When it comes to charitable donations, your role in identifying the actual donor is of utmost importance. It guarantees transparency and adherence to tax regulations.

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Let's explore some scenarios to clarify who the actual donor is in different situations and when you can issue an official donation receipt.

Scenario 1: A Cheque Donation

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Your charity receives a cheque from Donna Hughes. The cheque is written in her name.

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Actual Donor: Donna Hughes. You can issue the official donation receipt in Donna's name, as she is the donor.

Scenario 2: Two Names on a Cheque

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You receive a cheque with two names, Alex and Joan, but no additional information is provided.

What to Do:

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You need evidence to determine the donor. If one person explicitly claims the donation, their name can go on the receipt. Otherwise, you may need to issue a receipt to both names.

Scenario 3: Donating Business Property

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Alex and Joan own a laundromat called "Fresh Bubbles." Joan donates a used washing machine from the laundromat to your charity, valued at $100. She asks for the receipt to be issued in her name.

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Actual Donor: The laundromat, "Fresh Bubbles," is the donor since the machine is the business's property. Unless Joan provides written evidence showing she purchased the washing machine personally with her funds, you cannot issue the receipt in her name.

Scenario 4: Customer Donations at a Store

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A grocery store collects customer donations at checkout and then sends the total amount to your charity.

Actual Donors: The customers who made the individual donations are the actual donors. The store cannot claim to be the donor since it acts as a collection agent. Efficient tracking systems are needed as issuing individual customer receipts may not always be practical.

Why Identifying the Actual Donor Matters

The Canada Revenue Agency (CRA) requires charities to maintain accurate records of donations and their sources. If audited, your charity may need to provide evidence to support every receipt issued.

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Understanding the actual donor in each situation ensures your charity remains compliant and maintains trust with your donors. Failure to correctly identify the donor can lead to issues with the Canada Revenue Agency (CRA) during audits, potentially resulting in penalties or loss of tax-exempt status.

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