Understanding the definition of a ‘qualified donee’ in Canada

In recent blogs, we’ve noted a growing trend among philanthropists in Canada: greater strategic engagement with the charities and non-profits they support. As we’ll explain in a moment, the majority of these recipient organizations are permitted to issue tax receipts, designating them as a qualified donee under Canada Revenue Agency rules.

Just how involved philanthropists can become with their preferred causes may seem limited—at least in part—by CRA rules. Still, they can take a hands-on approach to determining how they support a qualified donee, and often the options for giving are far more extensive than many donors first realize.

As the CRA explains on its website, “Only qualified donees, including Canadian registered charities, can issue official donation receipts for gifts they receive from individuals and corporations.” Qualified donees can also receive gifts from registered charities. In other words, Canadian philanthropists who want a tax receipt for a gift must donate to a qualifying organization; similarly, a Canadian foundation or donor advised fund can only make grants to qualified donees.

So, what type of organization is a qualified donee under the CRA’s definition? The list is long and includes:

• Registered Canadian charities
• Some Canadian amateur athletic associations
• Journalism organizations
• Foreign charities that have received a gift from Her Majesty in right of Canada
• Low-cost housing corporations for the aged
• Public bodies performing a function of government in Canada
• Universities outside Canada that typically include students from Canada

The qualified donee category also includes municipalities, provinces or territories, as well as the United Nations and its agencies.

This lengthy list presents a plethora of options for philanthropists looking to build a lasting legacy—including those who want to provide support to less conventional causes or initiatives. We highlighted a great example of an alternative type of giving in the recently-released Canada Gives Annual Impact Report 2019, all to underscore just how diverse those donation options can be.

In it, we recounted the story of a Canada Gives Foundation Account holder who endeavoured to build a memorial to the 23 individuals lost in this year’s shooting spree in Nova Scotia. With the help of the Canada Gives Client Services team, the donor client is currently navigating the administrative logistics of providing a gift to the local Municipality of the County of Cumberland—a qualified donee under Canada Revenue Agency guidelines—for the purpose of building a memorial to the Nova Scotians who perished. In doing so, he’ll realize his goal of ensuring that each individual is remembered.

That’s only one example among many of the creative gifting options available to donors in Canada. There are literally thousands of qualified donees in this country that are eligible to issue tax receipts. Of course, that raises another important issue for our Foundation account holders: how to narrow the list of causes or charities to support. That can be a challenging and potentially overwhelming process for philanthropists, many of whom are busy running businesses, managing families or simply enjoying their golden years and are too busy to spend dozens of hours building a list of prospective donation recipients.

That’s where we can help. The Canada Gives Client Services team is available to help our Foundation Account holders develop mission statements, create gifting strategies and vet prospective gift recipients**. Our goal is to not only handle the administration and ongoing maintenance of Foundation accounts—think important tasks such as tax reporting and grant request management—but to also do the legwork involved in helping our donor clients determine which qualified donees they’ll support, by how much and in what ways.

Because building a lasting philanthropic legacy isn’t simply about making effective donations, but also ensuring those gifts align with a donor’s personal values and vision for making a meaningful difference. More so when you consider that many will aim to share the gift of philanthropy with the next generation, and the greater the number of gifting options they have, the more they can ensure their children and grandchildren become (and remain) engaged in philanthropy in subsequent years.

Understanding the nature and complete scope of qualified donees expands giving opportunities for individual donors and foundation funders in Canada.

The Canada Gives Team

** Our new Client Portal features a fully interactive list of every Canadian charity listed with the Canada Revenue Agency, offering a fun and user-friendly way to research the charitable gifting options available to philanthropists in Canada.