The Canadian Charity Law Podcast | Compliant Fundraising for Canadian Charities

This episode focuses on the Canada Revenue Agency's (CRA) guidelines for balancing fundraising activities with the primary purpose of serving charitable causes. It outlines the importance of reasonableness in fundraising expenses and stresses the need for charities to obtain proper permissions and licenses for specific fundraising methods, including lotteries, bingos, and charity casinos. The article also highlights the "Guidance CG-013" document from the CRA, which provides detailed information on fundraising activities and best practices for registered charities.

This episode is jointly sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm exclusively serving charity and not-for-profit clients in Toronto, Ontario and across Canada with registration and governance, and B.I.G. Charity Accounts Group, a bookkeeping firm serving Canadian charities in Ontario with all their financial and tax filing needs.

https://www.charitylawgroup.ca/
P: 416-488-5888

https://www.charityaccountingfirm.ca/
P: 289-301-8883

What is The Canadian Charity Law Podcast ?

Exploring the ins-and-outs of Canadian Charity Law in a way that can be understood by the layperson, including Charity Registration, Not-for-Profit Incorporation, Charity Governance, Charity Fundraising, Tax Receipting, and much more!

David: 00:00

Welcome to the Deep Dive. Today, we're going deep into Canadian charities.

Sarah: 00:05

Oh, yeah.

David: 00:07

But, like, specifically, how they fundraise

Sarah: 00:10

Okay.

David: 00:10

And how they, you know, make sure they're doing it legally.

Sarah: 00:13

Right.

David: 00:13

We've got some great info from BIG Charity Law Group.

Sarah: 00:17

Awesome. This

David: 00:17

is gonna be a real deep dive.

Sarah: 00:19

It is. Yeah. A lot of people think charities just, you know, focus on their mission.

David: 00:22

Right.

Sarah: 00:23

But without the money, it's all just talk.

David: 00:25

That's so true.

Sarah: 00:26

So today, we're looking at how charities actually raise money, what works, what doesn't, and, The

David: 00:32

legal side of things.

Sarah: 00:33

Exactly.

David: 00:34

Okay. So our source material says fundraising is key.

Sarah: 00:38

Yeah.

David: 00:39

But it shouldn't be like the charity's main thing. So how do they find that balance?

Sarah: 00:44

Well, that's where the CRA comes up.

David: 00:45

The Canada Revenue Agency.

Sarah: 00:46

That's the one. They make sure charities are actually, you know, doing charitable stuff.

David: 00:50

Okay.

Sarah: 00:50

If a charity is spending all its time fundraising and not enough on their actual mission Yeah. That's a problem.

David: 00:56

Big problem.

Sarah: 00:57

Huge. They could lose their registered status, and that comes with a whole mess of legal and financial headaches.

David: 01:03

So it's not enough to just, like, have good intentions.

Sarah: 01:07

Nope.

David: 01:07

You gotta prove it.

Sarah: 01:08

You gotta walk the walk. Show the CRA you're putting your money where your mouth is.

David: 01:12

Like that.

Sarah: 01:13

And that brings us to, you know, the next tricky part, spending.

David: 01:18

Oh, right. Because fundraising itself costs money.

Sarah: 01:21

Exactly. It's a bit of a catch 22.

David: 01:23

So how does the CRA, like, view that? What do they consider reasonable?

Sarah: 01:28

They don't give you a magic number.

David: 01:29

Right.

Sarah: 01:30

But they look at everything, staff salaries, admin costs, even the cost of putting on fundraising events. Uh-huh. They wanna see responsible spending.

David: 01:38

Okay. And all of this ties into this thing called the disbursement quota. Right?

Sarah: 01:41

You got it. That's a big one.

David: 01:43

So break it down for me. What is this quota, and what happens if a charity, you know, messes up?

Sarah: 01:49

Basically, the CRA says charities have to spend a certain percentage of their assets each year on their actual programs.

David: 01:55

Programs, meaning their charitable work.

Sarah: 01:57

Exact and if they don't meet that percentage, well, they could face penalties, like losing their charitable status.

David: 02:04

Woah. That's intense.

Sarah: 02:06

It is. So charities can't just throw a lavish gala and call it a day. The CRA wants to see that the majority of the money is going towards the cause.

David: 02:14

Makes sense.

Sarah: 02:15

Not fancy dinners or, you know, excessive admin costs.

David: 02:19

So say a charity is planning a fundraising event.

Sarah: 02:21

Okay.

David: 02:23

What should they be thinking about to stay within budget and meet that quota?

Sarah: 02:27

They got a budget like crazy.

David: 02:28

Like, down to the last dollar.

Sarah: 02:30

Pretty much. Break down every expense, compare costs, track everything. And it's not just about raising the money. It's about showing the CRA that they're being smart with it.

David: 02:38

Okay. So this all sounds pretty complicated.

Sarah: 02:40

It can be. I bet

David: 02:41

a lot of charities feel overwhelmed.

Sarah: 02:43

I'm sure they do.

David: 02:44

Is there, like, a guidebook or something? Where can they find all this info?

Sarah: 02:48

Luckily, there is. The CRA puts out a document called guidance cg 01

David: 02:53

Guidancecg013. Yeah.

Sarah: 02:55

It's basically the bible for charity fundraising in Canada.

David: 02:59

So it lays out all the rules and regulations.

Sarah: 03:00

Yeah. Everything you need to know to stay on the right side of the CRA.

David: 03:04

Cool. Now what about charities who wanna try something a little different? Our source mentioned things like lotteries, bingo, even casinos.

Sarah: 03:12

Oh, yeah. This can be fun.

David: 03:14

But I imagine there's a catch.

Sarah: 03:16

There is. You need to be super careful with those.

David: 03:19

In what way?

Sarah: 03:20

Well, for one thing, you need a ton of permits and licenses.

David: 03:24

Oh, really?

Sarah: 03:25

And not just from one place. You gotta go to the province, the city, sometimes even the feds.

David: 03:29

So if I wanna have a little bingo night for my favorite charity

Sarah: 03:33

You can't just set up some tables and start calling numbers.

David: 03:36

You need to get the government involved.

Sarah: 03:38

Big time. You gotta do your research, know the rules, and make sure everything is legit before you even think about selling tickets.

David: 03:44

Sounds like a lot of red tape.

Sarah: 03:46

It is, but it's there for a reason. We're talking about a lot of money here.

David: 03:50

Right.

Sarah: 03:51

And people need to know that it's being handled properly.

David: 03:53

It's about accountability?

Sarah: 03:55

Exactly. And transparency.

David: 03:57

Because if people don't trust charities

Sarah: 03:59

They won't donate.

David: 04:00

And then the charities can't do their work. It's a whole ecosystem. Not just about following the rules. It's about building that trust.

Sarah: 04:06

Absolutely. Showing people that you're doing things the right way.

David: 04:10

So ethical fundraising is just as important as legal fundraising.

Sarah: 04:14

Couldn't have said it better myself. Yeah. And we've only scratched the surface here.

David: 04:18

Right. There's so much more to this.

Sarah: 04:20

Oh, yeah. We'll get into more details in the next part.

David: 04:22

I can't wait.

Sarah: 04:22

Me neither?

David: 04:23

So we've been talking about these, like, alternative ways to fundraise.

Sarah: 04:26

Yeah.

David: 04:27

And it just got me thinking. Like Mhmm. I kind of assumed charities just focused on their, you know, their cause. Right. But there's so much more to it.

Sarah: 04:36

Way more. It's not just about the mission.

David: 04:38

Right. Like, we've been talking about all the legal stuff. And

Sarah: 04:40

Exactly. It's a whole other side of things.

David: 04:43

And it's even with, like, the smaller stuff.

Sarah: 04:46

Oh, yeah.

David: 04:46

Like bake sales, car washes.

Sarah: 04:49

Those 2.

David: 04:50

I mean, those seem pretty straightforward. Right?

Sarah: 04:52

I think so.

David: 04:52

But there are still legal things to think about.

Sarah: 04:54

Oh, absolutely. Even something like a bake sale can get complicated.

David: 04:58

Oh, really? How so?

Sarah: 04:59

Well, think about it. What if a charity does a huge bake sale?

David: 05:04

Okay.

Sarah: 05:04

Like, taking up a whole street or something.

David: 05:06

K.

Sarah: 05:06

Suddenly, you might need permits for food handling.

David: 05:10

Oh, right.

Sarah: 05:11

Maybe permission to use that public space.

David: 05:13

I wouldn't have thought of

Sarah: 05:14

that. And if you're selling merch too, you might need to worry about sales tax.

David: 05:18

So even something small.

Sarah: 05:20

Can turn into a big headache.

David: 05:21

If you're not careful.

Sarah: 05:22

Exactly. That's why it's always best to do your homework.

David: 05:25

Yeah.

Sarah: 05:25

Check your city's website, call the government, whatever it takes to be sure you're following the rules.

David: 05:31

Makes sense. So okay. Let's say a charity has done all that.

Sarah: 05:35

They've got their permits. They're following the rules.

David: 05:37

They found a way to raise money that works for them. Okay. What else should they be thinking about?

Sarah: 05:43

Well, they need a strategy.

David: 05:44

Oh, right. Not just raising money?

Sarah: 05:47

It's gotta be more than that.

David: 05:48

But, like, how they're gonna use it?

Sarah: 05:50

Exactly. What are their goals? How are they gonna actually make a difference?

David: 05:54

So they need to be able to, like, show donors

Sarah: 05:58

Show them the impact.

David: 05:59

How that money is being used.

Sarah: 06:01

Exactly. They need a plan.

David: 06:03

A solid plan.

Sarah: 06:04

A road map with measurable goals, things they can actually track.

David: 06:07

I bet data plays a big role in that.

Sarah: 06:09

Huge. These days, you need data for everything. Understanding your donors, figuring out what appeals work best, measuring how active your campaigns are.

David: 06:19

So it's about being, like, really smart.

Sarah: 06:22

Smart, strategic, efficient.

David: 06:24

Not just throwing money at a problem.

Sarah: 06:26

Right. Every dollar has to count.

David: 06:28

But it's also about people. Right.

Sarah: 06:30

Oh, absolutely. You gotta build relationships with your donors. Yeah.

David: 06:32

Because it's real people who are donating.

Sarah: 06:34

Exactly. So you need to connect with them, share stories, show them the impact they're making.

David: 06:39

Make them feel like part of the team.

Sarah: 06:40

Exactly. It's about building a community around your cause.

David: 06:44

So we've got the legal stuff, the strategy stuff.

Sarah: 06:46

The people stuff.

David: 06:47

And there's one more big thing we need to talk about right.

Sarah: 06:49

You got it. Ethics.

David: 06:51

Right. It's not just about what's legal. It's about what's right.

Sarah: 06:56

Couldn't have said it better myself.

David: 06:57

Okay. So ethics and fundraising.

Sarah: 07:00

Big

David: 07:00

What are some, like, key things charities need to keep in mind?

Sarah: 07:03

Well, donor privacy is huge. Oh, yeah. That makes You're handling people's personal information. Gotta be super careful with that.

David: 07:10

You can't just share it around.

Sarah: 07:12

Exactly. You need explicit consent. It's all about trust.

David: 07:16

And that trust is so important.

Sarah: 07:18

Absolutely. So

David: 07:19

privacy. What

Sarah: 07:20

else? Transparency.

David: 07:21

Right. Being upfront with your donors. Totally.

Sarah: 07:24

Tell them exactly how their money is being used. No high pressure tactics. No misleading claims.

David: 07:30

Just honesty.

Sarah: 07:30

Honesty and respect. You're building a relationship with your donors.

David: 07:34

It's like ethical fundraising should just be part of the charities, you know, DNA.

Sarah: 07:39

Be baked right in. It's about walking the walk, not just talking the talk.

David: 07:43

Exactly. And that all ties back to public trust.

Sarah: 07:46

Oh, yeah. That's the foundation.

David: 07:47

If people don't trust charities

Sarah: 07:49

They won't donate.

David: 07:49

And then the whole system falls apart.

Sarah: 07:51

It does. So ethical fundraising is not just the right thing to do. It's also smart.

David: 07:57

It's good for everyone.

Sarah: 07:58

Exactly. It builds trust, which leads to more donations, which leads to more impact.

David: 08:03

It's a win win.

Sarah: 08:04

A win win win even.

David: 08:05

So as we're wrapping up this deep dive Yeah. What's, like, one final thought you wanna leave our listeners with?

Sarah: 08:11

We've talked a lot about the rules, the strategies. The ethics. But don't forget about innovation.

David: 08:16

Okay. Yeah. That's important.

Sarah: 08:17

Think outside the box. What are some new and exciting ways to engage donors?

David: 08:23

Right. Because the traditional methods aren't always the best.

Sarah: 08:26

Exactly. Use technology, tell stories, build a community

David: 08:30

Make it fun.

Sarah: 08:30

Make it meaningful.

David: 08:32

So it's about pushing boundaries.

Sarah: 08:34

But always always keeping those ethical principles in mind.

David: 08:37

Because at the end of the day, it's about making a difference. That's

Sarah: 08:40

what it's all about, making the world a better place.

David: 08:43

So well said. And on that note, we've reached the end of our deep dive into charity fundraising in Canada.

Sarah: 08:49

It's been a journey.

David: 08:50

I hope our listeners feel, you know, more informed

Sarah: 08:54

More empowered.

David: 08:55

Ready to support the causes they care about.

Sarah: 08:57

Absolutely. Every donation, every act of support can make a real difference.

David: 09:02

So true. Thanks for joining us on this deep dive, everyone.

Sarah: 09:05

And thanks for having me.