Monetary Donations

The result of successful fundraising is the receipt of donations. All donations to the University are processed by the Division of University Advancement (DUA) . This section covers monetary donations , which includes cash, cheques, credit card payments and marketable securities. For other (non-monetary) gifts, refer to the section Gifts-In-Kind (Non-Monetary Donations)

Definition of a Gift and Payments Not Acceptable as Donations

As a charitable organization under the Income Tax Act, the University may issue official charitable donation receipts which the donor/taxpayer may use to claim a non-refundable tax credit. To be eligible for an official receipt the gift must be received and not merely pledged . The charitable organization status also means that as long as the University applies its revenues to the charitable activities defined under its charter, its income is not subject to income tax.

The University’s Charitable Business Registration number is: BN 108162330-RR0001.

The basic provisions dealing with charitable donations and their deductibility are contained in sections 110.1 (for corporate gifts) and 118.1 (for individual gifts) of the Income Tax Act . The relevant implications of these sections are discussed in the following paragraphs.

Gift is not defined in the Income Tax Act

Although the above sections in the Income tax act refer to it, a “gift” is not specifically defined. Therefore, registered charities rely on CRA (Canada Revenue Agency) Interpretation Bulletins, Information Circulars and jurisprudence (court rulings on CRA challenges of taxpayers’ deductions of charitable donations) to guide them in the issuance of charitable donation receipts.Gift defined (General Rule)
Interpretation Bulletin IT-110R3 defines gift as:

a voluntary transfer of property without valuable consideration. Generally a gift is made if all three of the conditions listed below are satisfied:
- some property, usually cash, is transferred by a donor to a registered charity; and
- the transfer is voluntary; and the transfer is made without expectation of return. No benefit of any kind may be provided to the donor, or to anyone designated by the donor, except where the benefit is of nominal value. The benefit is considered to have a nominal value where its fair market value does not exceed the lesser of (a) $75.00, or (b) 10%. This amount of $75 or 10% is effective as of September 2006 but is subject to change from time to time .

Exceptions to the General Rule

In most cases, the general rule above will be applied to determine whether a particular payment is a gift. However, in recognition of certain widely accepted fund-raising practices, a gift is considered to have been made in the circumstances outlined below.

For many years the difference between the purchase price of a ticket to attend a “dinner, ball, concert or show” and the fair market value of the food, entertainment etc., available to a ticket purchaser has been considered to be a gift. This exception to the general rule will not be extended to anything that is not a dinner, ball, concert, show or a like event. A “like event” is an event which provides services and consumable goods, the equivalent of which are readily available in the marketplace and which by their very nature are necessarily purchased with the intention that they be used on a specific date in the near future by the ticket purchaser (and guests) and which, if not used, have no resale value. An auction, for example, is not a “like event.” A dinner coupled with an auction would not be considered a “like event” unless people are invited to bid and can bid at the auction without paying the admission fee for the dinner.
To calculate the gift portion, it should be considered that two payments have been received: one for the fair market value of admission and the second as a gift to the University.
The fair market value of admission to a fund-raising dinner, ball, concert or show should be determined by making a comparison to the regular or usual charge for attendance at the same or a similar function or event for which a donation is not solicited. In the absence of a comparable event, the value is the estimated price that would have been charged for a function or event of this nature carried out as a profit-making venture.
Official receipts for a gift or donation are not to be issued where the price of admission to a dinner, ball, concert or show includes participation in a lottery or draw for prizes or awards which have more than a nominal value. Any payment which might be considered in excess of the fair market value of the price of admission for the event is presumed to be consideration for participation in the lottery or draw.
Generally, any legal obligation on the payer to make a donation would cause the donation to lose its status as a gift. However, when a taxpayer honors a personal guarantee concerning a loan made to the University or honors a pledge, the amount can be considered to be a gift despite its having being paid to honor an obligation, if the obligation was entered into voluntarily and without consideration.
Other exceptions to the general rule in above are discussed in separate CRA publications. For example, see IT-244R3 Gifts by Individuals of Life Insurance Policies as Charitable Donations, and IC75-23 Tuition Fees and Charitable Donations Paid to Privately Supported Secular and Religious Schools.

Payments NOT acceptable as donations – Income Tax Folio S7-F1-C1 & IT-297R2, and Information Circular 80-10R:

payment of a basic fee for admission to an event or program
payment of membership fees that convey the right to attend events, receive literature, receive services or be eligible for entitlements of any material value. In this regard, the right to vote at meetings and to receive reports of the charity’s activities — unless such reports are otherwise available for a fee — are not considered to be of any material value.
tuition fees or other payments for which any right, privilege, benefit or advantage may accrue to the donor
amounts received by loose collection, i.e. where a particular donor cannot be identified as having made a particular donation
contributions of services may not be acknowledged by issue of an official receipt. A gift must involve property. Contributions of services (that is, time, skills, effort) are not property and do not qualify. There is nothing prohibiting a charity from paying for services and later accepting the return of all or a portion of the payment as a gift — provided it is returned voluntarily.
donations of property where its cost has been or should be charged as a business expense. For example, if a taxpayer transfers merchandise or supplies to a charity in consideration of a right, privilege, material benefit or advantage such as promotion or advertising for the taxpayers business, then the transfer would not be a gift.
donations of old clothes, furniture, home baking, etc.
a payment for a lottery ticket or other chance to win a prize is not a gift
gifts directed to a specified person or family. However, donations subject to a general direction from the donor that the gift be used in a particular program operated by the charity are acceptable provided that benefit does not accrue to the donor, the directed gift does not benefit any person not dealing at arm’s length with the donor, and decisions regarding utilization of the donation within a program rest with the charity.

More on Special Fundraising Events
The difference between the purchase price of a ticket to attend a “dinner, ball, concert or show” and the fair market value of the food, entertainment etc., available to a ticket purchaser is considered a gift.

The fair market value of the admission to a fundraising dinner, ball, concert or show should be determined by making a comparison to the regular or usual charge for attendance at the same or a similar function or event for which a donation is not solicited. In the absence of a comparable event, the value is the estimated price that would have been charged for a function or event of this nature carried out as a profit-making venture.

The value of any complimentary benefits provided to all participants for attending the event (e.g., pens and key-chains) and the value of door and achievement prizes that all attendees are eligible for by simply attending the event will be viewed as a benefit (and will not be eligible for a tax receipt) unless the aggregate value of such items, per ticket sold, does not exceed the lesser of 10% of the ticket price and $75.

More on Charity Auctions
At charity auctions, where the value of the item is clearly ascertainable (e.g., there is a retail price for the item) and made known to all bidders in advance, a tax receipt can be issued when the amount is in excess of the posted value.

The posted value of the item cannot exceed 80% of the accepted bid.

For example, if an item costing $400 was sold at auction for $500, the bidder would be eligible to receive a donation receipt equal to $100 (the excess of the bid price over $400).

Divisions should consult with Division of University Advancement before advising donors on the tax implication of gifts.

University Practice

In order for the donor to receive a charitable donation tax receipt, all amounts which qualify as gifts for tax purposes must be processed by the Division of University Advancement.

All such gifts are reported as donations in the University’s financial statements with the following exception:

Under the above definitions, most grants (but not contracts) for research or other purposes technically qualify as gifts under the Income Tax Act.

However, the University does not issue charitable donation receipts in respect to them unless specifically requested by the sponsor. Therefore, they are not usually processed by the Division of University Advancement. However, for the purpose of reporting and donor relations, Research Services will provide the Division of University Advancement with information on all grants received from charitable foundations and corporations.

Grants from government and charitable foundations
Sponsors who provide grants generally do not require charitable donation receipts because in most cases the sponsors are government, government agencies or charitable foundations which are not taxable under the Income Tax Act.

Therefore, they have no use for charitable donation receipts. However, some charitable foundations do request charitable donation receipts for their grants as evidence that they are meeting a requirement of their charter to distribute their funds to other charitable organizations.

Corporate grants
In many cases research grants from corporations are not gifts under the Income Tax Act because:

they are being treated as expenses of the business,
they may be conferring on the sponsor a right, privilege, material benefit or advantage.

International Gifts

Gifts by Residents of the United States to the University of Toronto
Under the Canada-United States Income Tax Convention, certain donors resident in the United States may have their gifts receipted for income tax purposes directly by the University:

alumni and their families (family members are defined as: spouses, children, grandchildren, parents and siblings),
corporations and foundations with Canadian income.

All other donors must continue to make their donations through The Associates of the University of Toronto, Inc. (the Associates) if they require a U.S. tax receipt. Establish in 1947 to facilitate donations, the Associates is a not-for-profit organization recognized under the U.S. Internal Revenue Code, Section 501(c)(3).

Gifts by Residents of Hong Kong
Donors who are residents of Hong Kong can make their gift through The University of Toronto (Hong Kong) Foundation if they require a Hong Kong tax receipt. The University of Toronto (Hong Kong) Foundation is registered with the Inland Revenue Department (Hong Kong) and is authorized to issue Hong Kong tax receipts for gifts received.

Other International Gifts
For more information on international gifts, including gifts from residents of England, Wales, Scotland and Northern Ireland, see International Gifts on the Division of University Advancement site.

Processing Monetary Donations

Monetary Donations Received by Departments
As discussed in the Fundraising and Donations Overview, fundraising normally occurs at either the University level (Division of University Advancement) or at the divisional level (e.g. Faculty of Medicine). As a result, donation cheques may be received directly by departments.

Since many divisions have their own development offices, departments within these divisions should (subject to divisional guidelines):

send these donation cheques directly to their divisional development office for completion of the Donations Processing Form, or
complete the Donations Processing Form (see section below on Completing the Donations Processing Form).

Completing the Donations Processing Form

Below are some important points to keep in mind when completing the Donations Processing Form:

Endowed or Expendable

Endowed Donations
- The distinctive feature of endowed donations is that the donations themselves cannot be spent. They are invested in order to generate investment income which is used to fund activities specified in the terms of the endowment.
Expendable Donations
- The distinctive feature of expendable donations is that the donation can be spent on a particular or general activity.

Fund/Funds Center Number
It is important to enter the fund/funds center number to be credited with the donation:

Endowed donation
- The endowment fund number range is: 3xxxxx, x’s representing numerical digits.
Expendable donation
- The expendable fund number range is: 4xxxxx, x’s representing numerical digits.

No existing fund (account)
- If the department has no suitable fund to receive the donation, steps must be taken to open a trust account (see section Trust Funds for steps on establishing a new trust account). The fund master record will be created by DUA once the following information is received from the Dean / Principal / Chair / Director:
  - the proposed name of the trust account
  - the source of funds
  - the purpose for which the funds are to be used
  - whether the account is endowed, designated endowed, or expendable
  - the faculty or department responsible for the administration of the account, i.e., decisions on use of the funds
  - the name of the individual to have signing authority for expenditures
  - reporting requirements (if any)
  - the date when funds are expected to be received (in this case, the funds have already been received)
  - if determined, the Cost Center and/or Funds Center related to the account
- However, do not delay the donation deposit.
  - When it is known that the donation is an endowment or expendable , the department should coordinate with DUA to open a “TEMP” account for these donations. The temp account will be opened in the appropriate number range based on whether the donation is an endowment or expendable. By doing this, funds can be deposited right away in the correct account and will eliminate the need for future adjustments and the risk of inaccurate reporting to donors. Note that spending of expendable funds will only be permitted once the terms and conditions have been finalized.
  - When it is NOT known if the donation is endowed or expendable , the donation will be deposited within a holding account until this is determined. At that time, the appropriate fund account will be created, and the holding account will be cleared. Again, it is important to determine this information as soon as possible.

Cheques
Cheques will be restrictively endorsed, for deposit only to the Governing Council University of Toronto prior to sending to DUA.

Supporting Documentation
All supporting documents, along with the donor payment, should be forwarded to the Division of University Advancement.

Form
Click here for the Donations Processing Form. Forward the completed Donations Processing Form with the cheque and related correspondence to:

Donations Management
21 Kings College Circle
Toronto ON M5S 3J3

If you have any additional questions regarding completion of the form, please contact Donations Management at 416-978-0811.

What Happens Once DUA Receives the Monetary Donation?

The following is the general process once the Division of University Advancement receives the monetary donation.

Donation is Deposited
DUA deposits donations as soon as they are received in order to maximize investment income for the University and the underlying programs supported by the donation.

Donation is Entered into DIS
DUA enters the donation into DIS. The donor master record is updated with the following information:

Fund and Funds Center (FIS) and Project number (DIS) credited with donation,
donation amount,
solicitation code,
date gift was received, banked and posted,
type of gift, e.g. cheque, marketable security, gift-in-kind, etc.
outstanding pledges are adjusted, where applicable

A DIS document number is generated by DIS for each donation processed.

ARBOR training courses are available for Alumni, Development and Public Affairs administrators and any staff who require access to DIS to view donor information. In order to have access DIS, you will be required to follow the appropriate steps and complete the required forms, including necessary approvals. See EASI Forms on the EASI website for these steps.

FIS is Automatically Updated
When the donation is entered into DIS by DUA, the FIS system is automatically and simultaneously updated. Therefore, it is important that the account information entered onto the DIS form, and subsequently entered into DIS, is accurate.

The following information is automatically updated in FIS:

the fund / funds center is credited,
the donor’s name and identification number. Note: If the donor has requested anonymity, the word anonymous appears in place of the donor’s name. The reason and source of the increase in the fund should be clearly identified for the fund manager(s)
the date donation was banked and posted
the amount of the donation
The credit card surcharges are also transmitted to FIS but these charges are absorbed by the Division of University Advancement and, therefore, do not reduce the amount credited to the donation accounts.
An FIS document number is generated for each donation processed in DIS

To assist users in viewing and reporting on donation transactions in FIS, refer to the following FIS Reporting courses and Workshops:

Trust Fund Analysis (Reporting Course) – see sections on Trust Fund Budgets and Trust Fund Revenues-Donations
Line Item Reports in FM (Workshop)

If you have any additional questions regarding donation activity in FIS, your first point of contact is your FAST Team Divisional Representative.

Official Charitable Donation Receipt is Issued
DUA will issue an official charitable donation receipt for monetary receipts deemed to be gifts to the University of Toronto.

Donor is Thanked / Gift is Acknowledged
See Donor Relations – Acknowledgement and Recognition of Gifts for guidelines.

Last revision: May 15, 2007