Donations and Receipts with Advantage

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Donations and Receipts with Advantage

This section is almost entirely for users in Canada. While the data entry fields mentioned below are available for users in other countries, the built-in receipts will only use those fields if you choose a Receipt Style / Location for Canada in the Maintenance ⇒ Receipt Options window - one of "Canada (English only)", "Quebec (French only)" or "Quebec (bilingual French & English)".

 

The Canada Revenue Agency (CRA) requires special elements to be added to a receipt when the donor receives goods or services in return for their gift. (Note: this has nothing to do with Gifts in Kind, which are donations of goods rather than money.) The Canada Revenue Agency calls the value of the goods or services that the donor receives an "advantage". This is also called "split receipting".

 

When there is an advantage, three dollar amounts must be displayed on the receipt:

 

- the total cash amount of the donation received by the charity

- the value of the advantage (what the donor received), and

- the eligible amount of gift for tax purposes.

 

The 1st of those amounts is entered in the donation's Total Amount field, and the 3rd is entered in the Eligible Amount field. The value of the advantage (the 2nd line) is the difference between those two amounts.

 

Both regular monetary donations (which the CRA calls "cash donations") and Gifts in Kind can have an advantage.

 

An example of a cash donation with advantage is a fundraising dinner. Suppose the donors buy tickets costing $100 for the dinner, and the fair market value of the dinner that the donors will receive is $40. That means that only $60 of the donor's donation is eligible to be included on a charitable receipt. The way you enter this is to enter $100 for the Amount, and $60 for the Eligible Amount. The Eligible Amount is what the donor can claim on their taxes.

 

For a Gift in Kind, an example is a donation of a painting for which the fair market value is $500, but the charity gives the donor $100 for it. Then the Advantage is $100, and the Eligible Amount is $400.

 

Receipts for donations with advantage also have to have a description of the advantage (whatever was received by the donor) printed on them. Although this has apparently been the rule for a long time, for some reason we were not aware of it until Fall 2017, when one user brought it to our attention. Our apologies for that oversight! Many changes were made as of version 4.01 of DONATION to allow for displaying the description of the advantage on the receipts.

 

CRA Rules

 

It is your responsibility to understand and follow the CRA's rules for what is counted as an advantage - the program does not enforce them. Currently (late 2017) one CRA web page describing those rules is:

 

https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/operating-a-registered-charity/issuing-receipts/split-receipting.html

 

Currently one of the rules is that if the Advantage is more than 80% of the Total Amount of the gift, you cannot receipt for the remaining Eligible Amount. So in those cases it would be your responsibility to set that donation to be non-receiptable - the program will not attempt to detect it. See Non-Receiptable Donors and Donations for details on how to do that.

 

Other Countries

 

Very few users in the U.S.A. seem to want to do this type of "split receipting" that is used in Canada, so at this point  the DONATION program's receipts for the U.S.A. always show just the regular Amount (or Total Amount) field. If you do want to do split receipting, you can use the Eligible Amount field, but you will need to contact us for a special version of the mail-merge receipt for the U.S.A. that displays it.

 

Receipts for all other non-Canadian countries use the Eligible Amount, if it is entered, and otherwise use the regular Amount (or Total Amount) field.

 

Data Entry

 

There are three optional fields that can be relevant when entering Canadian donations with advantage: Eligible Amount, Description, and Description of Advantage. Whether or not those fields are visible when entering donations on the program's main window is determined by checkboxes on the Donations tab of the Maintenance ⇒ Main Window Options window.

 

The Total Amount field (which is just called Amount if you are not displaying the Eligible Amount field) should have the total amount given by the donor entered in it.

 

The Eligible Amount should have the eligible amount of the donations for tax purposes entered in it - which is the Total Amount minus the value of the Advantage.

 

The description of the advantage can go into either the Description field, or the Description of Advantage field, except in the case where the donation is also a Gift in Kind. In that case, the description of the Gift in Kind has to go into the Description field, while the description of the advantage goes into the Description of Advantage field. The reason for this option for non-Gift in Kind donations is that if you don't actually receive Gifts in Kind, you don't have to display the Description of Advantage field with the donation fields - you can just use the normal Description field. However, if you do display and fill in the Description of Advantage field for a given donation, it will always be used on the resulting receipt.

 

The Eligible Amount and the Advantage Description can be only entered when you do your entry of donations on the main window, not via Batch Entry.

 

Receipting

 

When you create receipts using any of the Receipt menu options, including the Receipt ⇒ Gift in Kind Receipts sub-menu options, special handling is applied if there are donations with advantage included among the donations to be receipted.

 

The reason for this is that since the description of the advantage has to be printed on receipts for such donations, each donation with advantage has to have a separate receipt generated for it - just like with receipts for Gifts in Kind. It's only when there are donations without advantage, that are not Gifts in Kind, that multiple donations from the same donor can be included on a single receipt.

 

Also, because of this difference, different internal reports or mail-merge templates are used by the program for generating the receipts with and without advantage. As a result, a batch of receipts (such as one generated by Receipt ⇒  All Donors) cannot include both donations with advantage and donations without advantage.

 

To make this happen, when you choose a receipt menu option to generate receipts, the program first examines all of the donations for all donors that would be included in such receipts, and follows these rules:

 

If none of them have advantage, normal receipts are generated. Normally such receipts will not include all three dollar amounts mentioned above, but rather only the eligible amount of the gift (which you entered as the Amount or Total Amount.)

If all of them have advantage, the special receipts with advantage are generated (one receipt per donation).

If some have advantage and some don't, you are asked which type of receipts you would like to generate at this time - the ones with or without advantage. After generating that type, you can come back to the same menu option again, to generate receipts for the ones you skipped. (That would be the donations without advantage, if the first time you did the ones with advantage, or vice versa.)

 

Other Changes to the Program for Donations with Advantage

 

The following other changes were also made when adding in the printing of the description of the advantage as part of version 4.01 of DONATION:

 

Added new checkboxes in Maintenance ⇒ Receipt Options, Letters ⇒ One Letter and Letters ⇒ Mass Mailing to allow you to edit and/or merge with the special templates for receipts for donations with advantage.

In mail-merge letters for individual donations, or for receipts with advantage (including Gift in Kind ones) include a new merge field «AdvantageDescription».

The Reports ⇒ Custom Reports window now includes the Description of Advantage in the fields that can be selected for Donations, as long as you are displaying that field.

For Canadian users, added a new Notes column to Reports ⇒ Donation ⇒ Unreceipted, which can show "Missing Description" for donations where a description is needed to be printed on the receipt, but has not been entered. This applies to both Gifts in Kind and donations with Advantage.