CRA’s New Fundraising Guidance for Canadian Registered Charities 2012 just released
Published under: What's New from the Charities Directorate of CRA | Canadian Charity Law | Fundraising Guidance for Registered Charities
On April 20, 2012 CRA released a new Guidance on Fundraising for Canadian registered charities. This guidance is the most important information from the Charities Directorate on the obligations of Canadian registered charities when it comes to fundraising.
Here is a larger font version of the guidance:
CRA Fundraising Guidance April 20, 2012 in PDF
Here is a link to the CRA website:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/fndrsng-eng.html
In brief here are some of the changes::
-the new Guidance is in one document rather than two separate documents;
-the ratio of fundraising expenditures to revenue will receive less prominence - it will be one of many factors that could result in fundraising being viewed as unacceptable;
-the CRA’s suggested method of allocation is simplified substantially;
-the CRA’s position on charitable gaming is clarified - gaming is still covered under the guidance and costs and revenues fall into the ratio and CRA recognizes that charities that use lotteries and gaming may have much higher ratios;
-there is a detailed discussion on the importance of having a reserve fund policy so that the public understands why your charity is fundraising when they may have a substantial reserve; and
-there is a discussion of working with non-arms length fundraising firms.
This page is located at: http://tinyurl.com/8x99n2j
Comments
Hi Mark,
I don’t find the position on gaming to be 100% clear. I understand that as an individual fundraising activity, a high ratio for gaming is OK with CRA as long as provincial rules are followed as per Section 99. They are stating that gaming is an exception to Section 86 which states:
“While the ratios above refer to a global ratio over a fiscal period, a high fundraising ratio for an individual event may, on its own, be an indicator of unacceptable fundraising where the event forms a collateral non-charitable purpose, delivers a more than incidental private benefit, or is contrary to public policy or deceptive.”
Section 99 seems to imply that charities who have a high overall ratio because they run a gaming activity will be looked at differently than a charity who has a high ratio that does not run a gaming activity.
Where is becomes murky to me is Section 100 that states that:
“However, gaming activities are still fundraising activities and, like all activities of registered charities, must comply with the requirements of the Income Tax Act. For example, a charity cannot engage in a gaming activity that amounts to carrying on an unrelated business.”
This would seem to imply that a charity who has gaming activites would not be treated differently than a charity that does not have gaming activities.
Let’s say Charity A has no gaming activites and a fundraising ratio of 60%. CRA reviews their activities and finds that fundraising has become a collateral purpose. Charity B also has a fundraising ratio of 60% but runs a lotterty that increases their ratio from 35% to 60%. Everything about the two charities is the same in terms of how resources are allocated to fundraising i.e volunteer and staff time spent on fundraising. Will Charity B not be reviewed, or reviewed differently, by CRA as they will recalculate their ratio excluding revenues and expenses from the Lottery?
Thanks
David Oyler
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