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A State of Change - December 2017

Published on: Dec 04, 2017

Many not-for-profit organizations (“NPOs”) receive a large portion of their donations through events run by third party fundraisers. In this issue of A State of Change, we consider whether registered charities would be able to issue official donation receipts to such donors, and what the implications are with respect to the management of funds raised and the governance of such relationships.

Can a Registered Charity Issue Official Donation Receipts When Funds are Raised by a Third Party Fundraiser?

It is often with good intentions that events are organized to raise funds in support of a registered charity. But when funds are raised by a third party fundraiser, can the registered charity issue a registered tax receipt?

A registered charity can issue official donation receipts (“ODR”) to donors for gifts of property that it receives. The right to issue ODRs is not to be taken lightly. The charity alone is responsible for the official donation receipts issued using its registration number. The registered charity should ensure it has control over the tax-receipting process and over the funds received for the event. The charity cannot allow third parties to issue receipts on its behalf. Relinquishing the receipt-issuing function can put the charity at risk of deregistration and of losing its tax receipting privilege.

In its Policy Commentary CPC-206 “Third-Party Fundraisers for the Benefit of a Particular Charity”, Canada Revenue Agency provides guidance with respect to fundraising events run by third parties. A charity is permitted to have a third party organize a fundraiser for it, or to act as an agent to fundraise on its behalf; however, the charity must retain control over the funds received and over the receipts issued under its registration number. Where the charity does not run the fundraiser by itself, it should:

  • put in place a written agreement setting out the modalities of the fundraising arrangement
  • ensure that ODRs are only issued to donors for the eligible amount of the gift
  • ensure that ODRs are signed by an authorized individual in conformity with the receipting requirements
  • be able to provide to the Canada Revenue Agency a full accounting of the monies or that portion of the monies donated to it, and the receipts that were issued in return
  • be able to account to the Canada Revenue Agency for the amount of the advantage received by the participants as a result of their participation in the fundraising event

The charity must in essence treat the event as its own and be able to account for, and take ownership of, all monies received as a result of the fundraising event. The charity must ensure that any receipts issued are in compliance with all of the tax requirements.

In another communication “Fundraising Events – Issuing Receipts”, Canada Revenue Agency further confirms that it allows a charity to use a third party fundraiser and issue receipts as long as the charity had control over, and can validate, the receipts being issued:

“Q. 5. Can a charity have an organization hold a golf tournament on its behalf?

A. Yes. A charity can hire a third-party organization or retain the services of a fundraiser as an agent or other contractor to organize the golf tournament. However, the charity should maintain control over all the funds received from the event and over any receipts issued. For more information, see Policy Commentary CPC-026, Third-party fundraisers.”

The charity should receive the funds directly.

While this question and response relate to a golf tournament, the same would apply to other fundraising events that  for which a charity may use a third party The golf tournament must be treated as an activity of the charity. The third party fundraiser is providing a service of organizing the event for the charity.

Upon audit, Canada Revenue Agency will review documentation related to the event, as well as procedures in place to ensure the charity has maintained adequate control over the monies received from the event and the issuance of registered receipt. The onus is on the registered charity to ensure the receipts meet the tax requirements.

Question 5 specifically deals with a fundraiser where the charity has hired a third party to organize the fundraising event on its behalf. However, Canada Revenue Agency has also provided guidance where an organization holds an event of its own and then gives the funds to the charity. In this situation, the charity is not permitted to issue ODRs:

“Q. 6. If an organization advises a charity that they held a golf tournament on its behalf, can the charity issue receipts to the attendees?

A. No. When an activity is carried on that a charity is not aware of, it is not an activity of the charity, so the charity cannot issue receipts. However, as mentioned above, a charity can hire a third-party organization as an agent to carry on activities on its behalf.”

Where a third party holds a fundraiser independently from the charity, the charity cannot issue ODRs for funds it receives. In this case the third party should contact the charity in advance of the event and work with it so that the charity can oversee the event and ensure adequate controls are in place  over the funds received and the receipting process so that ODRs can be issued by the charity.

It is important that a registered charity know its obligations with respect to issuing official donation receipts related to third party fundraisers so that it does not risk losing its tax receipting privilege.



Sam Persaud Sam Persaud
Partner, Public Sector Audit
Sam has over 35 years of public accounting experience, specializing in the provision of audit and assurance services to many NPO clients of our firm. Sam’s extensive experience has allowed him to provide valuable insights to his clients in the areas of financial reporting, governance, internal controls and risk identification and risk management. Sam has volunteered with a number of organizations, including the United Way of Greater Toronto. He is an editor of A State of Change, our Canadian National not-for-profit newsletter.
Lilian Cheung Lilian Cheung
Senior manager, National Assurance Services
Lilian specializes in audits of not-for-profit and public sector organizations. She is an editor of A State of Change, our Canadian National not-for-profit newsletter. Lilian spent two years on secondment with the Canadian National office, providing support to client service teams on assurance matters in the private company, public sector, and not-for-profit spaces.
Trisha Patel Trisha Patel
Senior manager, National Assurance Services
Trish is with the Canadian National office and specializes in developing tools, and guidance for client service teams working on not-for-profit and public sector audits. She was previously in the GTA Public Sector group where she primarily worked on audits of not-for-profit organizations. She is an editor of A State of Change, our Canadian National not-for-profit newsletter. 



Dennis Alexander
Partner, Tax

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