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AFP Submits Comments on CRA Fundraising Guidelines Proposal

(Sept. 8, 2008) As part of a broad coalition of groups AFP submitted comments to the Canada Revenue Agency encouraging significant changes to its proposed fundraising cost guidelines.

Aug. 31 was the deadline for responding to the CRA’s proposed guidelines on how charities should report fundraising costs on their T3010A returns and whether those costs are “acceptable” or not. More than 80 organizations across Canada signed on to the response developed by the staff and volunteers of AFP, Imagine Canada and the Health Charities of Canada Coalition.

While AFP has been encouraged by its recent dialogue with CRA regarding its proposal and is supportive of certain aspects of the guidelines, it remains concerned about several key sections, including:

  • The tone of the overall guidelines that seem to imply that fundraising is a “bad” activity, especially fundraising by third-party firms or organizations. The guidelines also seem to discourage charities from seeking smaller donations, which are less effective but are crucial in reaching out to new donors.
  • A fundraising cost grid that is overly simplistic and does not take into account the myriad factors that affect fundraising and the diverse array of charities in Canada
  • An overly difficult and complex system for allocating costs for activities that have two different purposes or components—for example, both programming and fundraising. The subjective criteria also lead to the potential for manipulation of costs.
  • The lack of both a phase-in period for the guidelines and revenue guidelines that are consistent with the cost allocation guidelines.

“While there’s a long way to go in getting a proposal that makes sense given the current fundraising environment and does not unduly burden charities, AFP is very appreciative of the CRA’s willingness to work with the sector,” says Andrew Watt, chief programs officer for AFP and one of the association’s representatives during the discussions. “We’ve created a very strong and respectful working relationship, and I believe we can find a solution that is workable both from a regulatory perspective and from the charities’ side.”

Watt thanked Ken Mayhew, chief development officer, MS Society of Canada, and Carol Turner, vice president, finance and administration, Imagine Canada, for their work on the issue, and also thanked all of the organizations that signed on to the final coalition response.

“We’ve showed CRA that the sector is very concerned about this issue, and I’m very pleased at how we’ve come together to speak for the charitable sector,” says Watt. “It’s a great model for future collaborations, and AFP is so appreciative of Imagine Canada and the Health Charities of Canada Coalition for their work.”

A copy of the coalition letter can be viewed below in the Attachments section.

In addition, AFP has developed two guidance papers on fundraising costs, one for charities and boards and another designed for donors, which may be helpful for organizations as they look to address the issue of fundraising costs with their donors and others.

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