The CRA's fundraising guidance is available at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/fndrsng-eng.html.
Fundraising is something the CRA is interested in, and reviewing the guidance can help you stay within the lines.
Fundraising practices that are problematic from the CRA's perspective have been categorized as follows (details are available in the fundraising guidance):
- Resources devoted to fundraising are disproportionate to resources devoted to charitable activities
- Fundraising without an identifiable use or need for the proceeds
- Inappropriate purchasing or staffing practices (paying more than fair market value for fundraising services is one of the major issues for this category)
- Fundraising activities where most of the gross revenues go to contracted third parties
- Commission-based remuneration or payment of fundraisers based on amount or number of donations
- Misrepresentations in fundraising solicitations or disclosure about fundraising costs, revenues or practices
- Fundraising initiatives or arrangements that are not well documented
- High fundraising expense ratio –should aim to keep the ratio of costs to revenue over a fiscal period to under 35%
As with many things, the problem may lie in the details.
The Charities and Not-for-profit team at BLG is happy to help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.