Larger Text
Smaller Text
PrintEvent Guidelines
McMaster University
University Advancement
Advancement Services
DTC - 125, ext. 23802
TO: McMaster Personnel Involved with Fundraising Events
FROM: Dale Poole, Donations Coordinator
DATE: June 10, 2003
RE: Information on Events
The attached information package is meant to assist the campus community manage the donation components of McMaster fundraising events. Written in layman’s terms, it provides valuable information for McMaster employees anticipating that the admission price will include a charitable donation portion. Also included in the package is a set of blank forms to assist event organizers obtain approvals for Prospect Clearance and the issuance of charitable tax receipts. Furthermore, both a sample and a blank Donation Log are provided to enable users to simplify the cheque recording process.
Even if you have run an event in the past, please read through the package as the Canada Customs and Revenue Agency (CCRA) has moved to a much more strict adherence of the existing regulations than in the past. Additionally, the University has formalized some of its procedures for granting approval of such activities. You can make copies of the Prospect Clearance and Event Checklist forms as required.
The Donations Log is an EXCEL spreadsheet. You can receive an e-mail attachment of the blank form from Advancement Services. When holding an approved event with a donation component, or whenever submitting several donations at one time, please complete the spreadsheet instead of creating any type of memo. When using the form, please total the 3 ticket and donation columns after the last transaction. Save the file using the department’s name and date (i.e. Athletics Mar 30 2002), then send this file as an email attachment to Advancement Services. The file is designed to print on one page of legal sized paper. Print the Log, batch it with all relevant cheques or journal entries and deliver it to Advancement Services at T-27 1st Floor. When handling fundraising proceeds, if cheques arrive over several days, weeks or months, please make regular deposits. The University’s Cash Control Policy requests frequent deposits to ensure the secure handling of university funds.
If you have any questions after reviewing this literature a list of contacts has been supplied within the document. We would be pleased to offer training sessions if they would be helpful. If interested please contact Dale Poole.
Things to Know When Holding a Fund-raising Event If Charitable Donation Receipts are Expected
When holding an event, it should be considered whether it is necessary to offer participants or sponsors charitable tax receipts. Many corporations are quite willing to become involved without the prospect of a charitable tax receipt. Often the offer of a McMaster Business Receipt is quite sufficient to meet their tax needs. As at the year 2002, the corporate tax advantages available from a Business Receipt are just as effective as that provided by a Charitable Tax Receipt in reducing their taxes payable.
Business Receipts simply confirm that a university department has received either cash or a gift from the named corporation. These receipts are generated by the department hosting the event on Departmental Letterhead and signed by the Chair or Director. The cash for the transaction is deposited into university account by the department that is to be the beneficiary of the fundraising efforts. Advancement Services does not have to become involved in this type of fundraising revenues.
Qualifying Events
Dinners/Balls/Concerts/Shows or “like events”. “Like events” must provide services and consumable goods, readily available in the marketplace, which are purchased with the intention of using them on a specific date, after which time they have no resale value. (IT 110-R3, Part I, sect. 5)
Non-Qualifying Events
Dinner and auction, unless people are invited to bid and can bid at the auction without paying the admission fee for the dinner. (IT-110R3, Part I, sect. 5) For an event with an auction to qualify, the auction must have a separate admission ticket, the auction must be located in an area open and available to the public, and the advertising literature must indicate that the auction is open to all and not dependent on the event attendance.
Tax Receiptability
If a taxpayer contributes to a charity a combined payment, wherein one part of the payment is directed towards participating in an event and the remaining part is considered a donation for which a charitable receipt will be issued, then Canada Customs & Revenue Agency (CCRA) requires that the value of the tax receipt must be exclusive of all benefits received by the donor. To meet this legal requirement there are three considerations. The first consideration relates to the costs incurred to hold the event. All costs including, but not limited to, such things as golf fees; cart fees; cocktails or wine expenses; dinner expenses; disc-jockey expenses; entertainment expenses; and advertising expenses must be calculated into the cost of the event. The cost per ticket is determined when the total cost is divided by the number participants expected. The estimated number of participants should be supported by past-experience or by reasonable predictions.
The second consideration is the fair market value (FMV) of the event to the participant. How much would a participant expect to pay for this activity package if the charity component did not exist? If the value determined by the cost method is vastly different from that of the value determined by the FMV method, then the Director of Advancement Services or the Donations Coordinator should be consulted for a final determination of value.
The third consideration focuses on ancillary activities at the event. If, as part of the admission to the event, a participant receives event mementoes, or is included in a lottery, door prize or draw for prizes or awards valued at an amount greater than a “nominal value,” CCRA disallows any part of the ticket price from being tax receipted. CCRA defines “nominal value” as the lesser of $50.00 or 10% of the gift portion of the ticket. (IT-110R3, Part I, sect. 11) Hence, a ticket of $275 with a $75 donation included is permitted a $7.50 prize. Using this same example, the value of all non-consumable mementoes given to participants during the event such as hats, sunglasses, tee-shirts, golf-balls etc. and the prize table must be included in that $7.50.
CCRA’s view is that any amount in excess of the FMV of the event is the amount that participants are willing to spend to receive the non-consumables and to participate in the lottery, draw, or prize table. (IT-110R3, Part I, sect. 8) An example of a commonly offered prize is the “hole-in-one” prize. The resulting prize is usually quite notable, as such it disqualifies all participants from receiving tax receipts for any portion of the ticket price.
In the case of door prizes or golf prizes, their inclusion in the activities of the event may preclude the issuance of tax receipts for any portion of the ticket price. Always consult with Advancement Services giving complete details about event activities and participant rewards so a determination can be made prior to advertising the upcoming event.
Lotteries, draws and hole-in-one contests may be run without a prejudicial effect to the donation receiptability of the event, provided that tickets for these activities are purchased separately from the payment made for the event ticket/donation portion, and are not a condition of the event ticket purchase. (IT-110R3, Part I, sect. 15(c))
Another way of receiving donations at a golf tournament, while complying with CCRA regulations, is to sell tickets for the day’s events, which includes the golfing, the prizes and the mementoes, but ask the participants to donate a separate cheque for the cause. As long as the donation is voluntary and participation at the event is not restricted or limited by the lack of a donation, then the event can have all the enticements that would otherwise disqualify it from tax receipting. A sense of the participants and whether or not a favourable response to the voluntary donation could be anticipated would be key for this option.
Often when holding events, sponsorship is sought from companies or individuals to offset the costs of the event. Sponsorships come in many forms. If a person or company offers such things as wine, food, decorations, door prizes or golf prizes for an event, this should be considered a business expense. The event-holders should offer the company a business receipt for the merchandise, thus a tax receipt would not be issued. (As advertising or promotion expenses, these transactions are not processed through Advancement Services. The university department holding the event issues the business receipt on its own letterhead.) CCRA states that among the non-qualifying contributions, “contributions made to offset a charity’s costs of providing services (such as food and lodging..)” are not tax receiptable. (IT-110R3, Part I, sect.15(a))
Some corporations purchase a complete table of tickets as a form of corporate sponsorship of the event. If the corporation is given the tickets or can direct their use, then the donation receipt must be the value of the donation portion excluding the value of the event. Frequently, corporations donate an amount equivalent to the price of a table and authorize the event-holders to offer the tickets to non-paying recipients, (individuals who may otherwise be financially unable to attend such an event). In this case, the corporation’s tax receipt still must equal the value of the donation portion excluding the event portion of the ticket price. (IT-110R3, Part I, sect. 15(a)) If corporations want tax receipts for the full value of the price of the table, then tickets may not be distributed to them nor distributed in their name.
Another form of sponsorship is a golf-hole sponsor. If the advertising banners and publicity are more than nominal in value, then the sponsorship does not qualify for a charitable receipt. Our tax consultants have stated that a receipt cannot “be issued to a business that sponsors a hole at a charity tournament where the sponsorship is acknowledged by a placard at the hole.” (KPMG letter12/1999) This decision is based on KPMG’s view that the advertising at the hole has a value greater than “nominal value”.
Services-rendered are not tax-receiptable. As an example, if a graphic artist designs an event promotional piece, the value of those services cannot be donated and tax receipted. However, the artist can be paid and then the artist may subsequently donate an equivalent amount to the same purpose for which the event was raising funds.(IT-110R3, Part I, sect.15(d))
Similarly, “gift certificates” are often given to McMaster to be used as a door prize or an auction item. If the donor of the certificate purchased the certificate, then gives it to McMaster, that donor an be tax receipted for the value paid. If however, a business offers a gift certificate to perform the services of the business, then no tax receipt is possible. But as in the previous example, the event organizers could purchase the gift certificate from the business, then the business could donate to the fund-raising cause to qualify for a tax receipt. (CCRA Registered Charities Newsletter No. 10)
Tax Receipt Confirmation
If a group on campus wishes to fund-raise for a University supported project by holding an event, then support for the venture must first be obtained from the appropriate Dean or Vice-President. The event organizer should consult the relevant De-centralized Advancement Officer or the Associate Director of Annual Giving. The Prospect Clearance and Fund-Raising Approval form is to be completed including the signature of the Dean or Vice-President then sent to the Prospect Clearance Committee, c/o Imaging Specialist, T-27 1st Flr. The Imaging Specialist will circulate copies of the completed form to the Associate Director of Annual Giving and the Donations Coordinator for their review. The Clearance Committee will contact the event organiser that prospect clearance has been either granted or denied. If granted, the Clearance Committee will note that approval comes with the proviso that a second approval should still be sought from the Donations Coordinator to ensure that the fund raising revenues qualify for tax receipts.
To expedite that second approval, please complete an event checklist ensuring that all activities of the event are listed. This will make certain that all possible benefits to the participants are identified. If any benefits are revealed, the Donations Coordinator may be able to suggest a revised event format that would satisfy CCRA’s requirements. Otherwise, event participants will not be eligible to receive tax receipts.
Organizers should receive final approval from the Donations Coordinator prior to the printing, publishing or distributing of any event literature. Income tax receipts cannot be issued for an event that has not been approved. Failure to disclose activities may invalidate a previously obtained approval, requiring the offer of tax receipts to be revoked. CCRA insists that the validity of all deductions taken to reduce taxes payable is the responsibility of the taxpayer. Charitable tax receipts obtained or used inappropriately, which do not meet CCRA’s regulations may result in penalties and interest to the taxpayer. Our diligence regarding the issuance of tax receipts stems from our desire to protect donors from the possibility of such financial aggravation.
Sometimes, an organization or group of individuals external to McMaster departments or employees decide to hold an event to provide fund raised revenues to an area of McMaster. These efforts are welcomed and appreciated, nevertheless we must ensure that the events are conducted in accordance with all requirements previously mentioned. Registered Charities Newsletter No.10 states that in such a case, McMaster “should have a written agreement with the organization....[it] should spell out how any money earned by the event is to be handled and the procedures for issuing tax receipts.” The Fund raising Approval Form and the Event Checklist is our attempt to understand how each event is being operated. Advancement Services limits its communication regarding donation processing of events to university personnel, usually a signing authority of the FAS account receiving the funds. Therefore, it is the department receiving the donations that needs to ensure that all information is available to Advancement Services.
Handling Fundraising Proceeds
Cheques or credit card payments with a donation component are sent to Advancement Services for processing. In any particular case in which the event price is significantly larger than the donation portion and where the tax receipt will be relatively small, Advancement Services may require compensation for processing such payments. This is due to the fact that credit card companies charge a percentage service charge on the total transaction amount. Hence, credit card processing and tax receipting expenses may eliminate or severely reduce the donation value to the university. To ensure that a processing charge is not necessary, event organizers should ensure that individual receipt values support the processing efforts required to produce and mail tax receipts.
Advancement Services accepts only Visa and MasterCard and does not process credit card charges that are strictly event expense charges. These entries should be processed by the event-holders through Financial Services cashier’s office.
Weekly, Adv. Services transfers the ticket portion of the payments to the account number identified on the Fund-raising Approval Form. The donation portion is credited to the specified allocation and transferred according to the Transfer Policy in McMaster University’s Charitable Giving Policy.
Use of Funds
All funds tax receipted by McMaster University must be used for university approved activities. Revenues that are the result of issued charitable tax receipts must remain under the control of university personnel, those funds cannot be re-directed to an outside group or agency. Any efforts to join forces with outside charitable organizations and hold joint fund-raising events must first be approved by the Vice President of University Advancement (as per McMaster’s Charitable Giving Policy). Approval to hold such an event will be decided in light of all relevant University and CCRA policies.
Contacts
- The Decentralized Advancement Officer within each Faculty should be the first source of information.
- The Associate Director of Annual Giving or designate is available for events run in conjunction with the central Development Office.
- For technical issues or Policy questions, either the Director of Advancement Services or the Donations Coordinator can provide assistance.
- Interpretation Bulletin
- Newsletters
Forms Request From Advancement Services
- Request for Prospect Clearance/Fund Raising Appeal Form
- Event Checklist
Event Checklist
Type of Event (tick each activity occurring at the event)
Golf Auction Concert Dance Dinner Celebrity Reception Run Wine Tour Other
Event Price $____________ +
Donation $____________ +
Ticket Price $____________ =
Activities
Cost/person Cost/person
breakfast _______ greens fees _______
lunch _______ golf carts _______
dinner _______ other ________
dance _______
Tee-off grab bag ______________________________________________
(items included)
Door Prizes ______________________________________________
(types of prizes)
Hole-in-one Prize_____________________________________________________
(or similar prize) (describe prize)
Lottery __________________________________
(describe prize)
Other __________________________________
(describe other activities)
Describe how auctions, prizes etc. will be handled so as to qualify the event for participant tax receipts_____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
_____________________________ ____________________
__________________
(Name of group organizing the Event) (Name
of Organizer) (Organizer’s
Signature)