Authored by Philip A.S. Milley, Associate Director of Legal Affairs
On February 9, 2017 CRA published guidance on the issue of issuing receipts related to cause-related marketing. The new CRA webpage can be accessed here. According to CRA, cause-related marketing is a fundraising activity where a charity promotes the sale of a for-profit partner’s items or services on the basis that part of the revenues will go to the charity.
In this guidance CRA addresses the common practice of receipting donations from a for-profit organization for donations a charity receives through this arrangement. According to CRA, a charity must be able to calculate the value of any advantage the donor receives in order for a donation receipt to be provided. Because it is difficult, and sometimes impossible, to calculate the advantage a donor has received in this type of arrangement, it is unlikely that a donation will be capable of being receipted appropriately.
It is important to note that this is not the only receipting issue that can arise when a charity engages in this type of arrangement (i.e., whether a gift was made or the de minimis threshold). It is important that charities familiarize themselves with the CRA rules on split-receipting.
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.