Charitable Receipting
OSC - Charitable Receipting - September Sprint 2025
Why is Receipting Important?
Tax receipting is a cornerstone of nonprofit financial management. Done well, it ensures legal compliance, builds donor trust, supports accurate record keeping, enhances fundraising efforts, and protects the organization during audits. Far from being a purely administrative task, receipting plays a vital role in sustaining both financial health and donor relationships.
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Legal Compliance
Nonprofits that choose to issue tax receipts must meet specific regulatory requirements for eligible donations. Proper receipting ensures compliance with government rules and safeguards the organization’s charitable status. Failing to comply—even unintentionally—can put the organization at risk of penalties, reputational damage, or even loss of registered charitable status.
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Audit and Verification
Accurate receipting practices provide nonprofits with verifiable documentation of all donations received and receipted. This is essential for readiness in the event of an audit by tax authorities. Beyond government regulations, independent auditors often have higher expectations. For example, while the CRA only requires that receipts contain a unique identifying number, many auditors prefer to see sequential numbering to confirm completeness of receipting activities. Strong controls and consistency in this area give auditors confidence and protect the organization.
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Record Keeping
Tax receipts form a reliable record for both the nonprofit and the donor. They support accurate bookkeeping, facilitate financial reporting, and help ensure transparency in donation tracking. Strong record-keeping practices not only meet compliance requirements but also make it easier for staff and volunteers to manage donor inquiries, reconciliation processes, and year-end reporting.
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Donor Incentives
For donors, tax receipts have a tangible financial benefit. They allow individuals and businesses to claim deductions or credits on their tax returns, reducing taxable income or generating tax credits. This creates a strong incentive for charitable giving. By ensuring timely and accurate receipts, nonprofits reinforce the value of giving and may encourage greater generosity.
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Donor Stewardship
Tax receipting is also a donor touchpoint. When handled thoughtfully, receipting reinforces gratitude, transparency, and trust. Accompanying receipts with timely acknowledgements or stewardship messages can transform a transactional process into a meaningful moment that strengthens donor relationships and supports long-term engagement.
Acknowledgements vs Charitable Receipts
While both donor acknowledgment and tax receipting are essential practices for nonprofit organizations, they serve distinct purposes and have different requirements.
A charitable tax receipt is an official document that meets the requirements of the Canada Revenue Agency (CRA) or Internal Revenue Service (IRS). It provides the information donors need to claim tax credits or deductions and must follow strict formatting and content rules.
An acknowledgment, on the other hand, is a stewardship tool. It is typically a personalized thank-you letter or email that expresses appreciation, highlights the impact of the gift, and strengthens the donor’s relationship with the organization. Acknowledgments are not regulated in the same way as receipts.
While these are distinct documents, they can also be combined into a single communication. For example, a thank-you letter may include all required tax receipt information, provided it complies with CRA or IRS standards. This approach reduces administrative burden and delivers both compliance and stewardship in one touchpoint.
| Item | Acknowledgement | Tax Receipt |
|---|---|---|
| Purpose & Function | Relationship Building: Creates emotional connection between donor and organization. Gratitude Expression: Shows appreciation for the donor’s support and investment in the mission. Stewardship & Retention: Demonstrates how donations are being used and the impact they create to encourage continual giving. | Legal Compliance: Fulfills regulatory requirements for charitable tax deductions Financial Documentation: Provides official record of charitable giving Audit Protection: Creates paper trail for both donor and organization Tax Benefit Enablement: Allows donors to claim charitable deductions |
| Key Characteristics | Timing: Should be sent promptly (within 24-48 hours of receiving donation) Tone: Warm, personal, and mission-focused Content: Emphasizes impact, gratitude, and organizational values Format: Can be letters, emails, phone calls, or even handwritten notes Personalization: Often tailored to donor’s giving level, interests, or relationship with organization | Timing: Must meet specific regulatory deadlines Tone: Professional, formal, and legally compliant Content: Standardized information required by tax authorities Format: Official document with specific formatting requirements Standardization: Must follow exact regulatory guidelines without variation |
| What Can Be Included | Heartfelt thank you message Specific mention of how the gift will be used or stories of impact Personal touches to the donor Photos, updates, or program information | See below for receipting requirements for the United States and Canada. |
What is the Difference Between the Requirements for US and Canadian Tax Receipting?
The requirements for issuing charitable donation receipts differ significantly between the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) in the United States. In both countries, registered charities are not legally required to issue official donation tax receipts for every donation, but usually choose to. For Canadian registered charities, official donation receipts must include a comprehensive set of prescribed details, and charities are subject to strict penalties for non-compliance. Failure to issue receipts accurately or in a timely manner can result in financial penalties, compliance sanctions, or even suspension/revocation of charitable status. By contrast, U.S. nonprofits under IRS regulation are subject to less prescriptive requirements, particularly for smaller donations, though written acknowledgments remain essential for donors to claim deductions above certain thresholds.
Key Considerations
Tax receipting is a critical practice for nonprofits in both the US and Canada, but the rules and expectations differ between the two countries. Understanding these differences is essential for nonprofits to meet legal obligations while also building donor trust and supporting long-term engagement.
| Area | Canada (CRA) | USA (IRS) |
|---|---|---|
| Acknowledgment/Receipt Thresholds | Organizations can choose to receipt certain donations. (For example, donations over $20.00) | For donations under $250, a bank record (e.g., cancelled check, credit card statement) is sufficient for the donor’s tax return, though nonprofits often issue receipts as a best practice. For donations of $250 or more, a contemporaneous written acknowledgment from the nonprofit is required for the donor to claim a tax deduction. For donations over $500, donors must complete IRS Form 8283. For donations over $5,000, a qualified appraisal is required, and the charity must sign Part IV of Form 8283. |
| Mandatory Receipt Content | CRA: What information must be on an official donation receipt | IRS: Charitable contributions: Written acknowledgments |
| Receipt Format | Unalterable format like a PDF or paper. | As long as it is a written acknowledgement. This can be technically back of the napkin, an email and in some cases a credit statement. |
| Non-Cash/In-Kind Contributions | Goods amount are determined by an identified appraiser if not not easily priced like art | These can be determined by a good faith estimate by the nonprofit (does not need to identify appraiser) Charities must also complete Form 8282 if they dispose of a donated item within 3 years of receipt. |
| Quid Pro Quo/Split Receipting Contributions | See CRA: Split-receipting – intention to give | If a donor makes a payment of more than $75 partly as a donation and partly in exchange for goods or services (e.g., gala tickets, auction items), the nonprofit must provide a disclosure statement indicating: That the payment is partly deductible as a charitable contribution. A good faith estimate of the value of goods or services provided. |
| Re-issuing Receipts | Receipts can be reprinted if donation data has not changed. Changes to a donation that is already tax receipted require the original tax receipt to be voided and a new tax receipt to be created with the original tax receipt number | A written acknowledgement is sufficient. |
| Data & System Considerations | CRA: Computer-generated receipts Records must be locked down after it has been receipted | Data residency is less of an issue under IRS rules, though nonprofits should consider donor privacy, security, and integration with financial systems. |
| Consequences | Fines or penalties for improper receipting. Suspension of receipting privileges. Suspension or revocation of charitable status. Increased risk of audits and reputational damage. | Donors may be unable to claim charitable deductions. Penalties for issuing false or misleading receipts. Potential audits or compliance reviews for repeated non-compliance. |
Donor Data Residency for Canadian Nonprofits
For Canadian registered charities, maintaining donor and receipting data within Canada carries both compliance and operational significance. The Canada Revenue Agency (CRA) requires charities to maintain adequate books and records at a Canadian address that is accessible for audit or inspection at any time. This obligation includes the records and systems used to generate official donation receipts. If receipting data is stored exclusively outside Canada, the charity may not be able to demonstrate full compliance in the event of a CRA review.
Beyond CRA requirements, many organizations are also subject to provincial privacy laws (such as British Columbia’s FIPPA or Alberta’s PIPA) that place additional restrictions on the transfer of personal data outside Canada. This is particularly relevant for charities working in sensitive sectors like healthcare, education, or government-funded programs, where data residency in Canada is often mandated by funding agreements or sector-specific regulations.
From an operational perspective, Canadian data residency provides:
Regulatory assurance: Ensures records are fully accessible to the CRA and aligned with statutory requirements.
Risk management: Reduces exposure to conflicts between Canadian privacy laws and foreign data access laws.
Donor trust: Many donors prefer and expect that their personal information is stored securely within Canada.
Funding eligibility: Some funders require proof of Canadian data hosting as part of grant or compliance reporting.
In summary, ensuring that tax receipting data is hosted and managed within Canada helps safeguard a charity’s ability to remain compliant, protect donor privacy, and maintain eligibility for key funding sources.
Items and Services That Typically Cannot Be Receipted
While charitable tax receipting is an essential part of donor stewardship and compliance, there are important limits on what qualifies as a receiptable gift. Not every transfer of money, property, or services is considered a “donation” for tax purposes. In both Canada and the United States, items that provide a material benefit to the donor, or that do not represent a true transfer of property, generally cannot be receipted.
Because the details vary between jurisdictions and are subject to change, organizations should always consult the official receipting guidelines published by the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) before issuing receipts.
Donations Missing Information: this can vary by country, but can include gifts with an unconfirmed value, donor information missing, etc.
Gifts That Have Already Been Receipted: a replacement receipt is required should this be needed. This differs from the original receipt.
Services: Gifts of time, labour, or skills (like a professional’s advice or a contractor’s work) are not eligible for a receipt.
Non-Philanthropic Revenue: such as social purpose business transactions, investment income, parkade revenue, rental income, etc.
Advantages for the Donor: If a donation provides a substantial benefit or advantage to the donor (e.g., a significant meal at a fundraising gala), only the portion of the payment exceeding the value of the advantage may be receipted.
Gift Certificates and Coupons (issued by the donor): Certificates or coupons donated by the issuer generally do not qualify for a receipt.
Payments for Lottery or Chance: Money paid for lottery, raffle, or other chances to win a prize is not considered a gift and cannot be receipted.
Loans of Property: Loaning property to a charity, or allowing them to use a timeshare or premises, does not qualify for a receipt.
Business Sponsorships: Payments made in exchange for advertising or sponsorship are not considered gifts.
Basic Membership Fees and Event Admission: Payments for membership or event admission that provide a tangible advantage to the donor are not receiptable.
Donations from a Non-Legal Entity or Questionable Individual: typically classified as mafia, organized crime, proceeds of crime, money laundering, etc.
Contributions from Other Nonprofit Organizations: such as churches and foundations.
Receipting Solution Options
To support informed decision-making in selecting an optimal tax receipting solution, this evaluation matrix serves as a comprehensive, structured tool, comparing key platforms side by side, including attributes such as CRA/IRS compliance, bilingual support, data residency, and more.
By benchmarking vendors across essential criteria, spanning compliance, functionality, accessibility, data security, and ongoing support, the matrix enables organizations to:
Quickly identify strengths and gaps, such as multi-currency capabilities, split receipting for advantages/benefits, and batch processing efficiencies.
Ensure regulatory adherence, including receipt sequencing, long-term data storage (7+ years), and bilingual formatting.
Assess user-centered features, like audit trail integrity, self-service portal support via Experience Cloud, and accessibility compliance (AODA/WCAG).
Compare operational and governance factors, including hosting location, training availability, reporting tools, knowledge resources, and customer support levels.
This matrix provides a clear visual framework for evaluating each solution’s fit—highlighting both current functionality and future adaptability.
Existing Solutions
There are some solutions that have been built by companies that are no longer around and do not support them anymore. We want to note them here for referential purposes.
Traction Receipting: was owned by Traction on Demand and after the Salesforce acquisition, there is no support, therefore we do not recommend this as a solution.
KELL Receipting: though this solution is being managed for existing clients, it is not available for purchase for net new customers.
Other Solutions Built by Consultants: may also be available, however we can not verify if they are compliant to receipting requirements.
Custom & ISV Solutions
Some organizations choose to build a custom solution using a variety of tools such as a 3rd party document generation tool (Nintex/Conga/S-Docs, etc,) and flow or apex automation, however they may not be CRA compliant because of the complexity of managing receipts. The complexity and feature options would depend on what has been built by the partner or architect owning the solution.
There are some 3rd party apps that also offer a solution that will also send an automated receipt however it may or may not meet the all the CRA requirements. For example they may offer a solution that will provide CRA compliant tax receipts with their donation solution, but not necessarily for offline donations and other donations from other channels that are tracked in Salesforce.
Contributors:
Lynda En
Brittany Neale
Jessica Langelaan
Chantelle Ng
Clair Lam
Ami Krishnan
Prabhjot Gadri
Tamara Wojdylo
Audience: Nonprofit Organizations, Salesforce Partners