A. Legal and Ethical Practices
- Conduct an analysis of provincial and federal charitable fundraising laws and register where the land trust determines it is appropriate.
- Do not compensate internal or external fundraisers based on a commission or a percentage of the amount raised.
Background
There is increasing federal and provincial regulation of philanthropy and fundraising practices, and public and donor scrutiny of non-profit charitable solicitation activities. Charitable solicitation laws are designed to enhance public accountability and to aid potential donors by making government-required registration material and financial reports available to the public. Land trusts should be familiar with laws governing charitable solicitation in their jurisdictions. Compliance with the standards of the philanthropy and fundraising industry is considered prudent for land trusts.
Professionals raising money in the charitable sector are discouraged from engaging in commission-based fundraising by national associations. Imagine Canada’s Ethical Fundraising & Financial Accountability Code states “Paid fundraisers, whether staff or consultants, will be compensated by a salary, retainer or fee, and will not be paid finders’ fees, commissions or other payments based on either the number of gifts received or the value of funds raised. Compensation policies for fundraisers, including performance-based compensation practices (such as salary increases or bonuses) will be consistent with the charity’s policies and practices that apply to non-fundraising personnel.” Imagine Canada’s code complements the professional codes of ethics and standards of practice to which many professional fundraisers individually adhere, such as those of the Association of Fundraising Professionals, the Canadian Association of Gift Planners, and other national and provincial organizations.
Funds spent in excess of 80% of charitable receipts can be carried back one year to offset a shortfall in that period. A charity can also draw on an excess for up to five of its following fiscal periods to help it meet its disbursement quota. A charity can draw on previous years’ excesses to cover a shortfall. If no excesses are available to draw on, a charity can try to spend enough the following year to create an excess that will make up for the shortfall. However, continuous shortfalls can lead to revocation of the charity’s registration. For more information, refer to bulletins on the CRA website:
Canada Revenue Agency (CRA) – Annual spending requirement (disbursement quota)