While telemarketing is allowed by Canadian charities they must be very careful in its use.

In the CRA Fundraising Guidance CRA advises as follows:

“4. Our charity has hired a telemarketing firm to raise funds.  However, when the firm contacts potential donors it will convey information that will raise awareness of our cause. We consider this part of our efforts to advance our charitable purposes. Can we report a portion of the costs of the telemarketing initiative as a charitable expenditure?

No. All fundraising requires a certain amount of communication about the cause for which the funds are being raised. If the communication is undertaken for the purpose of fundraising, then all costs are to be reported as fundraising expenditures. Generally, the CRA requires that all telemarketing costs to raise funds be reported as fundraising expenditures.”

There have been a number of scandals involving charities and telemarketing.  It is important that charities allocate all telemarketing costs to fundraising, that commissions not be used as they violate a number of codes of ethics and are an indicator of concern for CRA.  As well it is prohibited for a fundraising activity to result in a disproportionate private benefit.  The contract between the telemarketer and the charity should be carefully scrutinized by a charity lawyer knowledgeable about the CRA Fundraising Guidance.  Furthermore, charities must ensure that their telemarketers’ scripts are accurate and not deceptive and in fact the telemarketers actual conduct is appropriate.