Donations And Sponsorships

Worldwide businesses are acknowledging their corporate social responsibility in addition to profit making goals. As significant corporate resources are being allocated to these new efforts, organizations need to consider different options and the related advantages and disadvantages.

When a corporation wishes to support a registered charity, it can do so by way of a gift or sponsorship. At law, a gift requires: (i) an intention to donate property; (ii) acceptance of the gift; (iii) delivery of the gift; and (iv) no corresponding benefit given in exchange for the gift. According to the Income Tax Act (Canada) ("ITA"), there is a broader definition of a charitable gift which permits the corporate client to receive a benefit in exchange for a gift provided that the 'advantage' does not exceed 80% of the fair market value of the gift. In contrast, a sponsorship (which is not defined in the ITA) means a payment by a corporate client to a charity in exchange for advertising