Can Our Charity Collaborate with a Business & Still Issue Tax Receipts?

Cause-related marketing is a collaboration between a registered charity or nonprofit organization and a for-profit partner. The primary aim of this partnership is to boost the sale of the for-profit partner's goods or services, with a portion of the proceeds earmarked for the charity. 

At first glance, this partnership is a win-win situation for both parties. The charity receives much-needed funds, while the for-profit partner enhances its brand by aligning with a noble cause. 

However, there are complexities involved, especially regarding the issuance of receipts. For the charity to issue a receipt, it must accurately calculate the value of any benefit the donor receives in return. 

If the value of the benefit exceeds 80% of the donation, the charity cannot issue a receipt, according to the Canada Revenue Agency (CRA). It's crucial to navigate these complexities responsibly, ensuring compliance and maintaining the integrity of the partnership.

Nevertheless, the "de minimis rule" provides a caveat to this regulation. This rule states that if the value of the benefits received is minimal—less than $75 or 10% of the donation, whichever is less—the charity doesn't need to subtract these amounts when issuing a receipt. 

Suppose the charity cannot issue a receipt due to these rules. In that case, the for-profit partner may explore claiming the expenses from the cause-related marketing arrangement as an advertising expense. It's essential to note that cause-related marketing can be a powerful way to increase a charity's fundraising prowess and revenue.

One of the considerable benefits of this type of partnership is that it provides a platform for the charity to reach a broader audience. The partnership could also add credibility to the charity's cause, as it collaborates with a reputable company.

Furthermore, the for-profit partner can benefit from the positive publicity associated with a charitable cause, improving the company's brand image and potentially increasing revenue and customer loyalty. 

In conclusion, cause-related marketing is an excellent way for charities to raise funds while allowing for-profit partners to contribute to a noble cause. 

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