Donation Policies

Policy #1: Gift Acceptance
Policy #2: Designated/Restricted Gifts
Policy #3: Gifts-in-kind
Policy #4: Donations of Securities
Policy #5: Deferred Gifts
Policy #6: Donor & Sponsor Recognition & Naming
Policy #7: General Fundraising Policy & Practice
Policy #8: Investment Policy

Policy #1: Gift Acceptance

Donors are encouraged to make unrestricted gifts wherever possible to allow Covenant House to direct donations to the areas and programs of greatest need. Covenant House will accept restricted or designated gifts for approved and priority purposes as outlined in Covenant House Policy #2, Designated/Restricted Gifts. Covenant House does not accept endowments.

The form of support covered under this policy includes donations, grants, and in-kind gifts, in keeping with Income Tax Act (Canada) regulations, Canada Revenue Agency guidelines and any other applicable guidelines.

All acceptances of gifts must also comply with relevant Covenant House policies and codes.

Covenant House reserves the right to decline a gift. The final decision to accept or decline a gift rests with Management unless it might expose Covenant House to liability (e.g. real estate and other gifts in kind), is precedent setting or involves sensitive matters, in which case, the final decision rests with the Board.

Acceptance of a gift does not imply endorsement by Covenant House of any product, service or philosophy of the donor.

Donors are strongly encouraged to review the terms of deferred gifts with Covenant House staff to ensure Covenant House can honour donors’ wishes.

Covenant House strongly recommends all donors seek advice from professional advisors and discuss the matter with family when considering a bequest or other deferred gifts to Covenant House.

Supporting Documentation

Covenant House will produce supporting documentation for gifts that have multi-year commitments or that are designated for specific purposes (see Policy #2, Designated/Restricted Gift Policy) or that entail naming rights (see Policy #6, Donor Recognition and Naming Policy).

Returning Gifts

In certain circumstances, it may become necessary for Covenant House to return a previously accepted gift. The final decision to return a gift will be made by the Board, in consultation with legal and financial counsel.

When a decision is made to return a gift, Covenant House will comply with Canada Revenue Agency requirements. In addition to the return of the same or identical property, Covenant House will provide the donor with details on the cancelled or revised charitable tax receipt. A copy of this tax receipt will be filed with Canada Revenue Agency.

Such instances could include, but are not limited to:

  • Where continued association with the donor would result in harm to the Agency’s reputation
  • Where a donation is determined to have been the proceeds of a crime
  • The terms of the donation agreement can no longer be honoured, and a new agreement cannot be negotiated with the donor, or his or her heirs or assigns

Definition of Gift Types

  • Gift or Donation – The terms “gift” and “donation” are often used interchangeably. For the purposes of this policy, “gift” and “donation” are understood to mean the same thing, that is, a voluntary transfer of cash or in-kind goods from individuals, corporations, foundations and other sources to Covenant House for either undesignated or designated use. Gifts are made without expectation of a tangible return.
  • Deferred gift – Deferred giving is the process of making a gift commitment today for delivery to Covenant House at a future date. See Covenant House Policy #5, Deferred Gifts.
  • Designated or Restricted gift – A gift given to Covenant House where the donor has specified how the support is to be directed. See Covenant House Policy #2, Designated/Restricted Gifts.
  • Undesignated or Unrestricted gift – A gift given to Covenant House where the donor has not specified how the support is to be directed. Covenant House will determine the most appropriate use of the gift.

Types of Gifts Accepted: Covenant House will accept donations through the following giving vehicles, subject to the terms outlined below:

  • Cash or equivalent – Cash donations include those received through cheques, debit and credit cards. Pledges or cash or equivalents will also be accepted.
  • In-Kind Gifts – In-kind gifts include tangible personal property, real property and goods or services, as outlined in Covenant House Policy #3, Gift-in-Kind.
  • Gifts of Securities – Gifts of securities include donations of publicly traded and thinly traded securities, as outlined in Covenant House Policy #4, Donations of Securities.
  • Deferred Gifts – Deferred gifts include bequests, life insurance, retirement plans such as RRSP’s and RRIF’s, charitable gift annuities, charitable remainder trusts and other gift vehicles that may be categorized as deferred gifts in the future, as outlined in Covenant House Policy #5, Deferred Gifts.

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Policy #2: Designated/Restricted Gifts

Covenant House encourages donors to give undesignated and unrestricted donations or gifts so that funds may be directed where the need is greatest. However, Covenant House acknowledges the importance of and will support designated gifts when that designation is consistent with the mission and priority needs of Covenant House, as in the Agency’s annual operating budget approved by the board. However, Covenant House does not have nor is accepting endowments.

All acceptances of gifts must also comply with relevant Covenant House policies and codes.

Covenant House will produce supporting documentation for gifts that have multi-year commitments, that are designated for specific purposes or that entail naming rights (see Policy #6, Donor Recognition and Naming).

Upon acceptance of a designated/restricted gift, there will be no change in the use of that gift, or any portion thereof, without the donor’s or his or her agent’s consent. If the original purpose of the donation is no longer relevant and in the event the donor or his or her agent is no longer able to approve or decline consent for a change of purpose, the funds will be used in support of the area of greatest need.

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Policy #3: Gifts-In-Kind

Covenant House will accept and receipt those in-kind gifts it deems appropriate, in accordance with the Income Tax Act (Canada), Canada Revenue Agency guidelines and requirements, and relevant Covenant House policies and codes (see Policy #1, Gift Acceptance Policy).

Covenant House will accept in-kind gifts of tangible personal property which can be used for:

  • Display or use at Covenant House
  • Program delivery or facilitation
  • Revenue generation through sale or auction
  • Other purposes that may arise from time to time that benefit Covenant House

In-kind gifts of real estate will be reviewed and approved by the Finance/Property Committee on a case-by-case basis.

Other in-kind gifts will be addressed on a case-by-case basis.

In-kind gifts of services


Registered charities cannot issue official charitable income tax receipts for gifts of services. However, a gift of services may be eligible for a tax receipt through a cheque exchange. Receipting for cheque exchanges will be determined on a case-by-case basis.

Acceptance

Covenant House reserves the right to decline any inkind gift. The decision to accept or decline a gift rests with Management unless the source of a gift might expose Covenant House to liability, is precedent setting or involves sensitive matters, in which case, the final decision rests with the Board.

Valuation

Proven value of the donated item is required in order for Covenant House to issue a tax receipt. Receipted in-kind gifts will be accompanied by supporting documentation such as a wine donation form or an in-kind gift form.

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Policy #4: Donations of Securities

A. Acceptance and treatment of securities upon receipt

Covenant House can receive gifts of securities listed on any prescribed stock exchange or market, including Canadian stock exchanges, the NYSE, AMEX, and NASDAQ, in keeping with the guidelines set out by the Canada Revenue Agency and all relevant Covenant House policies (e.g. Policy #1, Gift Acceptance Policy).

Covenant House can also receive gifts of mutual funds/units, pooled fund units and segregated fund units.

In addition, Covenant House can accept donations of thinly traded securities which can be difficult to liquidate at the value or close to the value of the shares at the time the gift was made. These will be accepted on a case-by-case basis, in consultation with the agency’s brokerage firm.

Donors must discuss their proposed donation of thinly traded securities with Covenant House in advance of initiating a transfer of such securities.

Covenant House reserves the right to decline any gift, as outlined in Covenant House Policy #1, Gift Acceptance Policy, including, but not limited to, a gift of thinly traded securities if Covenant House is not notified in advance of the transfer.

B. Valuation of securities

Electronic transfer of gifts: For the purpose of valuing the income tax receipt for securities transferred electronically, the value of the gift will be based on the closing market value on the day the gift is received in Covenant House’s brokerage account.

Transfer of gifts via share certificate:
If the gift of securities is delivered via share certificate, the value of the gift, for the purposes of valuing the income tax receipt, will be based on the closing market value on the day Covenant House or its broker takes possession of both the share certificate and the transfer documents/Power of Attorney.

Valuation of securities for recognition purposes: Recognition will be based on the tax receipted amount of the donation.

C. Disposition of Shares

All gifts will be liquidated immediately.

Miscellaneous

Covenant House encourages donors to discuss the proposed gift with independent legal, financial or tax advisors and family members.

Donors are encouraged to contact Covenant House to discuss their proposed donation prior to the transfer of their securities. Donors must complete the donation transfer form to complete their gift.

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Policy #5: Deferred Gifts

Covenant House accepts donations in the form of “deferred gifts” as bequests, life insurance, retirement plans such as RRIFs or RRSPs, charitable gift annuities, charitable remainder trusts and other gift vehicles that may be categorized as a gift in the future.

Donors are encouraged to make unrestricted deferred gifts whenever possible to allow Covenant House to direct support to the areas and programs of greatest need. Covenant House will accept restricted or designated deferred gifts for approved purposes, described in Covenant House Policy #2, Designated/Restricted Gifts Policy.

All acceptances of gifts must comply with relevant Covenant House policies and codes.

Tax receipts for deffered gifts will be issued in accordance with Income Tax Act (Canada) regulations, Canada Revenue Agency guidelines, requirements for the specific gift vehicle involved and all applicable Covenant House policies.

Donors are strongly encouraged to review the terms of deferred gifts with Covenant House staff to ensure Covenant House can honour donors’ wishes.

Covenant House strongly recommends all donors seek advice from professional advisors and discuss the matter with family when considering a bequest or other deferred gift to Covenant House.

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Policy #6: Donor & Sponsor Recognition & Naming

All receiptable donations of $10 or more will be acknowledged with a thank you letter and official income tax receipt. A donation is defined as a voluntary transfer of cash or in-kind goods from individuals, corporations, foundations and other sources to Covenant House for either undesignated or designated use. In addition, gifts (cash or in-kind) starting at $1,000 can receive more public recognition.

Covenant House may publicly recognize gifts made by donors or sponsors. The recognition vehicle(s) will be determined by Covenant House to be consistent with the type and value of the gift. The manner in which the donor/sponsor is recognized is agreed to, ahead of time, by the donor/sponsor.

Sponsorships

Covenant House relies on corporate sponsors for their special event activities. Sponsorship is defined as a mutually beneficial business arrangement between Covenant House and a funder or provider of resource that results in the exchange of benefit and value related to visibility, exposure or increased market reach. In such cases, the contribution made by the funder no longer qualifies as a charitable donation and is deemed by Canada Revenue Agency as a commercial arrangement, and therefore not receiptable.

Sponsorships include initiatives that further a funder’s corporate social responsibility and marketing objectives while advancing Covenant House’s fund development and marketing goals. A sponsorship can include:

  • cash contributions;
  • gifts-in-kind and gifts-of-service;
  • financial and non-financial support to Covenant House’s services, programs and special events;
  • cause related marketing initiatives; 
  • company promotions including employee and community engagement programs designed to generate broader community contributions and other similar arrangements that may be made between the parties.

Naming Opportunities

Within Covenant House’s recognition structure there are opportunities for donors and sponsors to have naming rights to programs, departments, rooms, events etc.

Donation or Sponsorship Agreements will be required for gifts resulting in a naming opportunity. The value of such naming opportunities will be determined based on the “asset” in relation to the value of other like properties that may or may not be owned by Covenant House.

The Agreement will address such issues including, but not limited to:

  • Naming rights will be for a time-limited period, to be determined. Naming donors will have the right of first refusal to renew their commitment with an additional gift upon the expiration of the naming term, if this opportunity is still possible.
  • Given the diversity of the naming opportunities, each campaign/event may develop its own naming convention, e.g. “The renovation of this space was made possible by the generosity of (donor name) or ABC company Step Up for Street Kids
  • When naming will take place. For example, signage will be installed after the first payment of a pledge is paid.

In the event that the naming organization merges or changes its name, Covenant House will retain the original name unless the donor specifies and at which point the cost of replacing a named element will be borne by the donor.

All recognition must comply with all relevant Covenant House policies and codes.

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Policy #7: General Fundraising Policy & Practice

Covenant House’s fundraising and solicitation activities comply with federal, provincial and local laws as well as the ethical fundraising practices as established by Canada Revenue Agency, Association of Fundraising Professionals and Imagine Canada. Covenant House recognizes that the agency engages in fundraising and solicitation activities to support our operations and has established this fundraising policy and practices in order to ensure compliance.

Guiding Principles

As part of Covenant House’s commitment to ethical fundraising practices, all fundraising activities conducted by or on behalf of the organization must:

  • be truthful,
  • accurately describe the organization’s activities,
  • disclose the organization’s name,
  • disclose the purpose for which funds are requested,
  • disclose the organization’s policy with respect to issuing Official Income Tax receipts including policy on minimum amounts for which a receipt will be issued; and,
  • disclose, upon request, whether the individual or entity seeking donations is a volunteer, employee or contracted third party.

Practices

A. Oversight

The Fundraising and Development Committee, a standing committee of the Board, shall annually review all fundraising policies and activities by Covenant House. All fundraising activities for Covenant House are supervised and directed by the Director of Development and Communications.

The majority of fundraising activities include mail-outs, telemarketing, online and special events are carried out by the staff and volunteers of Covenant House. From time to time, when Covenant House deems appropriate, we may need to hire an outside professional at which point they will identify themselves as such.

B. Use of Fundraising Professionals

Third parties not directly affiliated with the organization must have written permission from the Director of Development and Communications prior to any solicitation on behalf of Covenant House and their representation of the organization must be evidenced by a written agreement approved by Covenant House.

Covenant House complies with all relevant legislation, including CRA guidelines and code of conduct around fundraising costs and procurement of fundraising services. As such, CHT will not directly or indirectly pay finder’s fees, commissions or percentage compensation based on the amount or number of donations received by the fundraisers hired on behalf of the organization.

Donors are entitled to know whether an individual soliciting funds on behalf of Covenant House is a volunteer, an employee or a hired third party fundraising agency.

C. Truth and Accuracy

All fundraising solicitations by or on behalf of Covenant House will be truthful and will disclose our name as well as the purpose for which funds are requested. Printed solicitations will also include our address or other contact information.

All fundraising activities conducted on behalf of Covenant House will accurately describe our activities. The Director of Development and Communications shall review fundraising or solicitation materials prior to publication for:

  • material omissions or exaggerations of fact, use of misleading photographs, or any other communication which would tend to create a false or misleading impression, as well as
  • any statement or content that would tend to create unrealistic donor expectations regarding what the donor’s gift will actually accomplish, or could otherwise mislead a donor.

Covenant House will ensure that donor gifts are used for the purpose for which they were given.

D. Donor Acknowledgement, Recognition and Official Income Tax Receipts

All donors are entitled to receive appropriate acknowledgement and recognition as per Covenant House’s Recognition Policy. Donor requests to remain anonymous will be respected. Covenant House will contact those donors who meet our recognition criteria and have not yet made their recognition preference known to obtain their permission to be recognized. All donors are entitled to receive a thank you letter and an official receipt for income tax purposes for any gift of $10 or more or on request.

E. Donor Solicitations – Supervision and Training

Covenant House shall provide appropriate training and supervision of the people soliciting funds on its behalf, whether employees or third party representatives, including training to attempt to avoid use of techniques that are coercive, intimidating or intended to harass potential donors. All donors and prospective donors will be treated in a professional and respectful manner and all questions or complaints about any matter will be responded to in a truthful, forthright and timely manner as per Covenant House’s Complaints Policy.

Covenant House shall attempt to avoid accepting a gift from or entering into a contract with a prospective donor which would knowingly place a hardship on the donor, or place the donor’s future well-being in jeopardy.

Donors are encouraged to seek independent advice if Covenant House has any reason to believe that a proposed gift might significantly affect the donor’s financial position or taxable income. Please see the Donor Bill of Rights.

F. Donor Privacy Policy

The privacy of donors will be respected. Any donor records that are maintained by Covenant House will be kept confidential in accordance with our donor privacy policy.

Covenant House does not sell its donor lists. It will honour the donor’s or prospective donor’s request to be:

  • excluded from mailings, telephone or email lists,
  • limited in the frequency of mailing or other forms of contact, or removed from any contact list,
  • excluded from exchanging their name and address with other reputable charities.

Donors can call, email or write to our donor services or our general email found on our website.

G. Compliance With Law

In addition to any other requirements of this policy, all fundraising activities for Covenant House shall be conducted in accordance with applicable law.

H. Requests for Information

Donors and prospective donors are entitled to the following upon request or by visiting Covenant House’s website:

  • our most recent annual report (includes mission, vision, strategic direction and budgets);
  • our audited financial statements;
  • our charitable registration number;
  • a list of the names of the Board of Directors;
  • our donor privacy policy;
  • a copy of our Investment Policy;
  • donor gift policies and other related donor policies;
  • donor “Bill of Rights”;
  • information regarding fundraising solicitation practices; and
  • donors are also entitled to request a copy of the information we have on record about their giving.

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Policy #8: Investment Policy


The Board of Directors of Covenant House Toronto (the “Board”) is responsible for determining and monitoring the investments of Covenant House Toronto (CHT). The Board also includes a Finance/Property Committee, which oversees CHT’s banking arrangements including the investment of surplus cash. CHT management is responsible for implementing the policies related to banking and investing.

This Investment Policy Statement (the “IPS”) provides broad objectives, performance expectations and guidelines for the investment management of CHT’s Short-Term and Long-Term Investments. The funds allocated to Short-Term and Long-Term Investments are based on cash flow needs, and will be determined by management in consultation with the Finance/Property Committee.

On an annual basis, management will review the funds and related cash flow needs to determine the amount to be invested under the Long-Term Investments Pool policy (using an external investment firm). The balance of funds will be invested under the Short-Term Investments Pool guidelines.

The overall responsibility for the investment of both Short-Term and Long-Term Investments lies with the Board, but the management of investment assets and the responsibility for investment decisions will be delegated in large part to the Investment Managers.

Legislative Requirements

CHT’s investments are governed by the Trustee Act of Ontario, and as a trustee, those making CHT investment decisions must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments. A trustee may invest trust property in any form of property in which a prudent investor might invest, including appropriate diversification of investments. CHT is a registered charitable organization under the Income Tax Act and accordingly, is exempt from income taxes, subject to the requirements of the Income Tax Act.

Responsibilities

The Financial Institution holding the long term investments of CHT (herein called the Portfolio Manager) will be responsible for ensuring the funds are invested in accordance with the IPS.

The Investment Managers engaged by the Portfolio Manager, will have complete discretion within the policies and constraints set forth in this statement, subject to any specific restrictions or requirements as imposed by the Income Tax Act, and any other pertinent applicable laws and regulations.

Management must approve the appointment and termination of an Investment Manager and any changes to an Investment Manager mandate. This must first be approved by the Finance/Property Committee and reported to the Board of Directors. In addition, major market fluctuations will be brought to the attention of the Finance/Property Committee.

Investment Objectives – Long-Term and Short-Term Investments

The objective of Covenant House’s investments in Long-Term Investments is to provide sufficient investment income and capital growth to assist CHT in meeting its reserve funds target of up to six of annual operating expenses. As such, the Long-Term Investments should be structured to provide reasonable assurances of meeting its capital preservation requirements, liquidity requirements and costs of inflation.

The following are the performance benchmarks for the investment portfolio.

Asset Class
Market Index/Benchmark
Benchmark Weight
Fixed Income – Bonds, GICs
DEX Universe Bond
GICs – no benchmark
65%
Equities

 
35%

Sub-equity Benchmarks
                                                                                    
 
Canadian
S&P/TSX Composite - Total Return Index 25%
US S&P 500 Total Return Index   5%
International MSCI EAFE Total Return Index   5%

The objective of the Short-Term Investments is to provide for the day-to-day expenses of CHT and meet cash flow requirements. Therefore, its commitments are shorter-term in nature. The Short-Term Investments will be comprised of liquid and shorter-term investments, which therefore will provide lower returns but also less risk and volatility. The investment objective is to provide a high level of interest income while preserving capital and maintaining appropriate liquidity.

Conflict of Interest Guidelines

These guidelines apply to CHT, the Directors of CHT, the Investment Managers, and any employee or agent retained by any of the foregoing to provide services relating to CHT’s investments.

Any persons listed above shall not knowingly permit their interests to conflict with their duties and powers in respect of CHT’s investments. Any such person shall disclose any direct or indirect material association or material interest or involvement in aspects related to his or her role with regard to CHT’s investments that would result in any potential or actual conflict of interest. Upon giving notice, the person or persons will refrain and withdraw from all discussions and participation in decisions pertaining to those matters where a conflict of interest exists or is perceived to exist.

Leverage

The following investments or strategies will not be permitted:
  • The purchase of securities on margin;
  • Short selling and similar transactions;
  • The use of leverage;
  • The borrowing of money, pledging or any other action that encumbers the assets of the Long-Term Investments, unless used in the acquisition of publicly distributed bonds, debentures or any other corporate or government obligations.
Financial Reporting and Investment Policy Statement Review

Returns are to be reviewed with CHT management and the Finance/Property Committee (via formal reporting) semi-annually. However, if the need arises the frequency will be increased. On an annual basis, the Investment Manager(s) should report formally to CHT and the Finance/Property Committee. On an annual basis, this information should also be reported to the Board by the Finance/Property Committee. Any unusual issues regarding the investment portfolio (trends/etc.) should be reported to management immediately.

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