CRA has a particular definition of fundraising in the guidance which includes certain elements and excludes certain elements.
Yes.
Here are 6 definitions contained in the CRA Fundraising Guidance
CRA sets out 4 categories of prohibited fundraising conduct.
Here is an excerpt from CRA’s Fundraising Guidance describing “Conduct that is illegal or contrary to public policy”
In its Fundraising Guidance, CRA discusses when ” Conduct that results in more than an incidental or proportionate private benefit to individuals or corporations”
The CRA discusses when fundraising actvities are considered deceptive in its Fundraising Guidance.
CRA’s Guidance of Fundraising in section 8 deals extensively with why you need to allocate expenditures on the T3010 Registered Charity Information Return and sets outs various tests that can help determine whether an expenditure is fundraising, charitable or combination of both. People who complete the T3010 need to be aware of CRA’s expectations with respect to allocation of fundraising expenditures..
Many charities have employees who are doing lots of different jobs. Even though someone may have a title like “Resource Development Coordinator” it does not mean that they are only fundraising. Staff can allocate their time between fundraising, charitable activities, administration etc. Remember that grant writing to government and foundations is not considered “fundraising” for purposes of this guidance. Keep in mind that although CRA does not require that staff keep time sheets it is a good practice to have at least weekly timesheets and not just an end of year estimation.
CRA is looking at many different matters when evaluating whether a charity fundraisng activities are compliant? One of the methods is to look at the amount of fundraising expenditures to fundraising revenue. Some people have fixated only on the ratio but it seems to me that CRA in general is more concerned with whether a charity is conducting prohibited activities or certain “indicator of concern” than just the fundraising ratio. Anyway amongst the general public about 40% of people think charities should not be spending any money on fundraising costs and the other 60% expects that on average charities should spend something like 15%. While there are some charities that can do some fundraising with no cost this is increasingly the exception and not the rule. CRA’s general acceptance of fundraising ratios of 35% or less and statement that fundraising costs to reveneu above 70% “will raise concerns with the CRA” and “The charity must be able to provide an explanation and rationale for this level of expenditure to show that it is in compliance; otherwise, it will not be acceptable”. CRA’s position to say the least is generous. Charities should be cognizant of their fundraising costs and as the public is very concerned with fundraising costs those charities with higher fundraising costs should be able to show why the costs are so high and what is being done to reduce to the ratio of fundraising cost to expenditure.
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If you require legal advice with respect to Canadian or Ontario non-profits or charities please contact Mark Blumberg at .(JavaScript must be enabled to view this email address) or at 416-361-1982 x237 www.canadiancharitylaw.ca