Fundraising and solicitation responsibilities

Overview

Three key responsibilities set by the Charitable Fund-raising Act and Regulation are:

• disclosing information to donors
• preparing financial statements
• keeping proper records

Charitable organizations and fundraising businesses can be fined if they are convicted of offences under the Act.

If your business or organization asks Albertans to donate to a fundraising campaign or solicits contributions that will be used for a charitable purpose, you must follow the rules set out in Alberta’s Charitable Fund-raising Act and Regulation.

These rules exist to ensure that the public has sufficient information to make informed decisions when making contributions and protect potential donors from misleading and false donation requests.

Rules for charitable organizations and fundraising businesses

A charitable organization or fundraising business:

• cannot imply they are endorsed by the Government of Alberta
• cannot claim that anyone sponsors or approves of their cause without the written consent of the parties involved
• must use their best efforts to remove a person's name from their donor list and stop sending request for donations if asked to do so
• cannot say they’re asking for contributions to be used for a specific charitable purpose if the contributions will not be used in that way
• cannot make false statements or misrepresent facts in their solicitations

No one may ask for donations for any charitable purpose or organization or use their emblem or printed matter without the charitable organization’s written consent.

Fundraising campaigns

A charitable organization that anticipates getting more than $25,000 in contributions from Albertans during their financial year and all fundraising businesses must give donors the following information verbally or in writing. They must also allow donors adequate time to review this information before they accept a contribution.

Information that must be provided to donors

• the name of the charitable organization for which the donation is being requested
• the cost of fundraising and how much they expect to raise
• the charitable purpose that the contributions will be used for
• the corporate and business address of the charitable organization and the place of incorporation (if applicable)
• the name and phone number of a contact person employed by the charitable organizations whom the donor can call for further information

If the charitable organization is using a fundraising business, they must also tell the donor:

• the operating name and full legal name of the fundraising business
• whether they are being paid a specific dollar amount or a specified percentage of the contributions they raise

Information that must be provided on request

Any charitable organization or fundraising business that asks for contributions must provide the following to anyone on request:

• a copy of the organization’s most recent financial statement (a fee may be charged for photocopying and postage)
• information about how and where the money will be spent
• the percentage of the gross contributions that is spent directly for charitable purposes (and not for administration or other purposes)

Receipts

If you make a monetary contribution, request a receipt.

Charitable organizations and fundraising businesses must give you a receipt if you request one.

Keeping records

Charitable organizations and fundraising businesses that make solicitations must manage and maintain:

• complete and accurate financial records of their operations in Alberta
• records of solicitations made in Alberta for at least 3 years after the solicitations are made

The Charitable Fund-raising Act gives government inspectors authority to enter and inspect the premises of a charitable organization or fundraising business to ensure compliance with this Act and its regulation.

Financial records and records of solicitations include:

• original copies of financial statements
• samples of the information given to potential donors, including any solicitation materials and telephone scripts
• copies of receipts for all monetary contributions
• if a fundraising business was used, a true copy of the fundraising agreement
• records of all transactions of the bank account used by the fundraising business and a record of the names of the signing officers of the charitable organization authorized to deal with the account

Service Alberta may ask a charitable organization for its most recent financial statements.

Financial statements must itemize all of the following:

• all expenses incurred to solicit contributions
• gross contributions received
• summary of disposition of contributions (with a separate description of each disposition equal to or greater than 10% of the gross contributions received)
• total amount paid to employees of the charitable organization whose duties involve fundraising
• amount paid to the fundraising business used, if applicable

Financial reporting

Charitable organizations must have financial reports ready for examination and review.

A charitable organization must have its most recent financial statements prepared and ready to submit to Service Alberta upon request.

Copies of all solicitation materials, scripts and other documents may also be examined and reviewed.

The financial statements must identify:

• all expenses incurred for the purpose of soliciting contributions
• information on the gross contributions received
• summary of how the contributions will be used (with a separate description of each disposition equal to or greater than 10% of the gross contributions received)
• total amount paid to employees whose duties involve fundraising
• amount paid to the fundraising business used, if applicable

The financial statement must be signed by at least 2 directors of the charitable organization, stating they believe the information in the return is true.

The department has authority to enter premises and inspect, examine and copy books, records and other documents required under the Act, to ensure compliance with the legislation.

Providing false information in a solicitation or having incomplete or inaccurate records could result in a charitable organization’s registration being suspended or cancelled, as well as prosecution under the Charitable Fund-raising Act.

Standards of practice

Fundraisers in Alberta must follow the 8 Standards of Practice for charitable organizations and fundraising businesses.

Charitable organizations, fundraising businesses and their employees must:

1. comply with all relevant municipal, provincial, and federal laws
2. advocate, within the organization, to follow all laws and Standards of Practice that apply to the organization
3. give donors the opportunity to have their names removed from lists that are sold, rented, or exchanged with other organizations
4. not disclose any personal and confidential information about donors or prospective donors outside the work environment, and within the work environment only as appropriate
5. not take unfair advantage of a donor or prospective donor for their own advantage or benefit
6. to the best of their ability, ensure contributions are used according to the donor’s intentions and obtain the consent of a donor or the donor’s representative before altering conditions of a gift
7. use accurate and consistent accounting methods that conform to appropriate Canadian Institute of Chartered Accountants (CICA) guidelines CICA guidelines (link)
8. effectively disclose to their organization all conflicts of interest and all situations that might be perceived as a conflict of interest

Forms and instructions for registering a charitable organization and licensing a fundraising business are available online.

If fundraisers do not follow these standards, their registration or licence may be cancelled or suspended.

Soliciting donations

Charitable organizations that raise or intend to raise $25,000 or more per year and all fundraising businesses must give specific solicitation information to each donor. For in-person solicitations, this information must be given before accepting a donation.

Solicitation script

The solicitation script must include the following information:

• the name of the charitable organization the donation is being requested for
• the charitable purpose contributions will be used for
• the cost of fundraising and how much the charitable organization expects to raise
• the address of the charitable organization and, if incorporated, the place of incorporation
• the name and phone number of a contact person employed by the charitable organization whom the donor can call for further information

Fundraising business

If a fundraising business is used to solicit donations, a potential donor must also be told:

• the operating name and full legal name of the fundraising business
• how pay for the fundraising business is determined

All new applicants must submit a copy of the solicitation materials and scripts that will be used to solicit funds. It is a serious offence to make a false statement or to misrepresent any fact or circumstance in a solicitation for a charitable donation.

Using a fundraising business

What to expect when hiring a fundraising business.

Some charitable organizations hire a business to:

• conduct their solicitations
• manage their fundraising activities

All fundraising businesses must be licensed in Alberta and provide a $25,000 security in the form of a surety bond, letter of credit, cash, or term deposit.

You can search to see if a fundraising business is licensed in Alberta.

Before you hire

• Make sure the fundraising business is licensed with Service Alberta.
• Check the reputation of a fundraising business by asking other charitable organizations that have hired them.
• Research every fundraising business you are considering. Unsuitable behaviour by a fundraiser can end in bad publicity, fewer donations and possible legal action.
• Do not enter into a fundraising agreement in which the fundraising business keeps most of the donations and little goes to the charitable purpose.

Hiring a fundraising business

A written agreement must exist between you and a fundraising business if it will:

• manage your fundraising activities
• ask donors for charitable contributions on your behalf

The written agreement must contain:

• the terms and conditions to which both parties have agreed
• the duties and responsibilities of both parties
• an estimate of the contributions you expect
• an estimate of the expenses and costs
• a description of how the charitable contributions will be solicited
• a description and specific price of any goods or services that will be sold
• the bank account where monetary contributions will be deposited
• the address, contact name and phone number for both the charitable organization and the fundraising business
• the amount you will pay the fundraising business for their services through
  • a specific amount of money
  • a specific percentage of the gross contributions
  • a combination of the 2

Contact

Connect with the Consumer Contact Centre:

8:15 am to 4:30 pm (Monday to Friday, closed statutory holidays)
Phone: 780-427-4088
Toll-free: 1-877-427-4088