4 Ways to Comply with CRA’s New Fundraising Guidance

Authored by Derek B.M. Ross.

In CRA’s fundraising guidance, CRA lays out its expectations for acceptable fundraising practices.1 Unacceptable fundraising can lead to sanctions or revocation of your charitable status. CCCC has several ways of helping you meet these expectations.

The details of the Guidance  were discussed in a recent CCCC Bulletin article. One of the Guidance’s important features is Appendix “D”, which sets out a number of best practices that are recommended for charities to adopt in order to “reduce the risk of…engaging in unacceptable fundraising”. CCCC has a number of resources available to its members to assist them in adopting CRA’s recommended best practices. These resources can help charities improve their fundraising practices and therefore instil more confidence in donors. Here are four specific examples.2

1. CRA BEST PRACTICE: DETERMINING REASONABLE COMPENSATION

When hiring in-house staff for fundraising activities, a charity should:

  • contact organizations with a profile similar to the charity’s to determine reasonable compensation for the type and amount of fundraising to be undertaken;
  • base the compensation on a salary survey; and
  • set compensation that is appropriate based on the remuneration received by other employees of the charity in light of the respective responsibilities and requirements of the positions” (para. 143)

HOW CCCC CAN HELP:

CCCC maintains a database through its Canadian Ministry Compensation Survey, which contains compensation information collected from over 900 Canadian charities. Reports can be customized to obtain data specific to positions (including fundraising staff) and a charity’s size. This information is free to CCCC members who participate in the survey and can help charities determine appropriate remuneration for fundraising staff. 3

2. CRA BEST PRACTICE: ESTABLISH FUNDRAISING POLICIES

Whether fundraising is carried out by employees or contracted out to third parties, a charity’s fundraising oversight measures should include… establishing and following fundraising policies that set out acceptable and unacceptable fundraising practices” (para. 149).

HOW CCCC CAN HELP:

CCCC provides a number of sample policies to assist charities in developing effective and exemplary fundraising practices, including:

  • Benevolence Fund Policy
  • Donor Restricted Gift Policy
  • Gift Acceptance and Valuation Policy
  • Official Donation Receipt Checklist
  • Privacy Policies
  • Conflict of Interest Policy

Since each organization is different, policies will need to be customized to each charity’s specific needs, but CCCC’s policies provide a good template and example of industry standards for charities and their advisors to consider.

3. CRA BEST PRACTICE: ADHERE TO EXTERNALLY ESTABLISHED STANDARDS

The CRA recommends that charities disclose all fundraising costs, revenues, practices, and arrangements so that members of the public—and, more specifically, donors or prospective donors—are not deceived or misled about the resources from fundraising that are ultimately available to a registered charity for its programs, services, or gifts to qualified donees.

The following measures could be evidence of a charity’s commitment to disclosure…:

  • use of independent auditors and/or externally established standards to promote truthful, accurate, accessible, and timely disclosure of financial information” (paras. 152-153)

HOW CCCC CAN HELP:

CCCC administers a program of accreditation which certifies Christian charities that demonstrate verifiable compliance with nine Standards of Accountability. The Standards require Christian ministries to be faithful stewards who give appropriate account of their finances and activities to donors, other charities and organizations, the larger public, program beneficiaries, and governments.

The CCCC Standards provide the public (especially donors and potential donors) with an effective benchmark when evaluating the worthiness of a ministry. They can help a charity meet CRA’s best practices related to disclosure as they require the charity to:

  • undergo an independent audit
  • provide to anyone, upon request, a copy of its most recent financial statements
  • adopt declared policies pertaining to its stewardship practices, in which the interests and dignity are always held foremost in mind
  • develop a Code of Ethical Fundraising and Financial Accountability that sets out how the organization meets the Standards
  • regularly communicate its commitment to ethical fundraising and financial accountability to its board members, staff members, volunteers and anyone interested in how the Standards are being met

4. CRA BEST PRACTICE: MAINTAIN A RESERVE FUND POLICY

A reserve fund policy may assist a charity when planning, explaining, and justifying its approach to fundraising to donors and to the CRA. It may help to ensure that a charity fundraises with an identifiable use or need, reducing the risk of failing to devote resources to charitable activities or engaging in fundraising that forms a collateral purpose. A transparent and publicly accessible policy may also help ensure that fundraising appeals are not misleading or deceptive by misrepresenting the charity’s financial position and the extent or urgency of its need for funds (para. 165).

HOW CCCC CAN HELP:

Charities that wish to develop a reserve fund policy can consult our CCCC Bulletin Article, “Establishing Reserve Funds – How Much is Enough”. The article discusses different types of reserve funds and outlines factors to consider when determining how much should be set aside.

For more information about CCCC and the ways we can help your charity implement best practices in its fundraising activities (and many other areas), please visit our Programs and Services page.

NOTES:

  1. CRA Guidance CG-013 “Fundraising by Registered Charities“, issued April 20, 2012 (“the “Guidance”).
  2. The Guidance contains a number of additional best practices in addition to those discussed here. Charities should review Appendix “D” of the Guidance for the complete list
  3. The Canadian Ministry Compensation Survey provides general information and charities should ensure that the information they are relying upon is an appropriate comparator to their own situation and needs. For example, a charity should not rely on survey results of charities different in size than their own, or with different levels of fundraising revenues.

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.