Receipting for Year-end Donations

CCCC always receives questions at year end about when a donation qualifies for current year receipting. The Income Tax Act’s Regulations state that an official receipt for a cash gift must show “the day on which or the year during which the donation was received.”

For church offerings, this is straight forward. Any collections received on Sunday January 1, 2012 will be a 2012 gift, regardless of the date that may exist on a donation cheque. The same would apply for credit card or debit transactions initiated on January 1.

Gifts in the mail are another issue. At this time, the Canada Revenue Agency appears to be administratively allowing donations put in the mail, and postmarked prior to year end, to be treated as current year (i.e., 2011) gifts, even if delivered after New Year’s Day. However, the onus is on the charity to be able to prove this. So, retaining the envelopes of the last-minute gifts that came in, with a December 31, 2011 or earlier Canada Post postmark (not a donor’s metered stamp date), is helpful.

Yet another issue is credit card and debit transactions in process. Using the above principle regarding cheques in the mail, if your third-party payment agent (e.g., credit card company, bank) provides:

– documentation that the donor made the transaction on December 31st or earlier, and

– a hard copy of that documentation can be made, then it is reasonable to treat the gift as received in the current year, though your third-party payment agent may lag in getting the cash into your account until the first few days of the new year.

Importantly, it is up to your charity to set its own policy on these matters:

1. You can either choose to do the above steps for late-in-the-year gifts, or, choose to treat any gift delivered on or after January 1, 2012 as a 2012 gift, regardless of the post mark or transaction date.
2. You may wish to inform your donors of the last day your ministry will accept hand delivered donations to your office (e.g., the Friday ahead of New Year’s Day, when that day falls on a weekend), for purposes of giving the donor a current year receipt.
3. Ensure that your stewardship representatives or fundraisers are aware that they need to get funds in ahead of year end. When that is not feasible (e.g., a weather delay), a signed and dated representative’s note of when the gift was received must be provided, to allow the issuing of a current year official receipt.

Below is a template of how that policy might look:

Year-end gift acceptance policy:

Cheques and money orders sent by mail must be:

– dated in the current year,

– the envelope both metered (if a stamp is not used) and postmarked prior to December 31 of the current year,

– and delivered within one week of New Year’s Day in order for an official receipt for tax purposes to be issued for the current year.

Additional elements dealing with communicating this to donors (e.g. via your website, Newsletter, Sunday Bulletin, social media – e.g. Facebook, Twitter) can be added, depending on your communication methods with your donors.

If your ministry has stewardship personnel or fundraisers, they should be made aware of any exceptions acceptable to your ministry and late delivery procedure (a signed and dated representative’s note of when the gift was received in their hands).