Q. Will donors receive receipts for income tax purposes?
A. RAC can raise money from donors and disburse it as the RAC Board sees fit. However, in order for the donors to receive tax-deductible receipts for their donations, RAC has only three possible courses to follow:
- form a separate charitable organization
- become a charitable organization
- work with a charitable organization
Revenue Canada defines the benefits and obligations of registration, specifies what are charitable purposes and outlines several ways to set up a charitable organization. Though forming our own charitable organization may be the ultimate method, there is considerable cost in time and money to make an application and a finite possibility of eventual rejection. The effort and constraints associated with RAC itself becoming a charitable organization are even greater and far outweigh the benefits. The RAC Directors have decided to follow the third course and to work with the Community Foundation of Ottawa (CFO), a 20 year old Community Foundation.
Q. What is a Community Foundation?
A. Donations to Community Foundations are retained as capital and invested. The proceeds of the investments are disbursed annually to charitable causes – all the same causes which RAC could support if we were registered ourselves. Although the CFO is in Ottawa there is nothing limiting their disbursements to the Ottawa area or even within Canada.
Our RAC Foundation is classified as a Donor Advised Fund. RAC, as the donor organization, will determine the disbursement of the fund earnings on the basis of donor designations by our members. Each RAC member donor will receive a tax receipt from CFO in the full amount of their donation.
Q. How will the funds be spent?
A. Revenue Canada provides for the following charitable purposes which are relevant to RAC.
Advancement of Education: This includes "providing scholarships, bursaries and prizes for scholastic achievement", and "undertaking research in a recognized field of knowledge (the research must be carried out for educational purposes and the results must be made available to the public)". The former would be reserved for Radio Amateurs. The latter would be reserved for research in areas which would benefit all Canadian Radio Amateurs.
Purposes Beneficial to the Community: Organizations which normally qualify as charitable include those with the following purposes: "providing public amenities to benefit the community", "establishing safety rescue operations" and "providing facilities for people with special needs". The first could cover such activities as grants for radio equipment and/or courses in schools, youth organizations, or homes for the elderly, or disabled. The second may apply to investment in equipment for Amateur Radio Emergency Service groups, who support their local communities and Canadian Red Cross with public service and disaster communications. The latter could apply to support for equipment, courses or the development of suitable devices or techniques for the handicapped or disabled.
Q. How does one apply for a grant?
A. Each year, the RAC Foundation may solicit Grant Applications in the same four categories as the donor designations. Decisions on grant awards will be made on the merits of those applications, and within the limits of the RAC Foundation earnings. Under Canadian tax regulations, Foundations can only disburse funds to institutions which are themselves charitable. All disbursement cheques must be made payable to the charitable institution which the applicant designates. The cheque will be sent from CFO to RAC for "presentation" to the applicant, who will then deliver it to the institution. Canadian universities, community colleges, hospitals, and most seniors', youth, and community centres qualify. Only Qualified Donees are considered qualified for support by a Foundation under Canadian tax regulations. However, RAC may receive scholarship or research grant applications for other Canadian or foreign institutions, some of which are not on the Revenue Canada "Qualified Donee" list. Before deciding on the merits of an application, the RAC Board or their designees will check the institution on the application as a "Qualified Donee".
Q. What are the costs of administration?
A. CFO administers the RAC Foundation free of charge: there are no transaction fees and no charges for Grant Application processing. Each year the CFO provides a complete detailed statement of donations, earnings and distributions. The CFO Board of Governors has established a limit on the allocation of operating expenditures against investment income to 1.5% of the average capital funds balance in any year. The CFO is itself a charitable organization. As such, it is the beneficiary of considerable community support for its good work.
Q. Why use the CFO?
A. A commercial trust company could administer a fund for RAC, but they would charge administration and transaction fees, and, as neither they nor RAC are registered charities, there would be no tax receipts for the donors. There are 80 Community Foundations across Canada. All share similar objectives and policies. Several are older, and others are in various stages of early growth. The CFO offers the convenience of proximity to our national headquarters and a flexible approach, which is only possible after achieving maturity. The fact that the CFO is partially supported through direct donations means that RAC is able to take advantage of that local generosity. The RAC Foundation would not be accepted for administration by the CFO if our own objectives were not worthy of such support.
Q. What are the overall Foundation Benefits?
A. The community goodwill that RAC already generates through our public service communications will be greatly enhanced by equipment and support grants for worthy organizations. If RAC members are willing to have their donations invested on their behalf with the proceeds going to charitable causes associated with Canadian Amateur Radio, the RAC Foundation will be a huge success. If RAC ever suspends acceptance of donations there will still be annual income for disbursement to charitable causes.
Q. How can I participate in this good work?
A. The RAC membership renewal form now includes an optional "Donation to RAC Foundation", with the four donor designation categories. Members are encouraged in regular TCA notices to make provision for the RAC Foundation in their wills. Amateurs can also advise their families to donate some or all of the station equipment on death to the RAC Foundation, who can take it off the hands of the widow or family, get a good return on sale through the Swap Nets and then present the proceeds to the CFO "In Memory Of". This will produce a tax receipt for the estate from CFO. Donors can even donate stock or mutual funds, which will be receipted at fair market value. These can be converted to cash for investment, or allowed to grow along with other investments, at the discretion of CFO. The annual premium on a modest life insurance policy payable to RAC Foundation may be quite small, yet the proceeds will greatly benefit the RAC Foundation and its good work on behalf of all Canadian Radio Amateurs. All donations will be recognized with a tax receipt, including those made "In Memory Of" a deceased person and "In Honour Of" living persons.
Donor cheques should be payable to "RAC Foundation". The Donor Information and Designation Form tells us which Grant Program(s) you wish to support. Designation has no effect on the tax receipt issued for donations of more than $20.