This blog was originally posted on the Manning Elliott website, and written by Patrick Chan and Brandon Kelley.
Within Part III of the Handbook - Accounting Standards for Not-for-Profit Organizations, Section 4410 provides guidance on revenue recognition for contributions which are non-reciprocal transfers to an NPO, the most common example being government funding.
Externally imposed stipulations that specify how the resources or assets must be used.
Externally imposed stipulations that specify the resources must be maintained permanently; the NPO only has access to use the income generated from the endowment.
Neither a restricted nor endowment contribution. An NPO can make an accounting policy choice to recognize contributions revenue using either the deferral, or restricted fund method.
Under the deferral method, unspent restricted funding accumulates as a liability and is presented as deferred contributions on the statement of financial position.
Under the restricted fund method, an NPO presents a general fund and one or more restricted funds in their financial statements. Revenues reported in a restricted fund must be externally restricted by a third party.
An NPO received $100,000 of restricted contributions funding during the fiscal year, $60,000 has been spent and $40,000 remains unspent at year end.
The table below illustrates the impact to the financial statements when using the deferral or restricted fund method under this example. The restricted fund example assumes a corresponding restricted fund exists.
Statement of Financial Position |
||
|---|---|---|
| Deferral Method | Restricted Fund Method | |
| Cash | $40,000 | $40,000 |
| Deferred contributions | $40,000 | $Nil |
| Net assets | $Nil | $40,000 |
Statement of Operations |
||
|---|---|---|
| Deferral Method | Restricted Fund Method | |
| Revenue | $60,000 | $100,000 |
| Expenses | $60,000 | $60,000 |
| Excess of revenues over expenses | $Nil | $40,000 |
Manning Elliott is here to help. Visit our blog to stay up to date on the most recent NPO topics. To learn more about revenue recognition for contributions or to submit an inquiry, please contact a member of our NPO.
The above content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent changes. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.
Manning Elliott
Manning Elliott is a CPA firm with offices located in Vancouver, Burnaby, Surrey, and Abbotsford British Columbia, Canada. We provide personalized accounting and business advisory services to companies operating within a wide range of industries in seven major practice areas: Tax, Private Company...
Vantage Point was featured in the Vancouver Guardian.
The Vancouver Guardian asked us about how we’re supporting non-profits across BC and our mission to strengthen BC’s non-profit sector through leadership, development, governance, organizational capacity building and more.
Join Vantage Point on September 17 in Terrace for the BC Non-Profit Network: Northwest BC Leaders Gathering. Deepen relationships, learn about what is happening in BC’s non-profit sector, participate in practical learning, and contribute to the next stages of growth for the BC Non-Profit Network (BCNN).
The Government of BC has asked for feedback on their discussion paper, BC’s Recovery from COVID-19. This is a great opportunity to influence BC's recovery. We are sharing some resources for not-for-profits who would like to provide input. Vantage Point sent the letter below to provide our input on the importance of investing in not-for-profits for the recovery. The deadline to for input is Tuesday, July 21, at 4pm.
Ways you can provide input:
The Honourable John Horgan, Premier of British Columbia
Office of the Premier
West Annex Parliament Buildings
Victoria, BC V8V 1X4
The Honourable Minister Carole James
Minister of Finance and Deputy Premier
Room 153 Parliament Buildings
Victoria, BC V8V 1X4
July 10, 2020
RE: Now more than ever, is the time to invest in BC not-for-profits.
Dear Premier Horgan and Minister James:
Thank you for the opportunity to provide input on how best to invest the $1.5 billion Economic Recovery Fund. I am writing to you today on behalf of Vantage Point and our member organizations. We are a charity based in Vancouver, BC on the unceded territories of the Skwxwú7mesh (Squamish), Səl̓ílwətaʔ (Tsleil-Waututh), xʷməθkʷəy̓əm (Musqueam), and shíshálh (Sechelt) nations. Vantage Point supports not-for-profits and charities across the province with leadership development, board training, strategic planning, and more. We represent over 545 not-for-profit members from 48 communities across the province.
The impact of the COVID-19 pandemic on the not-for-profit sector has been devastating and requires your urgent attention and action. Vantage Point’s research on COVID-19’s impact on the sector clearly confirms troubling impacts on not-for-profit organizations and the communities we serve. The research documented an increased demand for community services as well as a massive loss of income. The most worrisome estimates suggest that one in five not-for-profits will not survive this crisis.1 Closures of this scale will have irreparable impacts on BC’s economy and communities. The people who depend on these services, often some of the most vulnerable people in society, face increased risks of falling through the cracks. While our sector is innovative and resilient, our capacity to navigate COVID-19 is has reached a breaking point.
Not-for-profits are critical to the lives of people in British Columbia. As we adapt to different phases of the COVID-19 pandemic, BC's not-for-profits and charities continue to provide a critical level of support to the Government of British Columbia, businesses, and the public. We provide everything from the provision of health and other essential frontline services, to supporting victims of domestic violence, to deploying volunteers safely, to providing arts and culture services. The not-for-profit sector has long been recognized as vital to ensuring the safety and wellbeing of our province. We are an essential safety net for the most vulnerable individuals in our communities. From all angles, an investment in the not-for-profit sector aligns with the key values outlined in the recovery consultation discussion paper.
We acknowledge the remarkable work the BC Government has done to support our communities during the extremely challenging environment of the COVID-19 crisis. We have been encouraged by your explicit acknowledgement that “supporting… not-for-profits throughout the pandemic is vital to BC’s response to and recovery from COVID-19.”2 We have also been pleased to know that your Economic Recovery Task Force includes representation from the not-for-profit sector. We encourage you to continue deepening and expanding this engagement to ensure that the full breadth of not-for-profits expertise is adequately reflected in your consultations, advisory groups, and recovery planning efforts.
Recommendation One: Create a $500 million stabilization fund for the not-for-profit sector
Following our recommendations for the Budget 2021 consultation, we insist that a $500 million stabilization fund for the not-for-profit sector is required to ensure that organizations can survive, adapt to new circumstances, and position themselves to actively contribute to our recovery. A stabilization fund of this magnitude is critically important to sustain not-for-profits.
Current measures announced by the Federal and Provincial governments have failed to recognize:
Make funding flexible: It is critically important that stabilization funding is truly flexible and allows not-for-profits to allocate funding where they need it most. Current funding and granting systems often limit spending in our organizations solely on direct program delivery without strengthening our operational capacity. These systems also burden organizations with rigorous reporting requirements. Funding restrictions often cause not-for-profits to drift from their mandate as they often are forced to adapt to evolving funding priorities. These restrictions create precarious working conditions and stifles investments in employee benefits, stable governance, and adequate resources for efficient operations.
Commit to gender equity: We know that gender equity is a priority for the BC government. A stabilization fund will ensure women, who make up 74% of the not-for-profit sector, stay employed. Further, this will allow organizations that serve women and other populations who experience discrimination, oppression, and violence, to continue safely providing services in-person and virtually. Not-for-profits are leaders in anti-racism and social justice work, they are also providers of community-based health and wellbeing programs.
Invest in not-for-profits to stimulate the economy: We encourage you to think of stabilization funding and stimulus spending beyond customary criteria narrowly focused on business, employment, and “shovel-ready” projects.
Invest in not-for-profits to support public health: A stabilization fund of this magnitude would be equivalent to an investment in public health and prevention. These investments can help ensure British Columbians are supported to recover from the mental health effects of prolonged isolation, depression, and stress. It will also help address other healthcare crises, such as the recent increase in opioid overdoses, from worsening.
Partner with well-established and trusted funders: We recommend that a not-for-profit stabilization fund be administered through networks of funders with deeply established relationships with local not-for-profits and charities. Examples of such funders include provincial community foundations such as Victoria Foundation, Vancouver Foundation, United Way, and Vancity Community Foundation. It is particularly important to direct funding to organizations and funders that are led by and are working with Black, Indigenous, People of Colour (BIPOC), and others who face systemic discrimination.
Municipal and regional governments also have well established relationships and partnerships with charities and not-for-profits within their jurisdictions. Funds distributed through municipalities and explicitly earmarked for supporting their local ecosystem of not-for-profit organizations could help strengthen local economies and reduce the load on other municipal and provincial services.
Recommendation Two: Use an equity lens to invest in province-wide internet access, connectivity, and infrastructure
We echo the views in the Building BC’s Recovery Together report of the urgent need for province-wide internet access.
We urge the BC Government to immediately invest in affordable high-speed internet in rural communities, households across BC, and not-for-profit organizations and housing providers. We encourage you to work with network service providers to create equitable access to internet. We encourage you to remove network deployment barriers and use government assets effectively to reduce costs and accelerate the expansion of connectivity in rural BC. As you develop plans for these investments, we encourage you to uphold your commitments towards a Gender Based Analysis Plus (GBA+) framework as a way to ensure equitable access and connections for all, particularly for women, BIPOC, and other underrepresented communities.
We ask that you make funds available for not-for-profits to access reliable and adequate technology as this is one of the key impacts and barriers of COVID-19 on the sector. We encourage you to improve and update funding systems such as the rules for BC’s Community Gaming Grants to allow more flexibility for funds to be used for training and updating technology.
Work with the not-for-profit sector
Once again, we thank you for allowing us to join fellow British Columbians in sharing what is most important for our community’s wellbeing going forward. We urge you to work with the not-for-profit sector to strengthen public wellbeing and stabilize our economy. We look forward to continuing to contribute towards our province’s recovery through constructive investment and partnerships with the Government of British Columbia.
Sincerely,
Alison Brewin
Executive Director, Vantage Point
T: (604) 637-8207 E: abrewin@thevantagepoint.ca
www.thevantagepoint.ca
cc: Minister of Jobs, Economic Development and Competitiveness, Hon. Michelle Mungall Minister of Labour, Hon. Harry Bains Mr. Spencer Chandra Herbert, Vancouver-West End Riding
[1] Vantage Point (2020). No Immunity Report. Retrieved from https://www.thevantagepoint.ca/blog/no-immunity-impacts-covid-19-our-sector
[2] Government of BC. (2020). Budget 2021 Consultation. Retrieved from https://www.leg.bc.ca/content/CommitteeDocuments/41st-parliament/5thsession/fgs/Budget2021Consultation/Budget_2021_Consultation_Paper.pdf
Alison Brewin
As Executive Director, Alison Brewin is responsible for executing the Vantage Point’s mission and vision. Alison graduated with a Law Degree from the University of Victoria in 1991 and was called to the Bar in 1992. Throughout the 1990s, she worked in non-profit management, as political assistant...
Vantage Point was featured in the Vancouver Guardian.
The Vancouver Guardian asked us about how we’re supporting non-profits across BC and our mission to strengthen BC’s non-profit sector through leadership, development, governance, organizational capacity building and more.
Join Vantage Point on September 17 in Terrace for the BC Non-Profit Network: Northwest BC Leaders Gathering. Deepen relationships, learn about what is happening in BC’s non-profit sector, participate in practical learning, and contribute to the next stages of growth for the BC Non-Profit Network (BCNN).
This year was Vantage Point’s second time making a submission for the BC Budget Consultation to the Select Standing Committee on Finance and Government Services. Of course, this year looked very different than other years, with the COVID-19 pandemic playing a major role in the way we approached our recommendations.
To prepare this submission we gathered input from our members, spoke to BC not-for-profit umbrella organizations, co-led a virtual gathering of 90 not-for-profits leaders that came together to speak to the budget process. We also reflected on many other convening conversations about COVID-19 we’d held since March 2020 and the input from 1119 BC not-for-profit leaders that were documented in our No Immunity Report.
We were heartened to see that the Budget 2021’s Consultation Paper stated that “supporting… not-for-profits throughout the pandemic is vital to BC’s response to and recovery from COVID-19.” We advocated that the not-for-profit sector is in fact essential to ensure the wellbeing of individuals and communities in British Columbia.
In this submission we ask the Provincial Government to:
1. Create a $500 million stabilization fund for the not-for-profit sector
Not-for-profits have been heavily called upon to assist those impacted by the COVID-19 crisis – through access to food, housing, mental health supports, and other necessities. We urged the Provincial government to invest in the not-for-profit sector to ensure not-for-profits will survive this crisis. Both front line organizations directly supporting those affected by pandemic, to arts and culture organizations that are so critical for wellbeing.
2. Use an equity lens to invest in province-wide internet access, connectivity, and infrastructure
Now more than ever, the world is relying on internet and mobile access. We heard from many not-for-profit organizations of the urgency to address this issue in BC. Especially for vulnerable populations and rural communities, some services can only be accessed virtually.
3. Invest in the Ministry of Citizens’ Services to create a home for the sector in government
In our budget submission last year, we recommended that the Government of British Columbia establish a home for the not-for-profit sector in government. We recognize that some not-for-profits operate under the jurisdiction of certain ministries, but there are vast portions of the sector that do not have a central ministry to turn to for direct collaboration with government and support. We argued that now is a critical time that calls for clear lines of communication between the Provincial Government and the not-for-profit sector.
We encourage you to read the full submission and reach out to Omar Dominguez at odominguez@thevantagepoint.ca with any feedback.
Vantage Point
We are a team of passionate and dedicated not-for-profit professionals dedicated to providing not-for-profits with high quality leadership training. We are here to set you up for success. Learn more about our team at www.thevantagepoint.ca/about/our-people/
Vantage Point was featured in the Vancouver Guardian.
The Vancouver Guardian asked us about how we’re supporting non-profits across BC and our mission to strengthen BC’s non-profit sector through leadership, development, governance, organizational capacity building and more.
Join Vantage Point on September 17 in Terrace for the BC Non-Profit Network: Northwest BC Leaders Gathering. Deepen relationships, learn about what is happening in BC’s non-profit sector, participate in practical learning, and contribute to the next stages of growth for the BC Non-Profit Network (BCNN).
This blog was originally posted on the Manning Elliott website
The most important benefit that Canadian registered charities receive is the ability to issue "official donation receipts." When a donation is made to a charity, the charity has the ability to issue a donation receipt which will be tax-deductible to the donor.
Although a charity is not legally required to issue a donation receipt, it usually does so as an incentive to donors. The charity must issue receipts with very specific information.
The Canada Revenue Agency (CRA) suggests that registered charities issue receipts by the last day of February of the calendar year that follows the year of the donation. This allows individual taxpayers to claim their donations on their annual income tax returns.
Before a charitable donation receipt can be issued, a charity must first determine if the donation is a gift. A gift is a donation that is given freely, and not as a result of an obligation. In addition, the gift has to be a transfer of property, i.e., a gift of service is not eligible for a donation receipt.
Split receipting is required when a charity receives a donation but provides an advantage to the donor (an advantage being when the donor receives something in return for the donation). Therefore the amount on the donation receipt is reduced by the value of the advantage provided to the donor. For example, if a charity gala ticket costs $300, but the value of the meal and entertainment provided is $100, the charity would issue a donation receipt for $200.
There is an exception from split receipting when the advantage is less than $75 or 10% of the donation, whichever is less. In that case, a receipt can be issued for the full value of the donation, meaning no reduction is required.
No receipt can be issued if the advantage exceeds 80% of the donation, as the CRA considers the donor to have no real intention of making a gift.
To determine the eligible amount of a gift for tax purposes, a charity must know the fair market value of the donation, as well as the fair market value of the advantage provided to the donor, if any. If a charity is unable to determine the fair market value of either the gift or advantage, a tax donation receipt cannot be issued.
The Canada Revenue Agency (CRA) indicates that fair market value, "is usually the highest dollar value you can get for your property in an open and unrestricted market and between a willing buyer and a willing seller who are knowledgeable, informed, and acting independently of each other."
For gifts of $1,000 or less, someone within the charity with knowledge of the gift may determine the value of donated goods for tax purposes. However, if the gift is to be appraised at an amount higher than $1,000, then it is strongly recommended by CRA that an independent, professional appraiser prepare a donation appraisal report to determine the value of the gift. The donation receipt should also show the name of the appraiser who established the value.
A record of how the fair market value was determined should be maintained by the charity. A charity cannot issue an official donation receipt in the name of anyone but the true donor. The name and address of the donor must appear on the tax donation receipt, in addition to several other key pieces of information.
The 12 key areas that need to be completed on an official donation receipt are as follows:
If the gift is non-cash, some additional items need to be included on the donation receipt, such as the description of the donation and, if applicable, the appraised amount and the appraiser's name.
Manning Elliott is here to help if you have any questions about tax receipting and fair market value as it relates to charitable donations. To submit an inquiry, please contact a member of our NPO team.
The above content is believed to be accurate as of the date of posting. Tax laws are complex and are subject to frequent changes. Professional advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.
Manning Elliott
Manning Elliott is a CPA firm with offices located in Vancouver, Burnaby, Surrey, and Abbotsford British Columbia, Canada. We provide personalized accounting and business advisory services to companies operating within a wide range of industries in seven major practice areas: Tax, Private Company...
Vantage Point was featured in the Vancouver Guardian.
The Vancouver Guardian asked us about how we’re supporting non-profits across BC and our mission to strengthen BC’s non-profit sector through leadership, development, governance, organizational capacity building and more.
Join Vantage Point on September 17 in Terrace for the BC Non-Profit Network: Northwest BC Leaders Gathering. Deepen relationships, learn about what is happening in BC’s non-profit sector, participate in practical learning, and contribute to the next stages of growth for the BC Non-Profit Network (BCNN).
Rt. Hon Justin Trudeau, PC, MP
Prime Minister of Canada
House of Commons
Ottawa, ON
K1A 0A6
June 10, 2020
Dear Prime Minister,
We are joining colleagues across Canada to emphasize the urgency of a federal proposal to support and strengthen charities and nonprofits across the country.
In the face of our global emergency, BC's not-for-profit and charitable sector has been called on to provide a soaring level of support to the Government of Canada, its businesses, and the public. From the provision of front-line essential health services, to supporting victims of domestic violence, and deploying volunteers safely, the not-for-profit sector is vital to the safety and wellbeing of our country. But the impact of the COVID-19 pandemic on the not-for-profit sector needs your urgent attention and action.
Vantage Point exists to uplift and support nonprofits across BC. One of our core principles is to meet nonprofits and their leaders where they are at, adapting programs and services to reflect the capacities of the organizations we serve. We see ourselves as representing portions of the sector often left our of conversations - smaller organizations, volunteer-run or with small staff teams, organizations facing all the pressures of other business.
The not-for-profit sector in British Columbia
British Columbia's not-for-profit sector is vast in size, scope, and impact. It consists of over 25,000 societies providing immeasurable value to the economy and lives of people across British Columbia. These organizations also provide a crucial source of employment for more than 86,000 people and contributes up to $6.69 billion in programs and services across the province.[1]
Despite the fundamental impact on the quality of life for Canadians, not-for-profit organizations languish under economic policies and regulations which undermine our efforts. In 2019, the Senate report on the Canadian charitable sector found that while community-based organizations are resilient and innovative, our potential is limited by complex, outdated rules and a lack of coordinated government support.[2]
Here in British Columbia, we released the No Immunity report to highlight the early impacts of COVID-19 on BC’s charities and nonprofits. At the time of data collection in April, of the 1,119 respondents, 23% did not think they can stay open past 6 months and 74% were experiencing reduced revenue from fundraising. As overburdened not-for-profit employees experience increasing difficulties delivering essential services, our deep concerns for the sector also grows. Our colleagues at Imagine Canada estimate the projected financial losses for registered charities alone to be between $9.5 billion and $15.7 billion.
Here is what is at stake for our sector and the Canadian public:
At the outset of the pandemic, our sector identified the need for a grant program to ensure that organizations can survive, adapt to changed circumstances, and position themselves to actively contribute to the recovery. The financial measures announced so far have met a portion of what is required for those who are eligible, but much remains to be done. We urge you to work with your colleagues – primarily the Minister of Finance and the Minister of Families, Children, and Social Development – to finalize and implement a grant program that recognizes the unique situation facing charities and nonprofits, the efforts they have continued to make to serve their communities in unprecedented circumstances, and the role that they can and must play in Canada’s recovery from COVID-19.
We urge you to expand the criteria used to make policy and investment beyond a narrow focus on business and employment growth. Our current policies make sense when the metrics for economic success are based on GDP growth. But if the measure of success was to maximize public wellbeing, then the focus of infrastructure stimulus investment would look very different. Under this lens, it is clear that our sector is here to support common government objectives and that we need to work closer together. Our sector is Society’s Partner in Wellbeing. We encourage you to call on our expertise to inform and improve public policy decisions in ways that maximize public wellbeing. We urge you to engage in conscientious dialogue with our sector and to work together to recover from the pandemic, build healthy communities, and a resilient economy. Investing in, working with, and supporting the sector improves the lives of all people all Canadians.We encourage you to work with our sector to develop and incorporate a national wellbeing strategy to the stimulus spending that will be required to recover from the crises our nation is facing.
We look forward to your response.
Sincerely,
Alison Brewin
Executive Director
Vantage Point
cc: Hon. Bill Morneau, PC, MP
Minister of Finance
Hon. Ahmed Hussen, PC, MP
Minister of Families, Children, and Social Development
Alison Brewin
As Executive Director, Alison Brewin is responsible for executing the Vantage Point’s mission and vision. Alison graduated with a Law Degree from the University of Victoria in 1991 and was called to the Bar in 1992. Throughout the 1990s, she worked in non-profit management, as political assistant...
Vantage Point was featured in the Vancouver Guardian.
The Vancouver Guardian asked us about how we’re supporting non-profits across BC and our mission to strengthen BC’s non-profit sector through leadership, development, governance, organizational capacity building and more.
Join Vantage Point on September 17 in Terrace for the BC Non-Profit Network: Northwest BC Leaders Gathering. Deepen relationships, learn about what is happening in BC’s non-profit sector, participate in practical learning, and contribute to the next stages of growth for the BC Non-Profit Network (BCNN).