Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Dear Sirs:
Re: Charitable Donations
This is in reply to your letter of July 24, 1991, concerning a proposal by a community organization which wishes to increase donations by its members to a registered charitable organization. You indicate that the community organization proposes to make a matching donation in the name of the member rather than in the organization's name. This would result in members receiving a receipt showing a donation amount for double the amount he or she has given.
Our Comments
In our view, there can be no gift as the members do not personally control or own the money they are donating. The funds of the community organization, generally, have been raised for its community purposes; the funds are not the funds of the members. These funds will be donated to a registered organization by the community organization and not by the members. Furthermore, it is our opinion that the proposal to have the community organization match the donations by the members and have the entire charitable receipt in the name of the members would cause the community organization to cease to be tax exempt. In our view, because donations will be made in the name of a member, that income of the community organization will be made available to the members and thus it would no longer meet the requirements of paragraph 149(1)(1) of the Income Tax Act (the "Act"). Any funds made available for the personal benefit of any member could disqualify the organization from tax exempt status.
A gift may be defined as a voluntary transfer of property without consideration. There must be a donor who freely disposes of the property and there must be a donee who receives the property given. No right, privilege, material benefit or advantage may be conferred on the donor or on a person designated by the donor as a consequence of the gift. Further, donation claims that are supported by improperly-issued receipts may be disallowed. In our view, a charity that knowingly issues receipts in a situation such as the one you describe, gives cause for revocation of its registration under paragraph 168(1)(d) of the Income Tax Act.
We trust our comments will prove helpful
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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