Charity Governance

Charitable contributions take different shapes, and gifts of services have distinct rules. This blog post delves into whether registered charities can issue official donation receipts for service gifts and the particular conditions governing such situations.

Understanding the Concept of a Gift:

At its core, a gift is defined as a voluntary transfer of property without consideration. This definition sets the stage for the considerations surrounding gifts of services. Unlike tangible items or monetary donations, services such as time, skills, and effort are not categorized as property. Consequently, these contributions do not meet the criteria for being considered gifts in the context of issuing official donation receipts.
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Conditions for Issuing Receipts:

Registered charities must adhere to certain guidelines when it comes to issuing official donation receipts. While gifts of services don't qualify for receipts, there are scenarios where a receipt can be issued under specific conditions.
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One such scenario involves a charity paying a service provider for their rendered services, and subsequently, the service provider choosing to donate the money back to the charity. This process, commonly referred to as a "cheque exchange," requires two distinct transactions:

1. The service provider provides a service to the charity and is remunerated for that service.
2. The same service provider makes a voluntary gift of property (monetary donation) to the charity.

It's crucial for charities to maintain a clear record of this process by keeping a copy of the invoice issued by the service provider. This documentation serves a dual purpose – confirming that the charity is issuing a receipt for a gift of property and creating an audit trail. This trail is essential as the donor must account for the taxable income realized either as remuneration or as business income.