Charities are reminded that it is not permissible to issue receipts for donated services. This is based on the common law definition of gift. Charities can only receipt for donations that legally qualify as gifts. A gift is defined as a voluntary transfer of property without consideration. Because services (for example, time, skills, or effort) do not qualify as property, a donation of services does not qualify as a gift and is thus not eligible for a receipt. This is confirmed by CRA Summary Policy CSP-S03 and CRA Policy Commentary CPC-017.

According to CRA policy, where a charity is faced with a donor who wishes to donate his or her services to the charity, it may be possible to issue a receipt under certain circumstances. For instance, where a charity pays a service provider for services rendered, the service provider may choose to donate the payment back to the charity. In such a case, the charity can receipt for the cash gift to the charity. It is essential that the charity actually pays the service provider for the service and that the same service provider makes a voluntary gift back to the charity. The charity should keep a copy of the invoice, the payment to the service provider, and the gift back from the service provider for its records. We recommend that payments in both cases be made by cheque.

The CRA cautions that a charity should not issue a donation receipt to a service provider in exchange for an invoice marked “paid”. The CRA states that this procedure raises questions as to whether any payment has been made from the charity to the service provider and whether any payment has been made back to the charity.

Charities wishing to structure a gift of services in this manner are encouraged to contact us if they have any questions about this policy.