Can Canadian Charities Raise Funds Through a Third Party?

Are you wondering how charities raise money to support their important causes? One common method they use is through fundraising events organized by third parties. These events can range from bake sales and charity auctions to marathons and galas. But have you ever stopped to think about whether these events are safe for charities? Do they follow strict rules and guidelines? In this article, we'll explore the world of third-party fundraisers and explore the policies that charities must navigate to ensure the funds raised are used effectively and responsibly.

Understanding Third-Party Fundraisers:

Third-party fundraisers are events organized by individuals or organizations not directly affiliated with a charity. These events aim to raise money for a specific charity's cause. However, there are rules and policies that charities must follow when engaging in these fundraisers.

Policy:

Released on February 26, 2003, under reference number CPC-026, the CRA policy aims to clarify rules regarding third-party fundraisers for the benefit of registered charities. Here's what you need to know:

1. Control Over Funds: Charities must maintain control over all funds earned during third-party fundraising events. This ensures that the money goes where it's intended—to support the charity's cause.
2. Issuing Receipts: Official donation receipts, which allow donors to claim tax benefits, should only be issued for the eligible amount of the gift. This prevents misuse of tax privileges and maintains transparency.
3. Written Agreements: When a charity enlists a third party to organize a fundraiser, a written agreement outlining the arrangement is crucial. This agreement helps ensure both parties understand their roles and responsibilities.

Key Definitions:

• Amount of Advantage: The total value of benefits received by the donor, which should not exceed 80% of the fair market value of the gift.
• Intention to Give: The donor's gift should be given with the intention to support the charity, not solely for personal gain.
• Eligible Amount of Gift: The fair market value of the gift minus any benefits received by the donor.

In conclusion, while third-party fundraisers can be valuable sources of support for charities, it's essential to adhere to the CRA's fundraising policies and guidelines to maintain transparency and integrity. By ensuring proper control over funds, issuing receipts accurately, and establishing clear agreements, charities can benefit from these events while safeguarding their registered status.

Remember, every dollar raised through these fundraisers contributes to making a positive impact in our communities. So, let's support charities responsibly and help make the world a better place, one fundraiser at a time.

Curious about the legalities of fundraising partnerships? Can a Canadian Charity Work with Third-Party Fundraisers? walks you through the key considerations.

Frequently Asked Questions

Quick answers to common fundraising questions for individuals and nonprofits looking to raise money effectively.

What is a 3rd party fundraiser?

A third-party fundraiser is when someone raises money for a charity without being officially employed by that organization. This includes community groups hosting events for local nonprofits, employees organizing workplace campaigns, or individuals running marathons for causes they support. The charity receives the funds but has limited control over the fundraising activities.

How to start a charity fundraiser?

Choose a cause you care about and contact the charity for permission and support materials. Set a realistic goal and timeline, then select your method like online crowdfunding or events. Create a compelling story explaining why the cause matters and promote through social media, email, and personal networks while keeping supporters updated.

What percentage of a nonprofit budget should be fundraising?

Most experts recommend 15-25% of total budget on fundraising. Less than 15% may limit growth, while more than 25-30% suggests inefficiency. New nonprofits often spend higher percentages initially as they build their donor base. The key is ensuring fundraising expenses generate positive returns.

How to organize a fundraising event?

Plan 3-6 months ahead with clear attendance and fundraising goals. Choose appropriate date, venue, and format for your audience. Create a detailed budget and form a planning committee for different tasks. Secure permits, insurance, and vendors. Promote through multiple channels and follow up with attendees for future engagement.

How to raise money for a fundraiser?

Start with family, friends, and colleagues, then expand through social media and email. Tell compelling stories that connect emotionally and clearly explain fund usage. Make donating easy with online platforms and offer various giving levels. Consider matching challenges and corporate sponsorships. Keep donors engaged with updates and thank them promptly.