Who this is for
Charity and nonprofit boards building sponsorship packages, and business owners deciding whether to sponsor a community event, a sports team or a cultural program.
The five points
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A gift expects nothing back. The donor gives; the charity receipts the eligible amount. Minimal recognition, such as a name in a list of donors treated the same as everyone else, does not change that.
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Sponsorship expects promotion back. Logo placement, banners, a named sponsorship level, ads in the program, a speaking slot. The CRA calls this sponsorship: the business is receiving advertising, which is an advantage.
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Value the advantage, or no receipt. If the advantage can be valued, the receipt is for the payment minus that value, subject to the 80% rule. If it cannot be valued, the charity cannot issue a receipt. The CRA is explicit about that.
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The business has another route. A sponsorship that is reasonable and made to earn income can be deducted by the business as an advertising expense. For many sponsors that is as good as a receipt, and simpler. The charity issues an invoice, not a receipt.
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Nonprofits cannot receipt either way. If the organization is a nonprofit and not a registered charity, there is no receipt in any case. The sponsorship route, with an invoice for advertising, is the only one.
One thing many people do not realize
Putting a sponsor’s logo everywhere can cost the sponsor its donation receipt. The CRA treats meaningful advertising or promotion as an advantage received by the business. Where the value of that advantage cannot be calculated, the charity cannot issue an official donation receipt at all. The sponsor may still deduct the payment as advertising, if it was reasonable and made to earn income. Decide which it is before the banner is printed.
What to prepare
- The sponsorship levels and exactly what each sponsor receives
- An estimate of the value of the promotion at each level
- Whether the organization is a registered charity
- Receipt and invoice templates for each outcome
When professional help may make sense
Packages that mix a donation element with promotion, sponsors who want a specific receipt amount in advance, and events where sponsorship is the main revenue. Getting this wrong affects the charity’s receipting record and the sponsor’s tax position at the same time.
How Rex Tax may be able to help
Bookkeeping for charities and nonprofits, and sponsorship package set-up from the tax side. Advice to business owners on how a sponsorship is treated in their own return.
Official sources
This guide is general information, not advice about your situation. It reflects the rules for the 2026 tax year. It has not yet been reviewed by a practitioner. The information was checked against the official sources listed above on the date shown. Rules change. Check the official sources above or ask us. How we prepare these guides.