Donation Receipts for Community Organizations: The Basics

Why receipting is a privilege, not a habit

An official donation receipt lets a donor claim a tax credit, which reduces the tax they pay. Because a receipt has real value, the Canada Revenue Agency (CRA) holds the organizations that issue them to a strict standard. A receipt missing a required element is not a valid receipt, and issuing receipts incorrectly is one of the most common reasons charities run into trouble during an audit. The good news is that the rules are federal, so they are the same in BC as everywhere else in Canada, and most mistakes are easy to avoid once you know the pattern.

Who is actually allowed to issue one

Only a registered charity, and a small set of other qualified donees such as registered Canadian amateur athletic associations, can issue official donation receipts. A community group that is incorporated as a nonprofit but is not a registered charity cannot. This trips people up, because being a nonprofit and being a registered charity are two different things.

You can check your status quickly. Registered charities have a nine-digit business number followed by RR and four digits, like 123456789RR0001, and they appear on the CRA's List of charities. If you are not registered, you can still welcome donations. You simply cannot give a receipt that reduces the donor's taxes.

What counts as a gift, and what does not

For receipting, a gift is a voluntary transfer of property with no expectation of a return benefit beyond what the rules allow. That covers cash, cheques, and property (gifts in kind). It does not cover:

• Services or time. A volunteer's hours, a contractor's free labour, or donated professional advice cannot be receipted, however valuable they are.

• The loan of a space or equipment. Use of property is not a gift of property.

• A pledge, until it is actually paid.

• Anything where you cannot determine a fair market value.

There is a well-known route for services: pay the person, then let them donate the money back, as two separate transactions. That creates a receiptable cash gift, but the payment also becomes taxable income for the person, so treat it carefully and get advice before relying on it.

The details every receipt must show

Missing one required element makes the whole receipt invalid, so use a template that includes them all. For a cash gift, an official receipt must show:

1. 1

   A statement that it is an official receipt for income tax purposes.

2. 2

   Your charity's name and address as on file with the CRA (the registered name, not a nickname).

3. 3

   Your registration number, in the format 123456789RR0001.

4. 4

   A unique serial number.

5. 5

   The place or locality where the receipt was issued.

6. 6

   The date or year the donation was received.

7. 7

   The date the receipt was issued, if it differs from the donation date.

8. 8

   The donor's full name and address.

9. 9

   The amount of the gift.

10. 10

    The value and description of any advantage the donor received, and the eligible amount of the gift.

11. 11

    The signature of someone you authorize to acknowledge gifts, plus the name and website of the CRA (canada.ca/charities-giving).

For gifts in kind you also record the date received, a description of the property, its fair market value, and the appraiser's name and address if it was appraised. The CRA recommends an appraisal for property worth $1,000 or more. If a donor received something in return for their gift, you may still be able to receipt part of it: see what an advantage is and how split receipting works.

Serial numbers and keeping copies

Two habits keep you audit-ready. First, numbering: give every receipt a unique serial number in a single sequence per year, and never reuse a number, including for a cancelled receipt. A charity has to account for every number it issued, so a gap with no explanation is exactly what an auditor asks about.

Second, retention: the CRA requires you to keep copies of official receipts for at least two years from the end of the calendar year the donation was made. Because those receipts also support the revenue you report, and financial records generally must be kept for six years, many organizations simply keep everything for six years to be safe. Software that stores each receipt and can rebuild its PDF from the underlying record is far less fragile than a shoebox of carbon copies. Receipts are one line on a wider schedule, so it is worth setting them alongside how long you keep your other participant records. Confirm the current retention periods with the CRA.