F22. How do we allocate expenses of an activity that includes fundraising?

F22. How do we allocate expenses of an activity that include fundraising?

Short Answer

A charity must satisfy one of two tests before determining how (if any) of the expenditures relating to an activity may be considered to have both fundraising and charitable components. These tests are:

  • Substantially All Test
  • Four Part Test
Long Answer

Substantially All Test

If 90 per cent or more of an activity advances your charity’s objective(s) other than fundraising, this activity would pass the Substantially All Test. The percentage is determined by the amount of content and the resources used in the activity. Prominence of the fundraising content is also taken into consideration. 

If an activity passes this test, all the activity’s expenditures can be reported on your T3010B form as non-fundraising expenditures such as charitable program expenditures, management and administrative expenditures, political activities expenditures, and other expenditures as applicable, and not as fundraising expenditures.

Four Part Test

If an activity did not pass the Substantially All Test, your charity may still allocate part of the activity’s expenditures to areas other than fundraising as long as it passes this Four Part Test.

The Four Part Test consists of four questions:

  • Was fundraising the main objective of the activity?

  • Were there ongoing or repeated requests, emotive requests, gift incentives, donor premiums, or other fundraising merchandise in the activity?

  • Was the audience selected based on its ability to give?

  • Was remuneration commission-based or based on the number or amount of donations?

If the answer to all four questions is “no,” the charity can allocate part of the activity’s expenditures to non-fundraising expenditures such as charitable program, management and administration or other expenditures.

If any of the answers to the four questions is “yes,” all the expenditures have to be reported as fundraising expenditures unless the activity falls under the exception.

Even if the charity did not answer “no” to all the questions, it can still allocate part of the expenses to non-fundraising if the activity furthers one of the charitable purposes by prompting an action or changing behaviour. Raising awareness as an element of a fundraising activity does not qualify for this exception.


Charity Central Learning Module on Allocation of Fundraising Expenditures

CRA Guidance on Fundraising by Registered Charities