Policy, Procedure
AP 506 - (formerly policy 4430 and procedure 4430.1) – Charitable Donations
Background
The Surrey School District No. 36 (the “District”) recognizes that receiving donations and related issuance of official charitable donation receipts can contribute to the advancement of education.
The District is registered with Canada Revenue Agency as a charitable organization for the purpose of “advancement of education”, as defined in the Income Tax Act.
Definitions
Advancement of Education for charitable purposes, as defined by the Income Tax Act, must include formal instruction or training of the mind, preparing a person for a job or improving a useful branch of human knowledge. In addition, the Supreme Court of Canada established criteria to determine whether a purpose or activity is charitable as follows:
- There must be structure and a genuinely educational purpose
- There must be a teaching or learning component
- There must be a legitimate, targeted attempt to educate others.
Procedures
| 1. | The Secretary-Treasurer shall:a. | Ensure that donations for which official charitable receipts are to be issued are only accepted where their purpose satisfies the requirements of the Income Tax Act.
| | b. | Authorize the issuance of official charitable receipts.
| | c. | Hold and disburse charitable funds received subject to trust conditions which may be attached thereto.
| | d. | File charitable returns as required with Revenue Canada.
| | e. | Provide an annual report of charitable donation financial activity to the Board of Education of School District No. 36 (Surrey) (the “Board”) in conjunction with the presentation of the audited financial statements.
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| 2. | Acceptance of Charitable Donationsa. | Can only be accepted with the prior agreement of both:
i. | The account coordinator is responsible for the activity accepting any donor restrictive covenant on expenditure of the funds.
| | ii. | The Secretary-Treasurer, or designate, being satisfied that the purpose of the donation complies with the Income Tax Act requirements.
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| | b. | The District must maintain direct administration on the use of the donation for their intended purpose. | | c. | If cash charitable donation propositions are not included in the definition provided under the Definition section of this procedure, a written proposal is to be made to the Secretary-Treasurer, or designate, to enable assessment of compliance with the Income Tax Act.
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| 3. | Types of Charitable Donation Activities a. | Cash charitable donations that satisfy the charitable purposes requirements of the Income Tax Act includes school supplies, school furnishings and equipment, adventure playgrounds, student programs, student scholarships and student bursaries. | | b. | Donations-In-Kind require additional approval (refer to item 7).
| | c. | For a charitable donation to fund a scholarship see administrative procedure governing Establishing & Administering Scholarship Funds.
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| 4. | Official Charitable Donation Receipts
a. | Can only be issued in compliance with the requirements of the Income Tax Act.
i. | Can not be issued where the donor receives a direct benefit for themselves or their family members. (Communications soliciting charitable donations must not imply a direct exchange for services rendered to family members.)
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| | b. | On request, will be issued by Fiscal Management Services for cash donations of $20 or greater where the purpose of the donation has been accepted pursuant to the foregoing.
| | c. | Donors can make cheques payable to School District No. 36 (Surrey). Sites are to forward these cheques to Fiscal Management Services with identification of the school activity or District project to which it relates and request that a charitable donation receipt be issued.
| | d. | When a donor has provided a cheque in the name of a school, the school should: deposit the cheque to its account and forward to Fiscal Management Services the school’s cheque along with a photocopy of the donor’s cheque and a request that a charitable donation receipt be issued.
| | e. | Fiscal Management Services forwards charitable donation receipts to the account coordinator responsible for the funds in order to provide the opportunity to have a letter of thanks accompany mailing the charitable donation receipt to the donor. | | f. | Funds received as charitable donations are accounted for in general ledger accounts that the account coordinator is responsible for.
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| 5. | Gifts by Businesses a. | If a business provides cash or property to a charity, it may or may not be making a gift to the charity.
i. | If a business advantage, such as promotional or advertising services, is provided to business, the business can claim a business expense and a charitable donation receipt cannot be issued.
| | ii. | If no consideration is provided, then a gift has been made and a charitable receipt can be issued.
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| | b. | Gifts of inventory from a business (e.g. food from a grocery store) usually do not have charitable receipts issued. Since the business must include the fair market value of the gifts from inventory in its taxable income before deducting the donation, there is no net benefit to the business. In order to avoid the administrative burden of determining the fair market value of gifts of business inventory and the administrative burden of issuing the related receipts, the District, normally, does not issue charitable receipts for gifts of business inventory.
| | c. | A letter of thanks may be issued for contributions from a business that do not qualify for issuance of a charitable receipt.
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| 6. | Expenditure of Donated Funds
a. | The account coordinator who directs the program on which the funds will be expended, shall be responsible for:
i. | Any restrictive covenants associated with the funds; and
| | ii. | Compliance with District policies and procedures.
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| | b. | Financial information on the status of funds is available to account coordinators via on-line inquiry and from reports provided by Fiscal Management Services.
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| 7. | Donations-in-Kind
a. | Donations of equipment, furnishings and site improvements can only be accepted and commitments made to issue “donation-in-kind” charitable receipts after:
i. | The criteria for acceptance of donated goods delineated in the administrative procedure governing equipment donations.
| | ii. | The charitable purpose is confirmed pursuant to section 2 of this administrative procedure. The goods must be for educational purposes not for resale.
| | iii. | Fair market value is at least $250 and the cost to substantiate fair market value does not exceed the donation value.
| | iv. | Fair market value has been substantiated per section 6(b) and agreed to by the donor.
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| | b. | The fair market value of donations-in-kind will be determined and communicated to Fiscal Management Services for:
i. | Computers and other information technology equipment – by Information Management Services.
| | ii. | All other donations-in-kind – by the Manager, Purchasing.
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| | c. | Where a donor requests a charitable receipt for a donation-in-kind, the donor is to contact the offices described in 6(b) in order to make the necessary arrangements.
| | d. | Computers and other information technology equipment must be delivered to Information Management Services for evaluation (i.e. not received by District offices and schools) before fair market value can be determined. Such equipment must be clearly labeled as to the identity of the donor and the designated school when shipped to Technology Services.
| | e. | Charitable receipts for donation-in-kind will not be produced until there is confirmation that the goods have been received.
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