Revenue Agency.

“Disbursement Quota” means the disbursement quota that the Organization is required to comply with and disburse each year in accordance with the ITA.

“Organization” means Fighting Blindness Canada (legal name The Foundation Fighting Blindness), a non-share capital corporation under the laws of the Province of Ontario and a Canadian registered charity (registration number: 119129369 RR0001).

“ITA” means the Income Tax Act (Canada), R.S.C. 1985, c.1, as amended from time to time.

“Policy” means the Gift Acceptance Policy provided for herein, as may be amended from time to time.

2. Background

The Organization was established with the following charitable Objects:

(a) To promote and support, financially and otherwise, scientific research of the origin, treatment and cure of retinitis pigmentosa and other retinal pigment disorders;

(b) For the objects aforesaid, to promote the dissemination of the results of such scientific research to the scientific community;

(c) For the objects aforesaid, to accept donations, gifts legacies and bequests; and

(d) To enter into agreements with any Canadian charitable organizations and to make gifts to Canadian charitable organizations

3. Rationale

This document has been established to:

3.1 provide clarity on the types of gifts that the Organization can accept;

3.2 ensure the acceptance of gifts complies with the law in Canada, including the requirements of the ITA;

3.3 ensure accepted gifts are in keeping with the Organization’s charitable purposes, mission and vision;

3.4 provide volunteers and staff of the Organization with general guidelines and procedures for accepting and receipting various types of gifts; and

3.5 ensure consistent, equitable relations with donors.

This Policy governs the acceptance and administration of various types of gifts. The goal is to encourage funding of the Organization without encumbering it with gifts which may ultimately generate more cost than benefit, or which are restricted in a manner which is not in keeping with the charitable purposes, goals or best interests of the Organization.

In order to ensure that this Policy continues to be effective, it shall be reviewed periodically. The Organization’s Board of Directors is responsible for initiating this review (every 5 years minimum).

4. Effective Date

4.1 Effective Date: The Policy will come into effect on the May 28th, 2019, and all gifts and disbursements made after that date shall be made in accordance with the terms hereof.

5. Definition of Gift

5.1 General. A valid gift is a voluntary transfer of property with donative intent.  Accepted gifts to the Organization may be eligible for an official donation receipt that may be claimed as a non-refundable tax credit for an individual donor or tax deductions for a corporate donor on the donor’s income tax return.

5.2 Fair Market Value. The duty to accurately determine the fair market value of donated property lies with the Organization. The fair market value of a gift in kind as of the date of the donation must be determined before an amount can be recorded on an official donation receipt. If the fair market value of an item cannot be reasonably determined, an official donation receipt will not be issued.

Fair market value generally means the highest price, expressed in dollars, that a property would bring in an open and unrestricted market, between a willing buyer and a willing seller, both of whom are knowledgeable, informed, and prudent, and who are acting independently of each other. Where the fair market value of an item can be reasonably determined and is less than $1,000, an appraisal may not be required. However, where this is not the case, one or more independent appraisals, will be required to determine the fair market value of donated property.

Deemed Fair Market Value. The deemed fair market value rule provides that, in certain circumstances, a receipt issued for a non-cash gift (gift-in-kind) must be issued for the lesser of the gift’s fair market value and its cost to the donor immediately before the gift is made.  In other words, the Organization cannot, in certain circumstances, choose whether to use either fair market value or cost to the donor for the item; the Organization needs to work out which of the two is lower, and use the lower one. 

The deemed fair market value rule applies in three (3) circumstances, namely when:

• The gift received by the Organization was initially acquired by the donor as part of a tax shelter arrangement;

• The gift was acquired less than three years before the time of donation for any reason; or

• The gift was acquired less than ten years before the time of donation, with one of the main purposes being to gift the property to a qualified donee (for example, a registered charity).

The following types of gifts are exempt from the deemed fair market value rule and are normally assessed at their fair market value:

• Gifts made as a consequence of a taxpayer’s death;

• Gifts of inventory;

• Gifts of real property situated in Canada;

• Gifts of certified cultural property (special valuation procedures apply) (except when involving tax shelters);

• Gifts of certain publicly-traded securities; and

• Ecological gifts.

5.3 Non-Gifts. The following transactions do not constitute a “gift”, are not eligible for official donation receipts and will not be accepted by the Organization:

(a) a donation that does not meet all of the requirements for a gift as set out in Section 5.1;

(b) pledged amounts which are not received by the Organization;

(c) a donation of services;

(d) the purchase of an item or service by the Organization;

(e) the payment of sponsorship fees;

(f) a loan to the Organization; and

(g) the provision of free use of property.

In addition, the Organization reserves the right to decline a gift in any circumstance and for any reason, including for the following reasons:

(a) it has benefits that are directed to a specific individual or individuals;

(b) it is outside the legal purposes or mission of the Organization;

(c) it is too narrowly restricted to be effectively used;

(d) the gift exposes the Organization to liability or unacceptable risk;

(e) it has an attached potential liability that could create an undesired financial or administrative burden;

(f) it could compromise the reputation of the Organization;

(g)  it is from an individual or organization whose philosophy and values are inconsistent with the overall philosophy of the Organization, such as a tobacco company;

(h) it is perceived to come from illegal or unethical activities;

(i) it in any way violates federal and/or provincial laws or regulations, voluntary standards agreed to by the Organization or internal policies of the Organization; or

(j) the gift will be difficult to administer.

6. Policy for Gift Acceptance

6.1 The Organization may accept or decline any gift. Decisions as to whether donations and contributions will be accepted must be made in the context of the Organization’s charitable purpose and mission, as well as in the best interests of the organization. The final decision to accept or decline a particular gift rests with the President and CEO for all gifts with a fair market value of less than $250,000. Any gift exceeding this amount is subject to the approval of the Board of Directors (or the Executive Committee). 

6.2 The Organization will encourage unrestricted gifts (i.e. gifts for which the donor has made no designation as to the timing or purpose of expenditure). Unrestricted gifts provide the greatest flexibility and allow the organization to use funds where they are needed most. Unrestricted donations will be used in the way that best contributes to the furtherance of the Organization’s charitable purposes and mission.

6.3 The Organization may accept or decline restricted gifts (i.e. donations for which the donor has given specific directions on how or when the gift is to be used). Restricted gifts are inevitable in some cases and, when donated, must be used exclusively for the purposes for which they were given. The restriction must be compatible with the Organization’s charitable purposes and mission. Funds from restricted gifts shall be held in separate accounts and managed separately from unrestricted gifts. Funds from restricted gifts may be co-mingled with funds from other restricted gifts and this should be reflected in any restricted gift agreement.

6.4 In addition, if the Organization chooses to accept a restricted gift, the Organization may apply an administration fee to the restricted gift. The allocation amount will be recognized as Unrestricted revenue in the period the gift was received. Fighting Blindness Canada will be transparent with donors and potential donors on is administrative fee policy (eg. Included in donor agreements). Any exceptions to section 6.4 will be approved in writing by the Board of Directors. The standard administrative fee will be:

a) Restricted donations between $5,000 and $249,999: 10%

b) Donations $250,000 and above, to be determined case by case, minimum 5%

6.5 The Organization may accept contributions of cash and near cash and gifts-in-kind (including publicly-listed securities, real estate and other personal property). The Organization may also accept planned gifts including life insurance, bequests and registered retirement plans. A gift may be made on an outright basis to the Organization, or the donor may direct the Organization to hold the gift in a Fund. The gift might also constitute a residual interest in a property or a charitable remainder trust. The gift may be unrestricted or contain restrictions. There may also be other types of planned gifts accepted by the Organization.

6.6 The Organization holds itself to a high standard of ethical conduct, both within its own community of volunteers and employees, and in all of its external relationships and interactions – with commercial enterprises, with other external organizations, and with friends and donors.

6.7 In particular, the Organization will not accept gifts, enter into business relationships, or accept external support that will compromise its public image or commitment to its mission and essential values, including accepting gifts from tobacco companies.

6.8 The Organization values and will protect its integrity and autonomy, and does not accept gifts when it feels that a condition of such acceptance would compromise these fundamental principles.

6.9 Ownership of all gifts directed to the Organization vests in the Organization, whether said gifts are for the benefit of the Organization generally or for some specific purpose in it.

6.10 Acceptance of any gift contribution which involves a proposal to name is conditional upon final approval of the naming by the Board of Directors, since ultimate authority for naming at the Organization rests with the Board of Directors.

6.11 Neither the Directors nor any other representative of the Organization will pressure a donor, nor offer legal or financial advice to the donor.

6.12 In general, if any of the following apply, the Organization will request donors to enter into written gift agreements with the Organization to evidence the gift and set out the terms of any restrictions on the gift: a) gifts over $10,000.00, b) gifts that are subject to restrictions imposed by the donor, gifts to be paid over a period of time, gifts of residual interests, charitable remainder trusts and gifts of real estate. The Organization will establish template gift agreements. If a restricted gift is accepted, the gift agreement in connection with that gift must include an amendment and/or variation clause so that, in the event the Organization is unable to use the donation for the specific cause identified, it is able to redirect the contribution to a program or cause that is most similar to that designated, while making every effort to ensure that the donor’s philanthropic objectives are achieved. All gift agreements that do not follow the Organization’s templates will be reviewed by the Organization’s President and CEO.

6.13 This policy is designed to comply with current laws and regulations. In cases of inconsistency, federal and provincial laws as well as CRA guidance will supersede this policy.

6.14 All permissible donations directed to Organization must be acknowledged and registered by the organization. The Organization will in turn issue an official donation receipt where appropriate.  The official donation receipt and accompanying letter of acknowledgment represent the organization’s initial recognition of a donation. In some cases, the letter of acknowledgment may be sent immediately and the official donation receipt sent later. In addition, the Organization may communicate its appreciation to donors for various types of donations in accordance with its recognition program. 

6.15 Official donation receipts may only be issued in accordance with the Income Tax Act (Canada) and CRA guidance.  

6.16 The Organization may establish a gift acceptance committee.  The Gift Acceptance Committee would be composed of the President and CEO, Director of Philanthropy, Director of Finance and Operations. The responsibilities of the Gift Acceptance Committee include the following:

• become familiar with various types of planned gifts;

• develop policies and guidelines regarding the acceptance and administration of planned gifts for board approval;

• determine the types of planned gifts to be offered by the Organization;

• recruit individuals who can act as a resource in the review of certain types of planned gifts;

• assist the gift planning officer in developing a comprehensive marketing plan, including the marketing of planned gifts to all centres of influence;

• review and critique publications and other marketing materials promoting planned gifts

• evaluate products and services offered by vendors;

• be available, individually, to answer questions pertaining to particular gift situations;

• occasionally serve as speakers at charity-sponsored seminars;

• encourage prospective donors to make planned gifts;

• participate in selected prospect calls as appropriate.

7. Types of Gifts

7.1 Cash and Near Cash. The following gifts are deemed eligible for acceptance by the Organization: outright gifts of cash, credit card payment, on-line donations, money order, electronic transfer, or cheque. The following terms will apply to the Organization’s acceptance of such gifts:

(a) Following receipt of the gift, the Organization will issue to the donor an official charitable donation receipt for the amount of the gift.

(b) A gift by credit card is considered to have been made on the date the donor authorized the charge to the credit card.

(c) Gifts received after the end of the year may not be added to the previous year’s donations unless the gift was postmarked in the previous year (for example, a gift made by way of a cheque that was mailed and posted marked in December but not received by the Organization until January).

7.2 Publicly-Listed Securities.  Donations of publicly-listed securities do not give rise to a capital gain for the donor, which provides a substantial incentive for such donations.  In order to obtain the exemption from capital gains tax, donors must donate publicly-listed securities directly to the Organization rather than selling them and donating the proceeds. The securities of publicly-listed companies that are generally acceptable to the Organization are those that are registered for trade on a securities exchange in Canada or the U.S. These also include mutual funds.

The following terms will apply to the Organization’s acceptance of gifts of publicly-listed securities:

(a) The Organization generally accepts gifts of publicly-listed securities that have an active secondary market, are not subject to a volatile market, and can be readily converted into cash within a reasonable period of time after having received the gifts. Donors shall bear transfer costs when transferring securities to the Organization. Due to processing time beyond the control of the Organization it may not be possible to produce a tax receipt in the calendar year for gifts of publicly-listed given in the last 10 days of the year. The Organization will make best efforts to ensure that a gift of publicly-listed securities given within the last 10 days of the calendar year receives an official donation receipt in the calendar year.

(b) Donations of public securities are normally transferred electronically. Electronic transfers can take up to several days to complete depending on the procedures used by the brokerages involved. The date of a gift of electronically transferred shares is the date the shares are received in the Organization’s brokerage account. The fair market value of the shares may have dropped between the date of transfer and the date the shares are received in the charity’s account. Any such loss is borne by the donor.

A donation of public securities may also be made by transfer of the share certificate. Share certificates should be hand-delivered to the Organization or sent by registered mail or courier. The date of the gift will be the date the share certificates are delivered to the Organization and accepted by the Organization.

(c) In general, the value of the securities will be the closing bid price of the share on the date of the gift as set out above.   When unusual circumstances are involved in a gift, an independent appraisal may be required to determine the fair market value. As well, a gift agreement with the donor will be required to set out the method of valuation used, a price adjustment clause should an issue arise with CRA with respect to the valuation, and that the donor will be responsible for the cost of the appraisal.

(d) In general, the Organization’s policy is to liquidate gifts of securities as soon as possible after receipt unless otherwise restricted from doing so as part of a fund agreement.

(e) Upon confirmation of the receipt of a gift of publicly-listed securities, the Organization will issue an official donation receipt for the eligible amount of the gift based on the fair market value of the securities on the date they were received by the Organization. The value of the securities will be the closing bid of the share on that date.

7.3 Real Estate. Gifts of real estate include single family dwellings, condominiums, apartment buildings, office buildings, land and farms.  The following terms will apply to the Organization’s acceptance of gifts of real estate:

(a)  The ready marketability of the property and the carrying costs will be considered by the Organization before accepting the gift. Various factors, including zoning restrictions, environmental factors, marketability, current use, potential future uses, ongoing maintenance costs, and cash flow will be taken into account to ascertain that acceptance of the offered gift is in the best interests of the Organization.

(b) Before accepting a gift of real estate, the Organization will undertake such due diligence steps as it determines necessary, including but not limited to securing a qualified appraisal of the property from a reputable valuator, determining that the donor has clear title to the property, and environmental assessment.

(c) Costs such as legal fees, appraisals, environmental assessments, and real estate fees will be the responsibility of the donor.

(d) The Organization reserves the right to retain the property or sell it and apply the proceeds towards the charitable purpose of the gift. In general, it is the Organization’s policy to sell real estate as soon as possible after having received title.

(e) An official donation receipt will be issued for the eligible amount of the gift based on the appraised fair market value of the property at the date of donation.

7.4 Gifts-in-Kind. Gifts-in-kind refers to a gift of property (other than cash or near cash) such as jewellery, artwork or other valuable personal property. Acceptance of some gifts-in-kind is subject to special considerations and are specifically referred to in other sections of this Policy, including life insurance, publicly-listed securities, real estate, etc. The acceptance of other gifts-in-kind is governed by this section, including gifts of books, artwork or art collections, works or material, equipment, software, or other property. The following terms will apply to such gifts:

(a) Gifts-in-kind may be acceptable as a gift but because of the difficulty of valuation, the Organization will generally not provide an official donation receipt.

(b) The Organization may accept gifts-in-kind that are in reasonable condition and meet other criteria set out in this Policy. The Organization reserves the right to display or store the gifted property, use the property for fundraising purposes, or sell it and apply the proceeds towards the charitable purposes of the Organization.

(c) The ready marketability of the property, utility, and the carrying costs will be considered by the Organization before accepting a gift. The Organization reserves the right to secure its own appraisal and issue a gift receipt based on it.

(d) Before accepting a gift-in-kind, the Organization will undertake such due diligence steps as it determines necessary.

(e) Costs such as legal fees and appraisals will be the responsibility of the donor.

(f) An official donation receipt may be issued for the eligible amount of the gift on the date the donation was received, based on the fair market value of the property. Determining fair market value of in-kind donations can be a complex undertaking and will likely require the opinion of legal, financial and other advisors.

(g) In-kind donations such as gifts of artwork, jewellery, or items of a unique nature, that appear to be valued at greater than $1,000, if the donor will be provided with an official donation receipt, must have an independent appraisal of value by a reputable expert. Except in agreed upon circumstances, the in-kind donor is responsible for the professional appraisal fees required to determine the fair market value of the gift. (Fair market value does not include amounts payable to others, such as commissions to sales agents or sales taxes such as GST or HST). The Organization reserves the right to issue an official donation receipt in the amount of the assessed value of the in-kind donation as determined by a recognized expert in the field chosen by the Organization in its sole discretion.

7.5 Life Insurance. Gifts of life insurance may be made to the Organization by irrevocably and absolutely assigning the ownership and beneficiary rights of a paid-up life insurance policy to the Organization, or by irrevocably and absolutely assigning the ownership and beneficiary rights of a life insurance policy to the Organization on which premiums remain to be paid and by naming the Organization as a beneficiary of a life insurance policy. The following terms will apply to such gifts:

(a) When a life insurance policy is irrevocably and absolutely assigned to the Organization, the Organization becomes the legal owner of the gifted life insurance policy. All consents required under provincial regulations to be signed to change a beneficiary must also be signed before it is a completed gift.

(b) If an assigned policy is not yet fully paid-up, the acceptance of the assigned policy shall be conditional upon the Organization not having any liability to the insurance company or to the donor with respect to the payment of future premiums, unless otherwise agreed to by the Organization in advance.

(c) If an assigned policy is not yet fully paid-up, the Organization shall require written assurance from the donor that he/she will continue to make donations towards paying future premiums (for which the donor would be entitled to official donation receipts as explained below), unless otherwise agreed to by the Organization in advance.

(d) The receipting of gifts of life insurance shall be as follows:  Where the assigned life insurance policy fair market value can be determined, the Organization may issue a charitable donation receipt for the eligible amount of the policy’s value based on fair market value and in accordance with any CRA guidance. .

(e) In addition, if the policy is not yet fully paid-up, the Organization may issue an official donation receipt for the eligible amount of the premium paid at the time of donation or for premiums paid subsequent to the donation of the policy.

(f) Where the Organization is named as a beneficiary of a life insurance policy, the Organization may issue an official donation receipt when the Organization receives the insurance proceeds upon the death of the insured. No charitable donation receipt may be issued upon naming the Organization as the beneficiary or for premiums paid for such a policy.

7.6 Bequests.  A bequest is a provision in a Will, directing a gift of property from an estate to be paid to the Organization. There are several types of bequests accepted by the Organization:

• A specific bequest – a gift of a specific sum of money or a specific property, such as real estate or securities.

• A residual bequest – a gift of all or a percentage of the residue of the estate after having paid gifts to other beneficiaries under the estate.

• A contingent bequest – a gift of all or a share of the estate in the event of the prior death of certain other beneficiaries or in the event of certain conditions having been met.

The following terms will apply to such gifts:

(a) Sample bequest language can be made available to donors and their lawyers to ensure that the bequest is appropriately documented in the will. No such information will be provided over the phone as this can lead to errors. At all times, donors should be encouraged to use an independent legal advisor who is knowledgeable about estate planning and wills to professionally prepare a will.

(b) A bequest in the appropriate amounts can be used to create a Fund if appropriately provided in the will and would be subject to the Fund terms set out in this Policy.

(c) Donors are invited and encouraged to provide information to the Organization about their bequest and, if they so choose, to send to the Organization a copy of the relevant section of their will.

(d) Generally, the Organization will not serve as an executor or trustee of an estate or trust arrangement.

(e) Following receipt of the bequest, the Organization will issue to the estate an official donation receipt based on the fair market value of the property.

7.7 Registered Retirement Plans and Tax-Free Savings Accounts. Gifts of RRSPs/RRIFs and TFSAs include the direct designation of the Organization as a beneficiary to receive the proceeds of a RRSP/RRIF or TFSA on the death of the donor, or a gift to the Organization of the proceeds of a RRSP/RRIF or TFSA on the death of the donor by way of bequest. The Organization will accept such donations, as long as it does not assume any responsibility for any plans themselves. A gift of a registered retirement plan may also be made during a donor’s lifetime.

7.8 Residual Interests or Charitable Remainder Trust. A gift of a residual interest in a property involves conveying property to the Organization, with the donor retaining the use of the property for the donor’s life time or for a defined period of time.  A charitable remainder trust involves a donor (settlor) transferring property (e.g. real estate, securities, or cash, etc.) to a trust for a trustee to manage the property. The donor or a beneficiary (usually a family member of the donor, and usually referred to as a “life tenant”) retains a life or income interest in the trust, but an irrevocable gift of the residual interest in the trust is made to a registered charity. The charity would receive the trust property when the trust is collapsed at the end of the interest of the life tenant. Such a gift may be made through a testamentary trust or an inter vivos trust. The following terms will apply to such gifts:

(a) Various factors, including marketability, current use, and cash flow will be taken into account to ascertain that acceptance of the offered gift is in the best interests of the Organization.

(b) The Organization’s legal advisor must participate in an examination of the terms of any will, trust, or other document.  

(c) Costs such as legal fees, appraisals and other fees will be the responsibility of the donor.

(d) The Organization will generally not serve as a trustee for a charitable remainder trust or a residual interest, but may refer the donor to trust institutions that may agree to do so.

(e) The Organization reserves the right to retain the property or sell it and apply the proceeds towards the charitable purpose of the gift. In general, it is the Organization’s policy to sell property as soon as possible after the termination of the donor’s interest in the property in situations involving gifts of residual interest.

(f) An official donation receipt is issued for the eligible amount of the gift, based on the fair market value of the property on the date of donation, taking into consideration the interest retained by the donor and other factors, such as the fair market value of the property itself, the current interest rates, the life expectancy of any life tenants and any other factors relevant to the specific case, all in accordance with CRA guidance for such donations.

7.9 Other Gifts. There are many types of gifts that may be donated or may evolve with new ways of planned giving from time to time. Examples of these gifts include, stock options, gifts of private company shares, charitable gift annuities, time-share recreational property, airline premium points, etc. It is not possible to include every type of gift in this Policy. The Organization may establish specific policies for some of these gifts. Gifts not mentioned in this Policy or other policies of the Organization will require individual review.

7.10 The Organization may advise the donor as to the circumstances resulting in the gift being declined.

8. Gift Limitations

8.1 The following gift conditions cannot be accepted by the Organization for scholarships, fellowships, awards, bursaries, or other financial aid funds:

(a) Conditions which, by explicit designation, require the exclusion of, or discriminate against, a group or class, unless such exclusion or discrimination has the effect of favouring one or more designated groups as provided for in any approved institutional plan or equity scheme.

(b) Stipulations designating a specific recipient by a donor.

(c) Conditions or stipulations cannot be added following acceptance of the donation.

9. Gift Disclosure Policy

9.1 General Policy

The names of donors to the Organization may be made public on the website of the Organization, in the Organization newsletter or in the annual report of the Organization, if any, and may be used for other fundraising purposes unless the donor specifies that they do not wish to have their name, the amount, and/or the purpose of the gift disclosed.

9.2 Anonymous Donors

The Organization will respect and observe the wish of a donor to remain anonymous with respect to gifts made to the Organization. However, the Organization reserves the right to disclose the identity of the donor and the type and value of the gift where it is required to do so by law.

10. Effective Date

10.1 The effective date of this Policy shall be the date on which it is approved by the board of directors as indicated below.

APPROVED BY THE BOARD OF DIRECTORS THE 27 of MAY, 2019

PER: Rob Richards      

Appendix “A” – General Rules on Issuing Official Donation Receipts

General Notes about Receipts

No Obligation on the Organization to Issue Receipts

Registered charities are not obligated to issue tax receipts.  It is important that the Organization is clear and upfront in explaining its policy with respect to donations and the issuance of tax receipts to donors.

The Organization will not issue official donation receipts for small donations, i.e. donations of less than $10.00. Furthermore, if at an event the Organization will be providing an advantage to the guests, such as a meal, the Organization may wish to include a statement in any advertising for the event warning donors that they will not be receiving a receipt for the full amount that they are giving to the Organization, but only for the “eligible amount,” which involves subtracting the advantage received by the donor. 

Whether Receipted or Not, It Does Not Affect How Funds May be Spent

If funds are received from a donor or corporation without issuing a receipt, these funds cannot be spent outside the normal rules that apply to registered charities.  Whether receipted or not, once funds are received by the Organization, the funds can only be spent in accordance with the Organization’s charitable purposes, subject to the Income Tax Act, CRA’s guidance, provincial trust law and other applicable law.

If In Doubt, Don’t Receipt

The Organization must be careful in issuing official donation receipts. If in doubt either don’t issue the receipt or obtain appropriate legal advice.

Preliminary Matters

• Only those persons authorized by a board resolution of the Organization to sign official donation receipts may sign official donation receipts.
• If the Organization uses a receipt book then it shall be stored safely in a locked cabinet or drawer. 
• If the Organization uses a computer program to issue receipts it will be password protected.
• Receipts will be issued in sequential numbers.
• Copies of receipts will be kept for at least six (6) years in paper form or electronic form that is printable upon request. 

Steps to Issuing Appropriate Receipts

1. Template receipt that contains all mandatory information

The Income Tax Act (Canada) requires that there be mandatory information on official donation receipts.  If the Organization misses any of the mandatory information, then the official donation receipts are not complying with the rules and may be invalid.  The Organization should ensure that the template receipt they are using contains all the necessary information.  CRA has provided sample receipts with different layouts depending on whether it is a cash/non-cash gift and whether there is an advantage.

All official donation receipts for income tax purposes must contain the following:

• A statement that it is an official receipt for income tax purposes;

• Name and address of the Organization as on file with the Canada Revenue Agency;

• Charity’s registration number;

• Serial number of the receipt;

• Place or locality where the receipt was issued;

• Day or year donation was received;

• Day on which the receipt was issued if it differs from the day of donation;

• Full name, including middle initial, and address of the donor;

• Amount of the gift;

• Value and description of any advantage received by the donor;

• Eligible amount of the gift;

• Signature of an individual authorized by the Organization to acknowledge donation;

• Name and website address of the Canada Revenue Agency (canada.ca/charities-giving).

For non-cash gifts (gifts-in-kind), the official donation receipts should contain the following, in addition to the above-mentioned elements:

• Day on which the donation was received (if not already indicated);

• Brief description of the property transferred to the Organization (if the donation is a stock donation, include the stock description and the closing price);

• Name and address of the appraiser (if property was appraised); and

• Deemed fair market value of the property.

2. Letter form of receipt

the Organization may send a letter to donors and include the receipt at the bottom of the letter.  This is acceptable, but the Organization must make sure that there is a division between the letter and the receipt and that all the mandatory elements are included in the receipt. 

3. Is it a “gift”?  Not everything is receiptable.

There are a large number of valuable payments or transfers from a person to a charity that do not qualify as being a “gift” under the Income Tax Act (Canada), and in those circumstances a charity cannot issue an official donation receipt.

The Organization can only provide an official donation receipt for something that is considered a “gift.”  In order for a donation to be considered a gift, and therefore be receiptable, it must involve a voluntary and complete transfer of property from an entity to the Organization with the intention of making a gift.

There are four elements for a “gift” namely, it must be:

• Voluntary

If a donation is made as a result of a contractual or other obligation (for example, a court order), it is not eligible for a receipt.  Accordingly, if a person makes a donation because he is forced to – he is legally obligated, for example, by court decision – then it is not a gift.

• A complete transfer

It is not enough for a donor to pledge that he or she will one day give something to the Organization, or to provide the object but not do everything required to change the ownership.  For example, it is not sufficient to provide a house and key to the Organization – someone needs to actually go through all the legal steps and arrange that the house is completely transferred over to the Organization at the land titles or registry office.

• Property

Property includes cash, cheques, credit card, money order, wire transfer, and certain tangible items – such as computers, furniture, cars, land – but it does not include services as discussed below.

• Intention to make a gift

Under the Income Tax Act (Canada), if a donor receives an advantage that is greater than 80% of the value of the donation, then generally it is assumed that there is no donative intent and the person should not receive a receipt.

If any one of the above four elements is not present, a receipt should not be issued.  If a person volunteers for the Organization or provides services to the Organization, such time or effort may be valuable, but it is not “property” transferred and is not receiptable.

4. Common transfers that are not receiptable

As CRA notes, the following payments to registered charities do not qualify as gifts:

• The payment of a basic fee for admission to an event or to a program (e.g. fees for day-care or nursery school facilities).

• The payment of membership fees that convey the right to attend events, receive literature, receive services, or be eligible for entitlements of any kind (e.g. free access to facilities that the public must pay to access).  However, membership fees are considered as gifts if they confer no more than the right to vote at a meeting and to receive reports of the Organization’s activities, unless such reports are otherwise available for a fee.

• Any portion of the purchase price of a lottery ticket or other chance to win a prize, even though the lottery proceeds benefit one or more charities;

• The payment of tuition fees (except as permitted by CRA Information Circular 75-23, Tuition Fees and Charitable Donations Paid to Privately Supported Secular and Religious Schools);

• Contributions of services (i.e. time, skills, effort). Contributions of services are not property and do not qualify.  However, a charity can pay for services rendered and later accept the return of all or a portion of the payment as a gift, provided it is returned voluntarily.

• A payment from a business for which the business receives a material advantage, such as promotion or advertising in return.  For taxation purposes, the business may be able to claim the contribution as an advertising expense.

• A gift subject to a direction by the donor that the Organization transfer the funds to a specified person or family.  In such an instance, the donor has made a gift to the person or family and not to the Organization.

• A gift subject to a direction by the donor that the Organization give the funds to a non-qualified donee.

5. Determining fair market value of gifts-in-kind

Gifts-in-kind are typically tangible. Examples of gifts-in-kind include cars, furniture, computers, blankets, food, shares, clothes, art, books, land, etc.

There are concerns with gift-in-kind donations including, but not limited to:

• Often charities are pressured into accepting items they don’t want or need;

• Often it is receipt driven and has nothing to do with helping the Organization and its mission;

• Gifts-in-kind can create significant legal and ethical issues for the Organization, such as environmental concerns with land, toxic or dangerous products that have been recalled, expired or inappropriately labeled pharmaceuticals, etc.;

• The process of dealing with gifts-in-kind including valuation, storage, transportation, disposal can use up a lot of time and resources of the Organization, and in many cases are a net loss for the Organization;

• Problems of establishing fair market value and receipting;

• Ethical concerns about certain items being donated to a particular charity;

• A few of the charities that issue the largest amount of gift-in-kind receipts are abusive tax avoidance schemes or charity scams; or

• Financial disclosure and reporting in both financial statements and T3010.

The Organization may issue an official donation receipt if the fair market value (“FMV”) of the gift can be determined. The Courts and CRA have used the following definition of FMV:

Fair market value is normally the highest price, expressed in dollars, that property would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other.

The factors that are implicit in the definition of fair market value are:

• Highest price means the highest price that is consistently achieved;

• The transaction occurs in the market where such properties are most commonly and consistently sold to the public;

• The public is the customary purchaser or ultimate consumer;

• An ultimate consumer is a person, institution or corporation who does not hold the item for subsequent resale;

• The appropriate or relevant market for a determination of fair market value is the most active market for the particular asset and is determined by the frequency and aggregate number of sales;

• The buyer and seller are typically motivated, where neither is under compulsion to buy or sell;

• Each party is knowledgeable, informed of all of the relevant facts and acting in their own best interests;

• An unrestricted and open market is one that is available to the public;

• The property has been exposed to an unrestricted and open market for an adequate amount of time;

• The transaction is not influenced by time restrictions that would have a significant effect on the price; for example, fair market value cannot be determined by a forced sale; and

• Payment is made in terms of Canadian dollars.  To convert currency to Canadian dollars, appraisers should consult the rates published by the Bank of Canada, and take the higher of the noon and closing nominal rates (This information is available at http://www.bankofcanada.ca/en/rates/exchange).

In some cases the fair market value may be less than 1% of the “highest price” when you have a wholesale market or there is a prudent and knowledgeable buyer.

When the FMV of either a gift-in-kind or an advantage cannot be determined, an official donation receipt cannot be issued.  The Organization cannot rely on donors to advise it of the FMV.  The onus is on the Organization to determine FMV and the consequences of improperly determining FMV can be substantial.  The Organization must remember that some donors may have a vested interest in having the amount of the gift be inflated.  As well, donors may not know the complexity of determining FMV and they may also simply be mistaken about the value of an item.

Appraisal of FMV

CRA’s position is that, for items over $1,000.00, there should be an appraisal of the value by someone who is knowledgeable and independent of both the Organization and the donor.

As well, it is important to note the following:

• A sale price is often not an accurate reflection of the fair market value;

• Determining fair market value for an item can be difficult, and some charities and donors inappropriately ignore the legal definition, focusing instead on what “the highest price” is;

• More than one appraisal may be necessary with large or difficult donations;

• The eligible amount of the receipt is not the appraised value; the eligible amount is the appraised value minus any benefit or advantage received by the donor or someone related to the donor;

• Appraisals are for fair market value (as defined above) and not “for insurance purposes”, “for probate purposes”, “value” or other purposes; and

• Appraisals must be arm’s-length and prepared in an objective manner without any pressures from the donor, vendor, institution/public authority, or other appraisers; and

• Appraisers should disclose if they had any interest in the appraised property or have had any “personal or commercial intent or bias with respect to the parties involved (client or creator)”.

Determining FMV of marketable securities or shares traded on a public stock exchange

When a donor donates shares on certain stock exchanges, the CRA has “as a general rule, accepted the use of the closing bid price of the share on the date it is received or the mid-point between the high and the low trading prices for the day, whichever provides the best indicator, given the circumstances, of fair market value on normal and active market trading.” In some cases, such as thinly traded shares, this may not be appropriate.

Deemed fair market value rule

In 2002, responding to an increase in charity art flip schemes and other abusive gifting tax schemes, the Department of Finance introduced the deemed fair market value rule.  The rule provides that, in certain circumstances, a receipt issued for a non-cash gift (gift-in-kind) must be issued for the lesser of the gift’s fair market value and its cost to the donor immediately before the gift is made.  In other words, a charity cannot, in certain circumstances, choose whether to use either fair market value or cost to the donor for the item; the Organization needs to work out which of the two is lower, and use the lower one. 

The deemed fair market value rule applies in three (3) circumstances, namely when:

• The gift received by the Organization was initially acquired by the donor as part of a tax shelter arrangement;

• The gift was acquired less than three years before the time of donation for any reason; or

• The gift was acquired less than ten years before the time of donation, with one of the main purposes being to gift the property to a qualified donee (for example, a registered charity).

The following is an example of how deemed fair market value works:

A donor purchases a work of art at a garage sale for $50, and six months later donates the work to the Organization. The Organization would like to provide a receipt. Prior to giving the art to the Organization, the Organization has the work appraised at a value of $1,000.  Because the donor is gifting the art within three years of having purchased it, the Organization must issue a receipt for the gift at the lesser of its fair market value and its cost to the donor immediately before the gift was made. In this example, the official donation receipt must be made out for $50.   If the donor who received a receipt fails to notify the Organization that the work of art was purchased for $50 and is subject to the deemed fair market value rule, the value of that donor’s gift could be reduced to nil by the CRA.

The following types of gifts are exempt from the deemed fair market value rule and are normally assessed at their fair market value:

• Gifts made as a consequence of a taxpayer’s death;

• Gifts of inventory;

• Gifts of real property situated in Canada;

• Gifts of certified cultural property (special valuation procedures apply) (except when involving tax shelters);

• Gifts of certain publicly-traded securities; and

• Ecological gifts.

6. “Split receipting”: subtracting the advantage from the gift

The eligible amount of the gift on the receipt must be correct.  However, at times this is more difficult than one may think. The CRA has rules on what they call “split receipting”.  Essentially, if a donor receives an advantage, the amount of the advantage generally needs to be deducted from the value of the gift when calculating the eligible amount of the receipt. 

For example, if John pays $250 for a gala ticket, the Organization cannot issue a $250 official donation receipt to John.  the Organization needs to subtract the advantage, such as the meal, gift bag, entertainment, and door prizes.  If the advantage works out to be, for example, $100 then on the receipt it will show (amongst the mandatory elements):

Total amount of cash received by charity	$250
Value of advantage	$100
Eligible amount of gift for tax purposes	$150

The definition of advantage is very broad and some of the many possible advantages include:

• Property (for example, cash or non-cash gifts (“gifts-in-kind”));

• The use or enjoyment of property;

• The provision of services; and

• Other benefits including, but not limited to, assumption of debt by charity, sponsorship, or non-recourse loans.

There are also de minimis rules if the value of an advantage is the lesser of $75 and 10% of the value of the donation.  In such cases, the value of the advantage would be considered nominal and would not have to be deducted.  If the amount of the advantage is over 80% of the value of the donation, a donation receipt cannot generally be issued. 

CRA provides detailed descriptions of how advantages need to be calculated with different types of events such as gala dinners or golf tournaments. Unless the Organization receives cash donations only, and never gives any advantages or benefits to the donor, the Organization would need to be aware of the split receipting rules and how to calculate advantages.  If the amount of the gift, and/or the amount of the advantage (when an advantage exists) cannot be determined, then an official donation receipt cannot be issued.

7. Services (time, expertise, skills) are not property and not receiptable

Donations of time, skill and effort are services and are not a transfer of “property” from the volunteer to a charity, and they do not qualify as gifts for donation receipt purposes. Therefore, donations of services, such as professional advice by a lawyer, accountant or other volunteer, cannot be receipted. As well, by way of example, if a local contractor built a shed with supplies from the Organization the contractor cannot have the value of their time receipted by the Organization.  Other types of services that do not qualify as gifts are: lending a piece of equipment, or allowing the Organization to use a time-share or apartment.  CRA takes the view that a loan of property is not a voluntary transfer of property to the Organization and the mere granting of a right to use the property for a limited period of time is not considered a gift.

Cheque Exchanges 

The Organization can issue a receipt for services or work done if there is a cheque exchange. A cheque exchange is where a service is rendered to the Organization, the Organization is billed for the service and the Organization pays for the service. Then, without any obligation to do so, the person who provided the service makes a donation to the Organization of X amount of dollars and the Organization then issues a receipt for X amount of dollars to the person.

This “crossing of cheques” or “cheque exchange” is very different than just issuing a receipt for the provision of services.  When the person receives funds from the Organization, they have to include the amount they receive in income, which increases the taxes they have to pay and all the receipt does is offset that increased amount of taxes.  The cheque exchange works both for donation of time and lending of property.

8. Make sure to have the correct date of the donation

The date of donation needs to be correct.  The exact dates can be very important in a number of circumstances.  First, whether a donation is made in one calendar year or another affects the timing of tax benefits.  Second, the date is also important for gifts-in-kind, which have to be valued on a particular date, and some types of gifts-in-kind, such as public company shares, can fluctuate considerably depending on the exact date that they are valued.  Third, depending on the date that revenue is recorded, it can affect the Organization’s financial statements.

9. Make sure to have the correct name of the donor on the receipt

Who is the donor?  It is a factual issue and it is important that the Organization provides the receipt to the correct donor. Consider the following situation: the Organization receives a cheque from a corporation, and subsequently the president of the corporation calls the Organization asking it to prepare the receipt in the president’s spouse’s name.  If the funds are actually those of the corporation and not the spouse, then preparing the receipt in the spouse’s name is not permissible. On the other hand, if the president sends a letter on the stationary of the corporation noting that the funds are actually his spouse’s funds and that the receipt should be issued in the spouse’s name, then it may be appropriate to issue the receipt in the spouse’s name.

Another example is as follows: Jack and Jill organize a third-party fundraising event for the Organization at which 20 individuals each make a $100.00 donation and receive no advantage for their donation. Jack and Jill collect the 20 x $100.00 cash donations and submit them to the Organization. The Charity should obtain from Jack and Jill a list of the donors so it can issue a tax receipt to each of the individual donors. It would be inappropriate for the Organization to issue a $2,000.00 tax receipt to Jack or Jill.  If in doubt, a charity can ask a person or corporation to provide a declaration as to who the donor is, or the Organization can refuse to issue a receipt.

10. Electronic receipts

As long as charities follow certain rules they can either: issue physical receipts from a receipting book, use a computer program to issue receipts that are printed and mailed, or issue electronic receipts from a website or by e-mail. 

In the past, pre-printed receipting books were very common.  There are advantages to using them in that they may have the requisite fields and they are numbered sequentially.  However, with changes to the mandatory elements on the receipts, it can be costly to replace them. 

Many charities use a program (such as a word processing or spreadsheet program) to prepare receipts.  These receipts are then printed out.  For a small number of receipts this may be adequate. 

Some other charities use a computer program to issue the receipts.  Others have set up internet-based systems that can automatically issue the receipts and, in some cases, the donor can be provided with a receipt in seconds.

Any system of electronic receipts must ensure that, if receipts are sent electronically, they cannot easily be altered.  Sending a regular word processing file to a donor with the receipt would be inappropriate because the donor could change the amount of the donation or the name of the donor or the date on the receipt.  On the other hand, sending an unalterable PDF would be acceptable.

11. Properly replace lost or incorrect receipts

The Organization should ensure that, if replacing a lost receipt, the replacement receipt has all the same required information as the lost receipt with a note stating that it “cancels and replaces receipt No. X”. The Organization must ensure that the copy of the original lost receipt is kept and marked “cancelled” in its records.

If the Organization has issued an incorrect receipt (for example, it does not contain all the required information or there is a typographical mistake on the receipt), it must keep both the incorrect receipt and the Organization’s copy of such receipt, and both should be marked “cancelled.”  The Organization can then prepare a correct receipt. 

12. Keep copies of receipts

CRA requires that charities keep copies of tax receipts for a minimum of two (2) years from the end of the calendar year in which the donations were made. With respect to ten-year gifts, charities need to keep the donor’s directions for as long as the Organization is a registered charity, and two years after that date. Most other records are required to be kept for seven years.  The Organization may keep its official donation receipts for longer than the prescribed time in case they are ever needed by a donor or CRA. As well, if official donation receipts are produced electronically, a copy of the receipts should either be printed or kept in an unalterable format, such as burned to a CD. 

13. Make sure the Organization’s system is protected

Official donation receipts are like bags of cash and should always be securely kept by the Organization.  Irrespective of what system is used, make sure that the donation receipts are adequately secured or supervised – otherwise they could be used nefariously by some for their own private interests. For computers used to issue or store the receipts, make sure the computers are password protected.  If using receipting books, make sure they are kept locked up during off hours and are not accessible to anyone not issuing receipts. Inform the CRA or the police immediately if there is a concern with respect to false receipting. 

14. Do not lend the Organization’s registration to other organizations 

Charities are sometimes approached by people who are interested in contributing to a foreign charity or Canadian non-profit that is not a registered charity. The only reason (or an important reason) the funds are donated to the Canadian registered charity in such cases is that, while the Canadian individual wants the funds to be sent to the foreign entity or local non-profit, he or she also wants to receive an official donation receipt for tax purposes, instead of donating the funds directly to the foreign charity/local non-profit and not receiving the receipt for Canadian income tax purposes.  If the Organization receives the funds in such situations, the CRA refers to the Canadian registered charity as being a “conduit”.  While charities are allowed to conduct foreign activities, they are not allowed to lend their registration or act as a conduit.

CRA has issued this warning:

Caution: Lending registration numbers

Under no circumstances should a registered charity lend its registration number to another organization for receipting purposes. A registered charity is responsible for all tax receipts issued under its name and number and must account for the corresponding donations on its annual information return. A charity that lends its registration number risks losing its charitable registration.

A charity wishing to work with a foreign charity as part of an appropriate structured arrangement with direction and control can do so as long as it follows the requirements as set out in CRA’s Guidance “Canadian Registered Charities Carrying out Activities Outside Canada”.

15. Returning gifts – be very careful

Generally, a registered charity cannot return a gift. Once a charity owns the property, it should be used for the Organization’s charitable purposes.  This is because the Organization owns the property, irrespective of whether a receipt is issued.  The Organization must be very careful when accepting gifts with conditions attached to them, or fundraising for a particular purpose.

If the Organization is accepting a conditional gift, in some cases it would be best to not issue a tax receipt until the donor agrees that the conditions have been fulfilled.  Before returning a gift, the Organization should obtain legal advice to determine the best course of action. It may be appropriate to also advise the Charities Directorate or provincial Public Guardian and Trustee. In general, if the Organization returns a gift with the fair market value of over $50, and the donor received an official donation receipt for that gift, then the Organization will need to file an information return with the CRA, the information return must be filed within 90 days after the day the property is returned.

If a donor is upset with the Organization or wants the donation to go to another charity, CRA suggests that one solution may be for a charity to offer, in order to retain the goodwill of the donor, to transfer the gift to another qualified donee instead of returning it. 

Avoiding Inappropriate Receipting

Here are some suggestions for reducing the likelihood of inappropriate receipting:

• Know the rules for proper receipting;

• Access webinars and other publicly available resources on receipting;

• Make sure staff, volunteers, board members who are involved with receipting also know these rules;

• Ensure receipts have all mandatory fields;

• Have good governance and bring the board of directors into the receipting discussion;

• Have a gift acceptance policy for the Organization and follow through with it;

• Be careful with gifts-in-kind and inflated valuations;

• Stay alert and avoid abusive gifting tax shelters and fraud;

• Have good controls over who prepares and signs receipts and make sure, if possible, there is segregation of duties and more than one person is involved in the process;

• Have adequate books and records; and

• Obtain legal advice when necessary or call CRA.

Consequences of Inappropriate Receipting

Failure to prepare proper donation receipts can result in the suspension of receipting privileges, penalties and revocation of charitable status. If incorrect information is placed on a receipt, a charity can be fined or provided with a penalty equal to 5% of the eligible amount on the receipt for a first infraction.  If the Organization places deliberately false information on a tax receipt, it is liable to a penalty equal to 125% of the eligible amount stated on the receipt.  Furthermore, there are third-party civil penalties that can be assessed. 

There can be significant legal and reputational harm to a charity and its board of directors if there is inappropriate receipting.