It happens almost every time you pull out your wallet to pay for groceries, coffee, or a cheeseburger.
A friendly face on the other side of the till asks if you’d like to donate an extra loonie or tonie to charity. If you nod, the cashier adds a few extra dollars to your transaction.
The practice is called point-of-sale fundraising, as charitable donations are channeled through retailers at the final point customers make their purchases.
All that extra change brings a lot of money to charities, but it doesn’t give Canadians the same tax benefits as donating directly to a charity without a cash register in between.
No one receives a tax receipt. For real!
In 2021, grocery chains Subway i Calgary Cooperative collectively contributed more than $5.5 million for food banks, emergency shelters, cancer research and hospitals in Quebec, Ontario and Alberta.
So who can deduct all these donations from their income? Customers or retailers?
The right answer, according to accounting and charity experts, is neither. When it comes to paid philanthropy, in Canada, no one gets a tax benefit.
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“The individual [customer] would have to donate directly to the charity to get a receipt,” Toronto-based chartered accountant Brian J. Quinlan wrote in an email to CBC Radio’s The Cost of Living.
“It would be unethical for the grocery store to ask for a charitable receipt, since they don’t donate their own money.”
Higher donations and lower costs
Still, some nonprofits say there are big benefits when retailers ask you for change at checkout.
“It’s the cheapest way for charities to raise money,” said Gena Rotstein, principal of Karma & Cents, a Calgary-based consultancy that advises on philanthropy.
Gena Rotstein of Karma & Cents, a group that advises Canadians and businesses on charitable giving, says paid donations are an inexpensive way for charities to raise funds. (Submitted by Gena Rotstein)
According to Rotstein, there are significant savings for nonprofits.
“They’re not issuing tax receipts. They’re not tracking donors. They’re not writing thank-you notes, all the things that cost money to raise money,” he said.
Fundraising costs are high and retailers can help reduce them
A lot of time, planning, and manpower goes into more traditional fundraising efforts, like going door-to-door or throwing a glitzy gala.
According to Charity Intelligence Canada, which tracks and analyzes which charities gave money, fundraising costs make up about 20 percent of Canadian charities’ annual operating budgets.
When grocery stores or fast food chains collect donations at the checkout for a charity, many of these fundraising costs can be eliminated.
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Cost of living 5:35 Charity in the box
Point-of-sale fundraising is not tracked nationally in Canada, but is monitored by organizations in the United States.
In the roughly 30 years since this type of fundraising began, more than US$4.9 billion has been raised through cash boxes and similar efforts.
There are other incentives for stores
In the absence of tax receipts, many Canadian retailers who ask for donations at checkout have mandates to be good corporate citizens or community actors.
However, Rotstein notes another reason stores partner with charities is for good marketing.
Retailers can leverage the positive branding of a charity to promote their own point of sale, which provides good brand value at a lower cost to the store than more traditional marketing. Plus, customers are already at the checkout ready to spend money, so fundraising expenses are lower, too.
Cashiers across Canada regularly ask their customers to add an extra dollar or two for a charity of the retailer’s choice. (Chris Hondros/Getty Images)
“It’s a win for the charity and for the company because now they have their brand recognition even more in the community,” Rotstein said, noting that retailers are strategic about which charities they partner with. they associate
“You’re going to give kids, puppies and health care,” he said.
The more innocuous, the better, according to the philanthropy expert.
“Costco gives to the children’s hospital. Why do they give to the children’s hospital? Well, other than that being a good thing, it’s aligned with the type of customer they have, which is typically families who buy in bulk.” Rothstein said.
Do your research before you donate, says charity expert
On the other hand, charity industry watcher Kate Bahen is not a fan of point-of-sale donations.
“I call it the hold on the till. Like, hands up. Do you want to give $2?”
It may only be $2…but at the end of the day, that $2 adds up to millions of dollars.- Kate Bahen, Charity Intelligence Canada
The managing director of Charity Intelligence Canada is adamant that customers avoid donating to the box unless they are fully informed about the charity.
According to Kate Bahen of Charity Intelligence Canada, extra people donating to the boxes can add up. (Fabiola Carletti/CBC)
Canadians should give to charities they care about, Bahen says, and research how those charities spend their money before giving.
“It might just be $2 here and $2 there. But at the end of the day, that $2 adds up to millions of dollars,” he said.
“It’s absolutely fine when you don’t have information about a charity to say, ‘No thanks,’ and not feel guilty.”