Question: Our board would like to develop a donation receipting policy? Do you have any guidelines we should follow?

The board will want to consider incorporating the following aspects when developing a donation receipting policy:

  • What should you include on an official donation receipt?

Donation receipts must include the following:

  • charity name and address
  • unique receipt number
  • charity’s registration number issued by CRA
  • the received date or year for the gift
  • the issued date of the receipt
  • name and address of the donor
  • the eligible amount of gift (if applicable the amount and description of any advantage received by the donor)
  • signature of individual authorized by the charity
  • name and website of CRA
  • and ensure to include “official receipt for income tax purposes”.
  • The minimum donation to issue a receipt

Charities are not required to issue donations receipts. however many charities like to set a minimum donation to alleviate some of the administrative burdens since donors cannot claim a charitable tax credit without an official receipt.

  • Split receipting process for events

When the donor receives an advantage in exchange for the gift (ie. tickets to a dinner event, etc), the charity must deduct the fair market value (FMV) of the advantage received from the donation for receipting purposes.

  • Receipting for in-kind donations (valuation process)

The process will vary based on the value of the non-cash gift. However, if the FMV is below $1,000 a member of the registered charity (or an individual with sufficient knowledge) can determine the value. If the FMV is above $1,000, CRA recommends that the item be appraised by a third party (not associated with the charity or donor). Also, the donation receipt must include the appraiser’s name and address if the property is appraised.

  • Donated service

Moreover, charities cannot issue donation receipts for services received as this does not meet the definition of a gift (as there is no transfer of property). However, the person providing the service can donate back the funds they receive for the service performed (ie. separate into 2 transactions: 1) Person provides services to a charity and receives payment, 2) Person makes a voluntary gift of property to the charity).

  • Donation of investments

Lastly, to determine the FMV of the investment for receipting purposes, it would be advisable to include in your donation receipting policy that the charity will liquidate the investment immediately and issue the donation receipt for the market value of the investment as of the date it was received.

 

In addition, CRA has some great resources for charities on issuing donation receipts. See the link below:

https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/issuing-receipts.html