Registered charities may issue donation receipts but they are not required to do this. Issuing receipts so that donors can claim a tax deduction is one way to encourage donations. If a charity is not going to issue receipts donors should be informed about this.
Charities are not allowed to give their registration number to another organization so that another organization can issue a receipt.
To issue a receipt a charity must know...
A receipt can only be given for a gift of property. Property includes things like money, art, clothing and real property such as a house. Receipts cannot be issued for gifts of services.
If the gift is not cash the charity must determine the fair market value of the gift. Fair market value is what the property would sell for in an open market where buyers are acting independently of each other. If a fair market value cannot be determined then the property will not be considered a gift and no receipt can be issued.
If the fair market value will be under $1000 a professional appraisal is not required. However, the person who does the appraisal needs to be someone with the knowledge necessary to determine the fair market value of that property.
For property where the fair market is expected to be more than $1000, a professional appraisal by someone independent of the charity is strongly recommended. If the property is professionally appraised the name and address of the appraiser must be included on the donation receipt.
In all cases the charity is responsible for making sure the value on the donation receipt is accurate.
When the donor receives any advantage from the gift, the fair market value of the advantage must be subtracted from the fair market value of the gift. The donation receipt can only be for that difference. If the advantage is 80% or more of the fair market value of the gift no donation receipt can be issued. If the value of the advantage cannot be determined no donation receipt can be issued.
The fair market value of the advantage is determined in the same way it is determined for the gift itself. For example, if the donor received a theatre ticket then the fair market value of the advantage would be the ticket price.
Advantages that are minimal do not affect the fair market value of a gift. If the advantage is less than 10% of the value of gift up to a maximum value of $75 a receipt can be issued for the full value of the gift.
The minimal advantage rule does not apply if the gift is cash or the equivalent of cash (i.e. gift certificate). It also does not apply if the advantage relates to the activities at a fundraising event. For example if the donor receives their meal for free at a fundraising dinner or does not need to pay green fees at a charity golf tournament. In these cases the value of the advantage must be subtracted from the value of the gift.
There is no set form for a charitable receipt but certain information must be included and the information must be readable and not easily altered.
The following must be included...
For non-cash gifts a brief description of the gift must be included, as well as the name and address of the appraiser if the gift was appraised.