S3. Are membership fees considered donations? Can donation tax receipts be issued?

S3. Are membership fees considered donations? Can donation tax receipts be issued?


Short answer

The payment of a membership fee may or may not result in an eligible amount: it depends on whether there is an advantage, what amount that advantage is, and whether the membership fee exceeds the amount of the advantage. Specifically, if the amount of the advantage is 80 per cent or less of the amount of the membership fee, an official donation tax receipt may be issued for the eligible amount.

Long answer

A membership fee is considered a gift as long as it gives only the right to vote at a meeting and to receive reports of the charity’s activities, unless such reports are also sold. If the reports are available for a fee to non-members, they are valued as an advantage (benefit) and may affect the amount of the official donation tax receipt.

Example

The purpose of the registered charity is to promote musical education in youth through the creation of a youth orchestra. For a membership fee of $200, a member will receive:

  • the right to notice of, and attendance at, all meetings of the charity;
  • recognition as a donor on all concert programs;
  • a subscription to the charity’s monthly e-mail updates otherwise available free of charge, which provides concert dates, reviews, performer profiles, and so on;
  • an “I Support the Youth Orchestra” bumper sticker normally sold for $5;
  • a discount on all performances throughout the year, valued at $50;
  • tickets for free refreshments at the concerts, valued at $25;
Determination of eligible amount    

membership fee

  $200

membership fee

  ($80)
bumper sticker
$5
 
performance discount
$50
 
refreshment tickets
$25
 

eligible amount

  $120

As the amount of the advantage ($80) is less than 80 per cent of the $200 membership fee (80 per cent is $160), it meets the intention to make a gift threshold. An official donation receipt may be issued for the eligible amount of $120.