Legislative History: Enacted June 13, 2017 (By-law No. CPOL.-41-237); Amended June 26, 2018 (By-law No. CPOL.-348-339)
Last Review Date: July 25, 2023
Service Area Lead: Director, Financial Services
1. Policy Statement
The purpose of this policy is to set out in accordance with the Income Tax Act and the Canada Revenue Agency guidelines and standards for:
- acceptance of Donations;
- issuing Official Income Tax Receipts to donors for income tax purposes; and,
- collection, recording and disbursement of Donations.
2. Definitions
2.1 City – means The Corporation of the City of London;
2.2 City Treasurer - means the City’s Deputy City Manager, Finance Supports, or designate;
2.3 CRA – means the Canada Revenue Agency;
2.4 Donation – means a gift, bequest, financial contribution, or in-kind contributions of tangible property such as art, furniture, equipment, material of historical interest, which has been given voluntarily and without compensation or non-monetary consideration such as advertising, promotion or services;
2.5 Gifts in-Kind – means a gift of tangible property, other than cash, that are eligible donations;
2.6 Fair Market Value (or Valuation) – means the highest dollar value that a property would bring in an open and unrestricted market, between the willing buyer and the willing seller who are acting independently of each other. The fair market value of a property does not include taxes paid; taxes are costs incurred by the buyer;
2.7 Non-Qualifying Donations – means donations for which an Official Income Tax Receipt cannot be issued in accordance with CRA guidelines;
2.8 Official Income Tax Receipt – means a receipt issued by the City as a Qualified Donee under the Income Tax Act, for a Donation made to the City, which may be used by the donor to claim a tax credit on their income tax return.
2.9 Qualified Donee – An organization that under the Income Tax Act may issue Official Income Tax Receipts for Donations it receives from individuals and corporations and registered charities.
3. Applicability
This policy applies to all Donations to the City to support projects, programs or services offered by the City. This policy does not apply to Donations of Land and Buildings.
4. The Policy
4.1 Accepting Donations
a) The City reserves the right in its sole discretion to accept or decline any Donation. The City Treasurer has the authority to refuse any Donation up to $100,000 where it is determined that it is not in the City’s best interest to accept the Donation. Donations exceeding $100,000 will be presented to City Council. If a Donation is declined, the City Treasurer shall advise the donor in writing of the reason.
b) Donations must be for purposes consistent with the City’s mandate, programs, services and activities and must be deemed by the City to be in the public interest.
c) Donations are only to be accepted if the City has, in its sole discretion, the capacity to meet the initial and ongoing costs and obligations associated with the Donation.
d) The City shall not accept a Donation where any advantage will accrue to the donor or to any person not dealing at arm’s length to the donor as a result of the Donation. The City may decline Donations from any donor who in the opinion of Council, represents a reputational risk to the City through involvement in activities that are contrary to the values of the City. Examples include but are not limited to:
- Proven or suspected criminal organizations; and
- Organizations that promote hatred against individuals or groups.
e) The City may not accept Donations from individuals or organizations currently in litigation against the City.
f) The City will accept Donations from community groups, organizations and individuals subject to general direction. Donations where the purpose is not specified are deemed to be undesignated and become contributions to general revenue of the City.
g) The City will accept the involvement of charitable organizations and community groups in fundraising activities for projects related to the repair, enhancement or construction of City-owned facilities.
h) Where the donor requests that conditions be placed on the use of the Donation, Legal Services must be consulted to ensure that the appropriate agreements are prepared prior to accepting the Donation.
4.2 Gifts In-Kind
a) In-kind Donations to the City must be free and clear of all encumbrances, conditions and restrictions and shall provide that use of the property shall be entirely at the discretion of the City.
b) Final acceptance of an in-kind Donation will require a transfer of title or ownership through a written agreement as to the future use and disposition except with respect to applicable legislation on preservation, copyright and/or resale. An agreement, satisfactory to the City Treasurer, signed by the Donor and the City shall be required prior to the acceptance of the in-kind Donation.
c) In the event of a significant Donation of land and/or buildings to the City, the Donation of Land and Buildings to the City Policy as amended from time to time shall apply.
d) Written valuations of in-kind Donations shall be submitted with an external appraisal by an independent arm’s length qualified appraiser or other third party supporting documentation, satisfactory to the City Treasurer to substantiate fair market value.
4.3 Official Income Tax Receipts
a) The City will issue an Official Income Tax Receipt for Donations for City programs or projects that qualify as Charitable Gifts in accordance with the Income Tax Act, regulations and CRA guidelines. The Treasurer shall be responsible for the issuance of all Official Income Tax Receipts in accordance with the following:
i) Official receipts for income tax purposes shall be authorized by the City Treasurer for eligible gifts and gifts-in-kind made to the City.
ii) For gifts in-kind, the fair market value of the Donation must be supported by an independent arm’s length appraisal or other third party supporting documentation, satisfactory to the City Treasurer;
iii) Receipts shall be made in the name of the donor only;
iv) Receipts shall be issued for all Donations having a value of $20.00 or more, if requested by the donor.
b) Non-Qualifying Donations, in accordance with the Income Tax Act, regulations and CRA guidelines include:
i) Intangibles such as services, time, skills and effort;
ii) Donations that are given to the City intended as a flow through to a specified recipient who does not have charitable organization status (a Qualified Donee);
iii) Donation of business marketing products such as supplies and merchandise;
iv) Sponsorship in the form of cash, goods or services toward an event, project program or corporate asset in return for commercial benefit.
4.4 Records
a) The City shall maintain proper books and records supporting all Official Income Tax Receipts issued.
b) Copies of Official Income Tax Receipts issued must be retained and filed in accordance with the City’s records retention policy.
4.5 Accounting
a) Where Donations are received by the City, the funds will be recorded in the appropriate account by the City Treasurer.
b) Donations directed for specific operations or for specific capital projects (such as to a community or recreational centre) shall be deposited to the donation revenue account of the appropriate program.
c) Donations may be disbursed only for their intended purpose and in accordance with the terms, conditions, restrictions or any agreement governing the use of the Donation.