Can a Canadian Charity Work with Third-Party Fundraisers?

Fundraising is the lifeblood of many charities in Canada, helping them fund programs and make a real difference in their communities. But let’s face it—running successful fundraising campaigns takes a lot of time, effort, and sometimes expertise that smaller charities may not have. This is where third-party fundraisers can step in and lend a hand.

If your charity is considering working with a third-party fundraiser, it’s essential to know how to make the most of the partnership while staying on the right side of Canadian law. Here’s what you need to know!

What Are Third-Party Fundraisers?

A third-party fundraiser is someone—whether an individual, business, or organization—who raises money on behalf of a charity. Instead of the charity doing all the work, the third-party organizes events, campaigns, or donation drives to help generate funds.

For example:

• A local company might donate a portion of its sales to your cause.
• A professional event planner might host a gala to benefit your charity.

This kind of partnership can be a game-changer for many charities, but it’s important to set things up correctly to ensure it benefits everyone involved.

Why Work with Third-Party Fundraisers?

Here are some of the big advantages of working with third-party fundraisers:

1. They Help You Reach More People

Third parties often have their own networks, customers, or audiences that your charity might not otherwise reach.

2. They Bring Expertise

Experienced fundraisers know how to plan and execute successful campaigns, taking a lot of pressure off your team.

3. They Save You Time

Outsourcing fundraising means your charity can focus on what you do best—helping your community.

4. They Can Be Cost-Effective

Instead of hiring extra staff, you can work with third parties who already have the skills and tools needed to raise funds.

What Rules Do Canadian Charities Need to Follow?

While third-party fundraising can be a huge help, charities need to follow some important rules to stay compliant with the Canada Revenue Agency (CRA).

1. Stay in Control

Your charity is legally responsible for everything done in its name—even by a third-party fundraiser. You need to stay in charge by:

• Having a written agreement outlining what the fundraiser can and can’t do.
• Make sure their activities align with your charity’s mission.
• Regularly reviewing what they’re doing to ensure it’s appropriate.

2. Be Honest with Donors

Donors need to know exactly where their money is going. This means being upfront about:

• The charity’s involvement in the fundraiser.
• Any fees or percentages are taken out for costs.

3. Report It Properly

All money raised through third-party fundraisers is still considered part of your charity’s revenue. You’ll need to:

• Include it in your annual T3010 Registered Charity Information Return.
• Keep clear records of all expenses related to the fundraising.

4. Avoid Problematic Practices

The CRA doesn’t allow practices like:

• Misleading donors about how their money will be used.
• Giving the third party an unreasonably large cut of the funds raised.
• Using aggressive or coercive tactics to get donations.

The Importance of a Written Agreement

To protect your charity and ensure everything runs smoothly, you need a written agreement with the third-party fundraiser. Here’s what it should include:

1. Who Does What?

Clearly outline the responsibilities of both the charity and the fundraiser.

2. How Will Funds Be Handled?

Be specific about how the money raised will be collected, tracked, and handed over.

3. What’s the Fee or Payment?

Detail how the fundraiser will be compensated, whether it’s a percentage of funds raised or a flat fee.

4. Who Owns Donor Lists?

Make it clear that donor information collected during the campaign belongs to your charity.

5. How Will You Keep in Touch?

Set up regular check-ins or progress reports to make sure everything stays on track.

Real-Life Examples

Here are a couple of ways charities can work with third-party fundraisers:

Example 1: A Local Business Partnership

A health charity partners with a local fitness studio, which donates $5 for every membership sold during a month-long campaign. The charity provides materials about their work, and the studio promotes the cause to its clients.

Example 2: A Professional Event Planner

An animal welfare charity works with an event planner to host a charity dinner. The planner handles the logistics, while the charity shares its mission during the event and collects donations.

Tips for a Successful Partnership

Here’s how to make third-party fundraising work for your charity:

• Pick the Right Partner: Choose fundraisers who share your values and understand your mission.
• Be Transparent: Make sure donors know exactly where their money is going.
• Keep Records: Document everything, from agreements to expenses, so you can report accurately to the CRA.
• Communicate Regularly: Check in with the fundraiser to make sure the campaign stays aligned with your goals.

Third-party fundraisers can be a fantastic way for Canadian charities to boost their fundraising efforts, but they come with responsibilities. By following CRA guidelines, being transparent with donors, and keeping control over fundraising activities, you can build a successful partnership that helps your charity thrive.

If you’re thinking about working with a third-party fundraiser, take the time to set up a solid agreement and ensure you’re clear on your responsibilities. With the right approach, these partnerships can help you make an even greater impact on your community.

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