Gift Acceptance Policy Canada | ITA s.248 & CRA Rules

In Canadian practice, a gift acceptance policy is an internal governance instrument adopted by resolution of the board. It is not a contract with any donor. It sets the standing rules applied to every offer: who has authority to accept, which categories of property are welcome, which need committee or board review, and which are refused outright. It also fixes the valuation and receipting procedure, so that an official donation receipt is never issued on a guess. Many charities publish their gift acceptance policy so donors know the rules before they call.

The document is often confused with two neighbours. A donation agreement drafted to CRA receipting rules is a bilateral contract recording the terms of one specific gift: amount, restrictions, payment schedule, recognition and what happens if the purpose fails. The gift acceptance policy sits one level above and decides whether that agreement should be signed at all. A fundraising policy governs solicitation, and an investment policy governs funds once received.

No Canadian statute requires a gift acceptance policy by name, yet several regimes make one hard to do without. The first is the Income Tax Act. Under subsection 248(31), a charity may receipt only the eligible amount of a gift, meaning its fair market value minus any advantage to the donor. Paragraph 248(30)(b) presumes donative intent where the advantage does not exceed 80 per cent of the value; above that level, the donor must satisfy the Minister that a gift was intended. Receipts must contain the particulars in section 3501 of the Income Tax Regulations, including the donor's name and address and, for gifts in kind, a description of the property and the appraiser's identity. Where the donor acquired the property less than three years before the gift, or less than ten years where giving was one of the main reasons for the purchase, the deemed fair market value rule in subsection 248(35) caps the receipt at the donor's cost. Subsection 248(37) excludes inventory, real property situated in Canada, listed securities, certified cultural property and ecological gifts. A receipt issued for the wrong amount is a compliance problem for the charity, not only for the donor. The CRA's guidance on determining the fair market value of gifts in kind and other non-cash gifts recommends an independent appraisal for higher-value property.

Corporate law adds a second layer. Section 148 of the Canada Not-for-profit Corporations Act and section 43 of Ontario's Not-for-Profit Corporations Act, 2010 require directors to act honestly, in good faith and with the care of a reasonably prudent person, which is why the policy cross-references your conflict of interest policy under NFP Act section 141. Trust law is the third: a gift made for a restricted purpose is generally held on trust. Finally, sections 83.03 and 83.08 of the Criminal Code prohibit providing property for terrorist purposes and dealing with property of a listed entity, so donor due diligence belongs in the document.

The most common trigger is the first non-cash offer. A donor calls about a cottage, shares in a family company or a collection of paintings, and the executive director realizes nobody knows who can say yes. Planned giving comes next: once a charity encourages bequests, it needs rules for residual gifts under a last will and testament compliant with the SLRA and WESA, for life insurance and for RRSP or TFSA beneficiary designations, which arrive months after the donor's death.

Naming rights, endowed scholarships and program-specific gifts create obligations that outlive the people who negotiated them, so the gift acceptance policy sets the minimum term and exit clause before the plaque goes up. Many organizations adopt one only during a CRA audit, when they find that inconsistent receipting is the first thing examiners check.

One edge case deserves attention. Shares of a private corporation that does not deal at arm's length with the donor are non-qualifying securities under subsection 118.1(13) of the Income Tax Act. The donor's credit is deferred and arises only if the charity disposes of the shares within 60 months, for no more than the proceeds received, which turns acceptance into a liquidity plan.

• The statement of purpose and mission alignment ties every acceptance decision to the charitable purposes in your articles or letters patent. It gives staff a principled ground for declining a gift that would pull the organization away from its objects.
• The authority and approval thresholds allocate decisions between staff, the gift acceptance committee and the board. Cash and listed securities are delegated, while real estate, private shares and endowments go to the board, recorded in a board of directors resolution under NFP Act section 140.
• The categories of acceptable gifts treat separately cash, listed securities (eligible for the zero capital gains inclusion in paragraph 38(a.1)), real property, life insurance, gifts in kind, cultural property and ecological gifts. Life insurance premiums are receiptable only where the charity is both owner and beneficiary of the policy, and donated services are never receiptable.
• The grounds for refusal cover an illegal or unverifiable source, unacceptable conditions, excessive carrying costs, conflict with mission, or a requested benefit above the 80 per cent threshold.
• The valuation and receipting procedure sets when an independent appraisal is required, who pays for it, how the deemed fair market value rule is checked and which officer signs receipts.
• The restricted gifts and variation clause requires every restriction in writing and reserves the right to redirect funds to the closest charitable purpose if the original one becomes impossible.
• The recognition, privacy and anonymity provisions govern naming rights, donor lists and personal information under PIPEDA or provincial privacy law.

Federal corporations under the Canada Not-for-profit Corporations Act apply its director duties everywhere, and receipting is federal, so the tax sections of a gift acceptance policy do not change between provinces. Land transfers, trusts and charitable property supervision remain provincial, which is why the template adapts those references to your province.

Ontario gives the Public Guardian and Trustee a supervisory role over charitable property under the Charities Accounting Act, and investment of donated funds follows the prudent investor standard in section 27 of the Trustee Act. The Charitable Gifts Act, which once forced charities to sell controlling business interests, was repealed in 2010. Ontario charities may therefore hold gifted private shares, although private foundations remain subject to the federal excess business holdings rules in section 149.2 of the Income Tax Act. Before accepting, review any shareholder agreement under CBCA section 146 or its provincial equivalent for transfer restrictions, rights of first refusal and buy-sell triggers.

Quebec applies civil law. Under article 1824 of the Civil Code of Québec, a gift must be made by notarial act en minute and published, unless it concerns movable property delivered at once. A gift of an immovable made without a notarial act is absolutely null. A promise of a future gift is not itself a gift under article 1812, so a multi-year pledge gives the charity only a limited claim in damages if the donor stops paying. A Quebec gift acceptance policy routes real estate gifts through a notary and treats pledges as unsecured until paid.

British Columbia charities must account for the Charitable Purposes Preservation Act, which deems property received for a charitable purpose to be held on trust for that purpose. Societies under the Societies Act should align the policy with their bylaws on restricted funds.

Alberta regulates solicitation through the Charitable Fund-raising Act, which gives donors a right to information about how contributions are used. The gift acceptance policy states how those requests are answered.

You start by choosing the province where the organization is incorporated or principally operates, and whether it is a registered charity, a non-profit corporation or both. That choice switches the statutory references, adds the notarial requirements for Quebec and adjusts the trust language for British Columbia. The questionnaire then asks which gift categories you accept: a small community group may limit itself to cash and listed securities, while a hospital foundation will open the door to real estate, life insurance and cultural property.

Next you set the approval thresholds and name the officers authorized to sign receipts and the person responsible for appraisals. You then choose how anonymity, naming rights and restricted gifts are handled. The document is generated in Word and PDF, ready for adoption at the next board meeting.

The mistake seen most often is a gift acceptance policy that exists on paper but is never followed. Staff accept a donated vehicle because the donor is a friend of the chair, the receipt goes out at the donor's estimate, and the policy only surfaces when the CRA asks for the appraisal file. A second error is copying an American gift acceptance policy that refers to IRS Form 8283 and section 501(c)(3) and ignores split receipting. A policy that cites the wrong country's tax law offers no protection in a Canadian audit.

Restrictions cause the third set of problems. Boards accept conditions such as "for the new wing" without a deadline or fallback purpose, then discover the wing will never be built and the money cannot move without the estate or a court. The fourth mistake is ignoring carrying costs: land and collections bring taxes, insurance and sometimes environmental liability exceeding the gift's value. The last is skipping the conflict check when the donor sits on the board. Any gift involving a director should be approved without that director in the room.