Fundraising plays a vital role in supporting nonprofit organizations and charities in Canada. Without fundraising, many organizations wouldn’t be able to provide essential services and make a positive impact in their communities. However, fundraising isn’t as simple as asking for donations. In Canada, there are specific fundraising guidelines for nonprofit organizations that must be followed to ensure compliance with fundraising laws in Canada.
This guide will walk you through the essential fundraising guidelines for nonprofit organizations in Canada, explain the fundraising laws in Canada, and provide tips on how to raise funds for charity effectively and legally.
1. What Are Fundraising Guidelines for Nonprofit Organizations in Canada?
Fundraising guidelines for nonprofit organizations in Canada are rules and standards designed to ensure that donations are raised in a legal, ethical, and transparent manner. These guidelines help organizations raise funds while protecting the interests of donors and maintaining trust within the community.
These guidelines are outlined by various regulatory bodies, such as the Canada Revenue Agency (CRA) for charities, provincial governments for other nonprofits, and different fundraising professionals. Nonprofits that fundraise must adhere to these rules to maintain their tax-exempt status and avoid any legal issues.
2. Key Fundraising Laws in Canada
There are several fundraising laws in Canada that nonprofits need to follow. Understanding these laws is crucial to ensure that your organization is fundraising within legal boundaries.
Charitable Registration
Only registered charities can issue official donation receipts for tax purposes. To raise funds as a charity in Canada, your organization must be registered with the Canada Revenue Agency (CRA). If your nonprofit is not a registered charity, it cannot issue these receipts, but it can still raise funds through other means.
Compliance with Provincial and Federal Laws
Nonprofits must follow both federal and provincial laws when conducting fundraising activities. These laws vary depending on the type of fundraising activity (e.g., direct mail campaigns, events, or online fundraising). For example, if your charity plans to conduct a raffle, it will need to comply with the rules in your province regarding lottery licensing and conduct.
Advertising and Marketing Standards
Fundraising campaigns must be truthful and transparent. This means that you cannot mislead potential donors about how their funds will be used. You must clearly state your charity’s objectives and how the donations will help achieve them. Many provinces also have specific laws regulating telemarketing, email solicitations, and online fundraising to prevent fraud.
2.1 Provincial Fundraising Registration Requirements
Many provinces in Canada require organizations to register before conducting fundraising activities. These registration requirements vary significantly across the country, and failing to register when required can result in fines and legal consequences for your nonprofit.
Currently, nine provinces require fundraising registration. British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador all have fundraising registration systems in place. Each province has different thresholds, exemptions, and reporting requirements that your organization must understand before launching any fundraising campaign.
In Ontario, for example, charities that solicit more than $10,000 annually must register under the Charitable Institutions Act. The registration involves submitting financial statements, paying registration fees, and providing information about your organization’s fundraising activities. Alberta requires registration for organizations that receive more than $50,000 in donations annually or employ professional fundraisers.
Some provinces offer exemptions for smaller organizations or those that only fundraise within their local communities. Religious organizations, educational institutions, and hospitals may also be exempt from certain registration requirements depending on the province. However, even if your organization qualifies for an exemption, you may still need to notify provincial authorities that you are fundraising.
The registration process typically requires submitting annual financial statements, paying registration fees ranging from $50 to several hundred dollars, and renewing your registration each year. Organizations that use professional fundraisers or third-party solicitors must also register those relationships and provide contracts showing the compensation arrangements.
Before conducting any fundraising activities, nonprofit organizations should research the specific requirements in every province where they plan to solicit donations. Provincial authorities can provide guidance on whether registration is required and what documentation must be submitted.
2.2 Anti-Spam Legislation (CASL) and Digital Fundraising
Canada’s Anti-Spam Legislation, commonly known as CASL, has significant implications for nonprofit organizations conducting digital fundraising. This federal law regulates commercial electronic messages, and while many nonprofits believe they are exempt, the rules actually apply to most charitable fundraising emails.
CASL requires organizations to obtain consent before sending commercial electronic messages to Canadian email addresses. A commercial electronic message is any message that encourages participation in commercial activity, and this includes fundraising appeals, donation requests, and event invitations that involve financial transactions.
There are two types of consent under CASL: express consent and implied consent. Express consent means the recipient has clearly agreed to receive messages from your organization, typically by signing up through a form, checking a consent box, or verbally agreeing. This consent must be obtained before sending any messages, and you must clearly identify your organization and explain what types of messages the person will receive.
Implied consent exists in certain circumstances, such as when someone has donated to your charity within the past two years, attended your events, or volunteered with your organization within that timeframe. However, implied consent expires after two years for donations and volunteer relationships, so organizations must obtain express consent before that period ends if they want to continue sending fundraising emails.
Every fundraising email must include an unsubscribe mechanism that allows recipients to opt out of future messages easily. The unsubscribe process must be simple and free, and organizations must honour unsubscribe requests within 10 business days. Failing to provide a working unsubscribe link or ignoring unsubscribe requests can result in penalties of up to $1 million for individuals and $10 million for organizations.
Nonprofits should maintain detailed records of consent, including when and how consent was obtained, what the person consented to receive, and any unsubscribe requests. These records help demonstrate compliance if questions arise and protect your organization from potential violations.
Organizations conducting email fundraising campaigns should review their consent practices, update their email templates to include proper identification and unsubscribe links, and train staff on CASL requirements. While CASL compliance requires effort, it also helps build trust with donors by respecting their communication preferences.
3. Essential Fundraising Guidelines for Charities and Nonprofits
Here are some key fundraising guidelines for nonprofits and charities that should be followed:
Use of Funds
When raising funds, nonprofits must ensure that the money is used for its stated charitable purposes. This means that any funds raised for charity fundraising must directly benefit the community or individuals the organization aims to help. Misuse of funds can lead to serious consequences, including loss of charitable status or legal action.
Transparency
Nonprofits are encouraged to be transparent about their fundraising activities. This includes being open about how much of the funds raised will go directly to the cause and how much will be used for operational or administrative costs. Donors have the right to know where their money is going.
Fundraising Events
Many nonprofits hold fundraising for charity events like galas, auctions, or community fairs. These events must be planned in a way that ensures the funds raised are used appropriately. If any fees are charged for entry or participation, the event organizers must disclose whether those funds are going toward charitable activities or operational costs.
Reporting and Accountability
Nonprofits are required to keep accurate records of all fundraising activities. If the organization is a registered charity, it must submit annual financial reports to the CRA, showing where the funds came from and how they were spent. Regular reports and audits help maintain accountability to donors and other stakeholders.
3.1 Tax Receipting Rules for Registered Charities
Understanding when and how to issue tax receipts is one of the most important aspects of charitable fundraising in Canada. Only registered charities can issue official donation receipts for income tax purposes, and strict CRA rules govern this process.
A donation receipt can only be issued when a donor makes a voluntary transfer of property without receiving anything in return. The donation must be made without expectation of benefit, and the donor must have clear donative intent. Simply paying for goods or services, even if the payment goes to a charity, does not qualify as a donation eligible for a tax receipt.
When a donor receives some benefit in exchange for their contribution, such as attending a fundraising gala or auction, the charity must calculate the eligible amount for receipting purposes. This process, called split receipting, requires the charity to determine the fair market value of any advantage received by the donor and subtract that amount from the total contribution. Only the remaining amount can be receipted as a charitable donation.
For example, if a donor pays $200 to attend a charity gala where the fair market value of the meal and entertainment is $75, the charity can only issue a receipt for $125. The advantage threshold rule states that if the advantage received exceeds 80 percent of the contribution, no receipt can be issued at all. This prevents donors from receiving tax benefits for what are essentially purchases of goods or services.
Official donation receipts must contain specific information required by the CRA. Every receipt must include the charity’s name, address, and registration number, the donor’s name and address, the date the donation was received, the amount of the donation, a description of any non-cash donations, the eligible amount for tax purposes, the serial number of the receipt, and a statement that it is an official receipt for income tax purposes.
Charities cannot issue receipts for donations of services, time, or labour. If a contractor provides professional services to your charity, they must bill the charity for those services and then make a separate cash donation if they wish to receive a tax receipt. Similarly, volunteer time and donated labour are not eligible for receipting, regardless of the value of the work performed.
Donors who give publicly traded securities, such as stocks or mutual funds, may be eligible for enhanced tax benefits. When these securities are donated directly to a registered charity rather than being sold first, the capital gains tax is eliminated entirely. Charities should have procedures in place to accept securities donations and issue proper receipts.
Organizations must be particularly careful when accepting gifts in kind, such as donated goods or property. The charity is responsible for determining the fair market value of these donations and must have reasonable documentation to support the valuation. In some cases, professional appraisals may be necessary, especially for high-value items like real estate, artwork, or collectibles.
3.2 Professional Fundraisers and Third-Party Fundraising
Many charities work with professional fundraisers or third-party organizations to help raise funds. While these partnerships can be valuable, they also come with specific legal requirements and potential risks that organizations must manage carefully.
Provincial regulations require written contracts between charities and professional fundraisers. These contracts must outline the compensation structure, the services to be provided, the duration of the relationship, and the responsibilities of each party. In many provinces, both the charity and the professional fundraiser must register their relationship with provincial authorities before beginning any solicitation activities.
Disclosure requirements mandate that donors must be informed when a professional fundraiser is being used. In some provinces, fundraisers must disclose what percentage of donations will go to the charity versus compensation for the fundraiser. This transparency helps donors make informed decisions about whether to contribute.
Compensation arrangements vary widely in the fundraising industry. Some professional fundraisers charge a flat fee for their services, while others work on a percentage basis. The CRA views percentage-based compensation arrangements with scrutiny, particularly when the percentage is high. While such arrangements are not automatically prohibited, charities must ensure that the overall fundraising costs remain reasonable and that the charity retains control over the fundraising activities.
Third-party fundraising occurs when individuals or organizations raise funds on behalf of a charity without being hired as professional fundraisers. Examples include community groups holding bake sales for your charity, individuals running marathons and collecting pledges, or businesses conducting cause marketing campaigns. While these efforts can generate significant revenue, they also present challenges for charities.
Charities should establish clear policies for third-party fundraising that protect the organization’s reputation and ensure compliance with legal requirements. These policies should address how third parties can use the charity’s name and logo, what types of fundraising activities are permitted, how funds will be collected and transferred, and what reporting is required.
Organizations must conduct due diligence before entering into any fundraising relationship. This includes checking references, reviewing the fundraiser’s track record, understanding their methods and practices, and ensuring they comply with all applicable laws. Charities remain legally responsible for fundraising conducted on their behalf, even when using external parties.
When problems arise with professional fundraisers or third-party campaigns, charities should act quickly to address issues and, if necessary, terminate the relationship. Maintaining clear communication, documenting all agreements, and monitoring fundraising activities help protect the organization and its donors.
3.3 Gaming, Raffles, and Lotteries
Gaming activities, including raffles, lotteries, bingos, and 50/50 draws, are popular fundraising methods for Canadian nonprofits. However, these activities are heavily regulated by provincial gaming authorities, and organizations must obtain proper licenses before conducting any gaming events.
Each province has its own gaming regulations and licensing requirements. What constitutes a lottery varies by jurisdiction, but generally includes any scheme where participants pay to enter and prizes are awarded based primarily on chance. Even small raffles with inexpensive prizes typically require licenses in most provinces.
The licensing process usually involves submitting an application to the provincial gaming authority, paying a licensing fee, and providing details about the proposed gaming event. Organizations must specify the type of gaming activity, the total value of prizes, the ticket price, the expected gross revenue, and how the proceeds will be used. Licenses are typically issued for specific events and time periods.
Provincial regulations often limit who can participate in gaming activities. Most provinces restrict gaming licenses to registered charities and certain types of nonprofit organizations. Some provinces allow only registered charities to conduct large-scale lotteries, while smaller organizations may be limited to raffles with lower prize values.
There are strict rules about how gaming proceeds must be used. Generally, funds raised through licensed gaming activities must be used for the charitable purposes outlined in the license application. Organizations cannot use gaming proceeds for general fundraising expenses unrelated to the specific gaming event or distribute profits to members.
Reporting requirements accompany gaming licenses. Organizations must typically submit reports to the gaming authority showing ticket sales, prizes awarded, expenses incurred, and net proceeds. These reports must be filed within specific timeframes after the gaming event concludes. Failure to report can result in future license applications being denied.
Online gaming and raffles present additional complications. Many provinces have specific rules about selling raffle tickets online or conducting virtual gaming events. Some jurisdictions prohibit online ticket sales entirely, while others allow it with additional conditions. Organizations planning online gaming activities should research provincial requirements carefully.
The 50/50 draw has become increasingly popular, particularly at sporting events and community gatherings. In these draws, half the total pot goes to the winner and half goes to the charitable organization. Provincial regulations typically limit the maximum ticket price, require specific licensing, and may restrict where tickets can be sold.
Penalties for conducting unlicensed gaming activities can be severe. Organizations may face fines, be prohibited from obtaining future licenses, or in serious cases, face criminal charges. Board members and staff involved in unlicensed gaming could also face personal liability.
4. How to Raise Funds for Charity in Canada
There are many ways to raise funds for charity in Canada, and the methods you choose will depend on your organization’s goals, audience, and resources. Here are some popular fundraising strategies:
Online Fundraising
With the rise of social media and online platforms, nonprofit fundraising has become more accessible than ever. Platforms like GoFundMe, CanadaHelps, and JustGiving allow nonprofits to set up online donation pages where people can donate directly. Make sure to follow the guidelines for fundraising for charity by keeping your donors informed and offering tax receipts when possible.
Crowdfunding
Crowdfunding allows your nonprofit to raise small donations from a large number of people. Many platforms cater to this type of fundraising, making it easy for organizations to collect contributions online. Crowdfunding campaigns are most effective when they target a specific project or need and are shared widely on social media.
Peer-to-Peer Fundraising
Peer-to-peer fundraising relies on supporters to raise money on behalf of the charity. This strategy works well because it taps into personal networks, making people more likely to donate. Nonprofits can encourage individuals to start their own campaigns or host events like walks or runs in support of the charity.
Grant Writing
Many nonprofits rely on grant funding from government agencies, foundations, and corporations. Writing successful grant proposals takes time and effort, but it can be a highly effective way to secure larger amounts of funding for specific programs or projects. Be sure to follow all guidelines set by the granting agency and ensure that the funds will be used in line with the stated goals.
Monthly Giving and Recurring Donation Programs
Monthly giving programs, also known as recurring donation programs or sustainer programs, provide nonprofits with predictable revenue and help build long-term relationships with donors. These programs allow donors to make automatic monthly contributions through credit card or bank withdrawals, creating a steady stream of income for the organization.
The benefits of monthly giving programs are substantial. Organizations receive consistent cash flow that helps with budgeting and planning. Monthly donors typically give more over time than one-time donors, with studies showing that monthly donors contribute two to three times more annually than single-gift donors. These donors also tend to have higher retention rates and continue giving for several years.
Setting up a monthly giving program requires the right technology and payment processing systems. Organizations need online donation platforms that can process recurring transactions, store payment information securely, and allow donors to manage their giving preferences. Many donor management systems include monthly giving functionality, or organizations can use third-party platforms that integrate with their existing systems.
Marketing monthly giving programs requires a different approach than traditional fundraising campaigns. Organizations should emphasize the convenience and impact of regular giving, showing donors how their monthly contribution adds up over time. For example, highlighting that $25 per month provides $300 annually can make the donation feel more achievable while demonstrating significant impact.
Creating compelling monthly giving campaigns involves choosing an appropriate name for the program, setting suggested giving levels that align with program costs, developing recognition and stewardship plans for monthly donors, and making it easy for donors to sign up through various channels. Some organizations offer special benefits to monthly donors, such as exclusive updates, recognition in publications, or invitations to special events.
Stewardship of monthly donors is crucial for retention. Organizations should send welcome packages to new monthly donors, provide regular impact updates showing how their contributions are being used, thank donors appropriately without over-soliciting them, and make it easy for donors to update payment information or giving amounts. While organizations should avoid bombarding monthly donors with additional appeals, keeping them engaged and informed helps maintain their commitment.
Technical issues can impact monthly giving programs. Organizations must have processes in place to handle failed transactions, such as expired credit cards or insufficient funds. Implementing a recovery process that contacts donors when payments fail and offers to update payment information helps prevent donor attrition.
Planned Giving and Bequests
Planned giving involves donors making significant charitable gifts through their estate plans, retirement accounts, or other long-term financial arrangements. This fundraising strategy can bring substantial gifts to organizations but requires patience, expertise, and ongoing relationship building with prospective donors.
Bequests are the most common form of planned giving in Canada. A bequest is a gift made through a will where the donor designates all or part of their estate to a charity after their death. These gifts can be specific amounts, percentages of the estate, or residual amounts remaining after other obligations are fulfilled. Bequests are attractive to donors because they do not affect their current financial situation and allow them to make a larger gift than they might be able to during their lifetime.
Life insurance policies offer another planned giving option. Donors can name a charity as the beneficiary of an existing policy, transfer ownership of a policy to the charity, or purchase a new policy with the charity as owner and beneficiary. When a charity owns a policy, the donor can receive immediate tax receipts for premium payments, providing tax benefits during their lifetime.
Gifts of publicly traded securities represent one of the most tax-efficient giving methods in Canada. When donors give appreciated stocks, bonds, or mutual funds directly to a charity, they eliminate the capital gains tax entirely while still receiving a donation receipt for the full market value. This creates significant tax savings and often allows donors to make larger gifts than they would with cash.
Charitable remainder trusts and gift annuities provide donors with income during their lifetime while supporting charity. These arrangements allow donors to transfer assets to a trust or the charity in exchange for regular payments. At the donor’s death, the remaining assets go to the charity. These vehicles appeal to donors who want to support charity while maintaining income security.
Organizations interested in developing planned giving programs should start by identifying prospective planned giving donors within their current donor base. Typically, older donors who have given consistently over many years are most likely to consider planned giving. However, younger donors should not be ignored, as educating them about planned giving options plants seeds for future gifts.
Marketing planned giving requires sensitivity and patience. Organizations should include information about planned giving options in newsletters, on their websites, and in donor communications. However, the focus should be on education and options rather than high-pressure solicitation. Many organizations offer free estate planning guides or host seminars on wills and estate planning as a service to donors while introducing planned giving concepts.
Professional expertise is important in planned giving. Organizations should work with lawyers who specialize in estate and tax law, financial advisors who understand charitable giving strategies, and planned giving consultants who can help develop programs and materials. While small organizations may not be able to hire dedicated planned giving staff, they can still accept bequests and securities donations with appropriate professional support.
Stewardship of planned giving donors involves recognizing their intentions, even though the gift has not yet been received. Many organizations create legacy societies or heritage clubs to recognize donors who have included the charity in their estate plans. These recognition programs help the organization understand the potential size of future bequests and allow them to thank donors appropriately.
Corporate Partnerships and Cause Marketing
Corporate partnerships involve collaborations between nonprofits and businesses to achieve mutual benefits. These relationships can take many forms, from simple sponsorships to complex cause marketing campaigns, and can provide significant revenue and visibility for charitable organizations.
Sponsorships are one of the most straightforward forms of corporate partnership. A business provides financial support for a nonprofit’s event, program, or initiative in exchange for recognition and marketing opportunities. Sponsorship packages typically offer different levels of recognition based on contribution size, including logo placement, naming rights, speaking opportunities, and promotional benefits.
When developing sponsorship programs, organizations should create clear sponsorship packages that outline benefits at each level, identify businesses whose values align with the organization’s mission, demonstrate the marketing value and audience reach the sponsor will receive, and fulfill all promised benefits professionally and promptly. Organizations must be careful that sponsorships remain true partnerships rather than becoming commercial transactions that could jeopardize charitable status.
Employee giving programs allow businesses to facilitate charitable donations from their workforce. Many companies offer payroll deduction programs where employees can designate regular contributions to charities of their choice. Some employers match employee donations, effectively doubling the impact. Organizations can work with local employers to become designated recipients in workplace giving campaigns.
Matching gift programs represent significant untapped potential for nonprofits. Many corporations will match their employees’ charitable donations, but donors often forget to request matching gifts. Organizations should educate donors about matching gift opportunities, provide easy instructions for submitting matching gift requests, and follow up with donors who work for companies with matching programs. This simple practice can effectively double donations without additional fundraising costs.
Cause marketing involves commercial campaigns where a business promotes that a portion of sales will benefit a charity. For example, a restaurant might donate one dollar from every menu item sold during a specific period. These campaigns can raise substantial funds and increase awareness, but they require careful structuring to comply with charity law and tax regulations.
The CRA has strict rules about cause marketing to ensure that charities maintain their charitable nature and do not become commercial enterprises. Agreements between charities and businesses must be properly documented, the charity should receive fair value for any services provided or rights granted, the business should bear all campaign costs, and the charity should not provide undue promotional benefits that constitute private benefit. Organizations should consult with charity lawyers when structuring cause marketing partnerships to ensure compliance.
Transparency in corporate partnerships is essential. Donors and the public should understand the nature of the relationship between the charity and the business. When promoting cause marketing campaigns, materials should clearly state what portion of proceeds will benefit the charity, any limitations or restrictions on donations, and the expected duration of the campaign.
Some corporate partnerships go beyond financial support to include pro bono services, employee volunteers, in-kind donations of products or facilities, and skills-based volunteering where employees share professional expertise. These non-monetary contributions can be extremely valuable but require the same attention to documentation and acknowledgment as financial gifts.
Social Media Fundraising and Digital Campaigns
Social media has transformed how nonprofits engage with supporters and raise funds. Platforms like Facebook, Instagram, Twitter, and TikTok offer powerful tools for reaching large audiences, telling compelling stories, and facilitating donations directly through social channels.
Facebook Fundraisers have become particularly popular for individual and peer-to-peer fundraising. Users can create fundraising campaigns for birthdays, special occasions, or any reason, designating a registered charity as the beneficiary. Facebook processes donations and transfers funds to the charity periodically. Organizations should claim their Facebook charitable page to receive these donations and ensure their profile is optimized with compelling photos, mission statements, and impact stories.
Instagram fundraising features allow organizations to add donation stickers to stories, include donation buttons on posts and profiles, and run fundraising campaigns through Instagram Live videos. The visual nature of Instagram makes it ideal for storytelling and showing program impact through photos and videos. Organizations should develop a consistent visual brand and post regularly to build an engaged following.
Social media advertising offers targeted fundraising opportunities. Platforms allow nonprofits to target specific demographics, interests, and behaviours when promoting fundraising campaigns. Many platforms offer discounted or free advertising for registered nonprofits. Organizations should test different messages, images, and calls to action to determine what resonates with their audience.
Video content performs exceptionally well on social media for fundraising purposes. Short, emotional videos that tell beneficiary stories, show program impact, or explain urgent needs tend to generate strong engagement and donations. Organizations do not need expensive production equipment – authentic, smartphone-recorded videos often perform better than highly produced content.
Live streaming events and campaigns on platforms like Facebook Live, YouTube, or TikTok create urgency and real-time engagement. Organizations can host virtual fundraising events, conduct thank-a-thons where staff thank donors live, or stream special events to engage supporters who cannot attend in person. Live streams allow real-time interaction through comments and questions, building community among supporters.
Social media fundraising campaigns should include clear calls to action, making it easy for supporters to donate immediately. Organizations should use platform-specific features like Facebook’s donation buttons, Instagram’s swipe-up links, or link trees for platforms that limit links. Every post should include a clear next step for supporters who want to help.
Compliance considerations apply to social media fundraising just as they do to other channels. Organizations must follow CASL requirements when collecting email addresses through social media, respect platform terms of service regarding fundraising activities, be transparent about how donations will be used, and ensure proper tax receipting for eligible donations. Privacy policies should address how social media data is collected and used.
User-generated content and supporter advocacy amplify social media fundraising efforts. Organizations should encourage supporters to share their stories, post about why they support the cause, and invite their networks to get involved. Creating branded hashtags helps track campaign reach and builds community around the organization’s mission.
Measuring social media fundraising success requires tracking multiple metrics beyond just dollars raised. Organizations should monitor engagement rates such as likes, comments, and shares, reach and impressions showing how many people see content, click-through rates to donation pages, conversion rates from social media traffic, and supporter acquisition costs compared to other channels. This data helps refine strategies and allocate resources effectively.
5. Fundraising Costs and the Disbursement Quota
Understanding fundraising costs and how they relate to a charity’s overall financial health is crucial for maintaining compliance and donor trust. The Canada Revenue Agency monitors fundraising expenses carefully to ensure registered charities direct resources primarily toward charitable activities rather than fundraising itself.
Fundraising costs include all expenses directly related to soliciting donations. This encompasses staff salaries and benefits for fundraising personnel, costs of direct mail campaigns and online advertising, event expenses for fundraising activities, fees paid to professional fundraisers, promotional materials and marketing costs, and overhead expenses allocated to fundraising activities. Organizations must track these costs carefully and report them accurately on their annual T3010 Information Return.
The CRA does not set a specific limit on what percentage of revenue can be spent on fundraising. However, they do expect fundraising costs to be reasonable relative to the funds raised. Generally, established charities should aim to keep fundraising costs below 35 percent of total donations raised, though this can vary depending on the organization’s size, maturity, and fundraising methods.
New organizations and those launching new fundraising initiatives typically have higher fundraising costs initially. The CRA recognizes that building donor databases, establishing brand recognition, and developing fundraising infrastructure require upfront investment. Organizations should be prepared to explain higher fundraising ratios during startup phases and demonstrate plans for improving efficiency over time.
Different fundraising methods have varying cost structures. Direct mail campaigns typically cost 20 to 40 percent of funds raised, especially when building new donor lists. Major gift fundraising has lower costs, often 10 to 20 percent, because it involves personal relationship building. Special events can range from 30 to 50 percent of gross revenue when all costs are properly allocated. Monthly giving programs have higher acquisition costs initially but lower ongoing costs.
The disbursement quota is a separate requirement that affects how much charities must spend annually on charitable activities. Registered charities must spend at least 3.5 percent of their average asset value each year on charitable programs and activities. This requirement ensures that charities do not simply accumulate funds but actively use resources for charitable purposes.
Calculating the disbursement quota involves determining the average value of property not used directly in charitable activities over the past 24 months, multiplying that value by 3.5 percent, and ensuring the charity spends at least that amount on charitable activities or gifts to qualified donees during the fiscal year. Certain expenditures count toward meeting the quota, including amounts spent on charitable programs, gifts to qualified donees, and related program expenses.
Organizations that fail to meet the disbursement quota face penalties. In the first year of non-compliance, the penalty equals the shortfall amount. In subsequent years, the penalty increases to 110 percent of the shortfall. Chronic non-compliance can lead to revocation of charitable status. However, the CRA may accept reasonable explanations for temporary non-compliance, such as natural disasters, major capital projects, or unexpected economic downturns.
Charities can accumulate funds for specific future projects by applying to the CRA for permission to exclude certain amounts from the disbursement quota calculation. This allows organizations to save for major initiatives like building purchases or program expansions without facing penalties. Applications must demonstrate the legitimate charitable purpose and provide a timeline for using the accumulated funds.
Balancing fundraising efficiency with effective charitable work requires ongoing attention. Organizations should regularly review fundraising costs and returns, test different fundraising methods to find the most efficient approaches, invest in donor retention since keeping existing donors costs less than acquiring new ones, and be transparent with donors about how funds are used. Demonstrating fiscal responsibility helps maintain donor trust and supports long-term sustainability.
6. Record Keeping and Documentation Requirements
Maintaining proper records is both a legal requirement and a best practice for nonprofit organizations conducting fundraising activities. Good record keeping protects the organization, supports transparency, facilitates accurate reporting, and demonstrates accountability to donors, regulators, and the public.
The Canada Revenue Agency requires registered charities to keep adequate books and records for a minimum of seven years. This retention period applies to all documentation supporting financial transactions, donation receipts, fundraising activities, and program expenditures. Provincial fundraising registration authorities may have additional record-keeping requirements that organizations must follow.
Documentation for receipted donations must be comprehensive. Organizations should maintain copies of all official donation receipts issued, records showing the date donations were received, documentation of property valuations for gifts in kind, bank deposit records matching donation records, and any correspondence with donors regarding their gifts. This documentation proves that receipts were issued properly and helps respond to any donor inquiries or CRA audits.
Fundraising campaign records should include detailed information about each campaign’s planning, execution, and results. Organizations should keep copies of fundraising appeals and promotional materials, lists of donors who responded to each campaign, total costs associated with each fundraising initiative, revenue generated from each campaign, and analysis comparing costs to funds raised. This information helps evaluate campaign effectiveness and supports continuous improvement in fundraising strategies.
When working with professional fundraisers or third-party organizations, maintaining thorough documentation becomes even more critical. Organizations should retain copies of all contracts with fundraising service providers, reports showing services provided and funds raised, invoices and payment records for fundraising services, and correspondence regarding campaign planning and execution. These records demonstrate that relationships are properly structured and that the organization exercises appropriate oversight.
Event records require special attention because they often involve complex financial transactions. Organizations should maintain detailed budgets showing projected income and expenses, ticket sales records and attendee lists, receipts for all event-related purchases, contracts with venues, caterers, and service providers, documentation of sponsor contributions and benefits provided, and profit and loss statements for each event. Proper event documentation supports accurate tax receipt calculations and helps improve future event planning.
Donor information must be protected according to privacy laws while still being accessible for organizational purposes. Organizations should maintain secure donor databases that include contact information, giving history, communication preferences, and any restrictions on gifts. Access to donor information should be limited to authorized personnel, and organizations should have policies governing how donor data is used and protected.
Board records relating to fundraising decisions should be carefully documented. Minutes of board meetings should reflect approval of fundraising plans, authorization of major campaigns or initiatives, review of fundraising results and financial reports, and discussions about fundraising policies and practices. These records demonstrate that the board is fulfilling its governance responsibilities and exercising appropriate oversight.
Provincial fundraising registration requires specific annual reporting. Organizations must typically submit financial statements showing fundraising revenue and expenses, reports on professional fundraiser relationships, and information about how funds raised were used. Maintaining organized records throughout the year makes preparing these reports much easier and ensures accuracy.
Digital record-keeping systems offer significant advantages over paper-based systems. Donor management software, accounting programs, and document management systems help organizations store information securely, search and retrieve records easily, generate reports efficiently, and back up data to prevent loss. Organizations should establish regular backup procedures and ensure that electronic records are preserved for the required retention period.
Audit preparation benefits greatly from strong record-keeping practices. Whether facing a CRA audit, provincial review, or internal audit by an accounting firm, having well-organized documentation saves time and reduces stress. Organizations should maintain an audit file that contains key organizational documents, including governing documents and charitable registration information, recent financial statements and tax returns, major contracts and agreements, fundraising campaign documentation, and board minutes and resolutions.
5. Common Pitfalls to Avoid in Fundraising
To ensure your fundraising efforts are successful, here are some common mistakes to avoid:
Lack of Transparency
Donors expect to know where their money is going. Failing to provide clear financial reports or not being upfront about how the funds will be used can damage your nonprofit’s reputation.
Ignoring Legal Requirements
Not following fundraising laws in Canada can result in serious penalties. Always stay up to date with the latest laws and regulations that apply to your province and ensure your fundraising activities are compliant.
Poor Communication
If your nonprofit is not communicating effectively with potential donors, it will be harder to build trust. Be sure to provide regular updates on the progress of your fundraising efforts and the impact donations are having.
Conclusion
Fundraising for charity in Canada is a powerful way to support the work of nonprofit organizations, but it must be done correctly. By adhering to fundraising guidelines for nonprofit organizations and following fundraising laws in Canada, your nonprofit can raise the funds it needs to make a real difference in the community.
Understanding provincial registration requirements, complying with CASL regulations, properly issuing tax receipts, managing relationships with professional fundraisers, and maintaining accurate records are all essential components of legal and effective fundraising. Whether you’re raising funds through online campaigns, monthly giving programs, planned giving, corporate partnerships, special events, or gaming activities, transparency, accountability, and legal compliance remain paramount.
Remember that fundraising is not just about asking for money. It’s about building meaningful relationships with your community, demonstrating the impact of your work, and inspiring others to join your cause. Donors want to support organizations they trust, and that trust is built through consistent communication, responsible financial management, and genuine commitment to your charitable mission.
If you need assistance understanding fundraising regulations, developing compliant fundraising programs, structuring tax receipts properly, or navigating complex charity law issues, the legal professionals at Northfield & Associates can help. Our team specializes in Canadian charity and nonprofit law and has helped thousands of organizations across the country establish strong, compliant fundraising practices.
Don’t let legal uncertainty hold your organization back from achieving its fundraising potential. Contact Northfield & Associates today to schedule a consultation and ensure your fundraising activities are both effective and compliant with Canadian law.
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Frequently Asked Questions
Find answers to common questions about fundraising guidelines and regulations for nonprofit organizations operating in Canada. These FAQs cover legal requirements, best practices, and compliance rules to help your organization fundraise effectively and ethically.
How do nonprofit organizations get funding in Canada?
Nonprofits get funding through government grants, private donations, corporate sponsorships, fundraising events, membership fees, service fees, investment income, and foundation grants. They must follow CRA rules and may need fundraising registration in some provinces.
What are the rules for not-for-profits in Canada?
Nonprofits must operate exclusively for nonprofit purposes, cannot distribute profits to members, must wind up assets to similar organizations, follow incorporation laws, maintain proper records, and file required returns. Registered charities have additional CRA compliance requirements.
Is fundraising legal in Canada?
Yes, fundraising is legal but regulated. Organizations may need to register with provincial authorities, follow disclosure rules, use contracts for professional fundraisers, and comply with privacy laws. Registered charities can issue tax receipts for eligible donations.
What is the best way to raise money for a nonprofit?
The best approach combines multiple strategies: building strong donor relationships, using digital platforms and social media, hosting events, applying for grants, partnering with businesses, and clearly communicating your mission and impact to supporters.
What is the most successful type of fundraiser?
Individual donor cultivation and major gift solicitation typically generate the most revenue. However, success varies by organization size, cause, and community. Many nonprofits find success with peer-to-peer fundraising, online campaigns, and annual giving programs.
What are the ethics of fundraising?
Fundraising ethics include being honest about how funds are used, respecting donor privacy, avoiding high-pressure tactics, ensuring reasonable fundraising costs, honouring donor restrictions, providing accurate financial information, and maintaining transparency in all communications and activities.
Do I need to register in every province where I fundraise?
Yes, if you solicit donations from residents in provinces with fundraising registration requirements, you typically need to register in each of those provinces. Currently, nine provinces require registration: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Each province has different thresholds and exemptions. Some provinces exempt small organizations or those fundraising only within specific communities. Research the requirements for each province where you plan to solicit donations.
Can I issue a tax receipt for donations made at a fundraising gala?
Yes, but only for the portion that exceeds the fair market value of benefits received. This is called split receipting. If a donor pays $200 for a gala ticket and receives a meal and entertainment worth $75, you can only receipt $125. You must calculate the fair market value of all advantages received by the donor, including meals, entertainment, auction items, or goods. If the advantage exceeds 80 percent of the contribution, no receipt can be issued.
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Disclaimer:
The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. Readers should seek tailored legal advice in relation to their personal circumstances.
About Northfield
Northfield & Associates International Corporation is a global consulting firm serving private enterprises, public institutions, not-for-profit organizations, and institutional capital providers. Operating across Cambodia, Canada, and global markets, the firm supports capital deployment, regulatory navigation, and enterprise decision-making in complex economic and geopolitical environments. Northfield & Associates delivers customized, execution-focused advisory solutions that drive measurable transformation, strengthen competitiveness, and enhance long-term highest value opportunities. The firm incorporates consulting, legal, regulatory, financial, and risk expertise to enable disciplined capital allocation, strong governance, and operational resilience. Northfield & Associates upholds a culture of applied insight and innovation, supporting clients across digital transformation, growth strategy, and organizational capability building. The firm advises individual, leading global corporations, midsize enterprises, government agencies, and mission-driven organizations through long-term partnerships. Enterprise-wide risk management, professional ethics, and fiduciary standards are embedded across all operations. Northfield & Associates’ diverse, globally unified teams are committed to execution certainty and sustainable, risk-adjusted returns aligned with ESG and stakeholder objectives.
Forward-Looking Information
This news release contains forward-looking information. All statements, other than statements of historic fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future constitute forward-looking information.
This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company.
Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things: the failure to finalize negotiations concerning the increase of the Loan or to close such transaction and the failure of the Company to complete the acquisition of the Company Facility; operating performance of facilities; environmental and safety risks; delays in obtaining or failure to obtain necessary permits and approvals from government authorities; unavailability of plant, equipment or labour; inability to retain key management and personnel; changes to regulations or policies affecting the Company’s activities; and the other risks disclosed under the heading “Risk Factors” and elsewhere in the Company’s amended annual information.
Forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
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