Have you ever been asked what kind of recognition your organization will offer a funder?

Many funders, corporate funders especially, are interested in leveraging their grants programs for social cred.  

But recognition can be a trick question, because the Canada Revenue Agency (CRA) has very particular rules about donor recognition for charitable organizations. You want to be sure that you don’t risk your ‘gift’ inadvertently becoming recognized as a ‘sponsorship’ because of how you thanked a funder.

If your organization will be issuing a charitable tax receipt for a grant, the CRA guidelines state that in order for your recognition to be considered an administrative cost, it cannot exceed $75 or 10% of the gift, whichever is less. If your recognition exceeds that value, you must report the cost as a fundraising expense because “it implies a solicitation for further support.”

Also, if you’ll be giving a charitable tax receipt, the funder cannot have the expectation of special naming rights or that their logo will be appearing on your program materials. Why not? Because to the CRA, that looks a lot like the philanthropic donor is receiving a marketing advantage. If that’s the case, then the fair market value of the advantage must be deducted from the charitable tax receipt.

The guidelines state: “If a business receives the same level of recognition as all other donors, with no special treatment, and the recognition is minimal (for example, a simple acknowledgment), the charity can issue the business a receipt for the full amount of the donation.” But if a funder receives more than this, it is considered sponsorship, because they are receiving an advantage—namely, marketing—in exchange for their gift.

So offer to express appreciation for all of your donors on social media, your website, in the project’s press release, or in your annual report. If you have leeway to use fundraising funds rather than only your administrative funds, then a thank you video or some sort of permanent sign may be appropriate (depending on the size of the gift.) But it would be unfortunate if your receipting privileges were revoked because you didn’t know the rules, so read up before you promise to recognize a funder in a special way.

Read more Grant Writing Tips.