Charity FAQs

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

On the surface, it appears to benefit 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). However, there's a caveat known as the "de minimis rule."

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.

If the charity cannot issue a receipt due to these rules, the for-profit partner may explore claiming the expenses from the cause-related marketing arrangement as an advertising expense.

In conclusion, cause-related marketing can be a powerful way to increase a charity's fundraising prowess and revenue, but it's essential to understand its complexities. By navigating these intricacies responsibly, both charities and for-profit partners can harness its power for positive change.