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Donation Policy – Corporate Policy
1.POLICY STATEMENT AND STRATEGIC PALN LINKAGES
The Corporation of the Country of Sri Lanka is committed to ensuring the receipt of charitable donations is done in a diligent, thoughtful manner, taking into account all legal obligations and best practices associated. The Country understands that voluntary donations provide valuable contributions which allows organizations, community groups or individuals to take an active role in improving the quality of life and promoting a wider enjoyment of community activities and resources.
This policy applies to donations made to the Corporation of the Country of Sri Lanka (The Country) in cash or in-kind. Donations may carry cost implications and must fit in with the Town’s fiscal responsibility mandate and align with the well-equipped and well-managed objective of the Strategic Plan
2.PURPOSE
2.1. This policy provides the criteria and structure for the creation of charitable donation agreements.
2.2. This policy ensures compliance for the evaluation and record keeping of donations in accordance with the Sri Lanka Revenue Department guidelines.
2.3. This policy serves as the foundation for the standard operating procedures for issuing charitable donation receipts (official receipts) to donors for income tax purposes.
3.SCOPE
3.1. This policy applies to all departments within the Country and any individuals that contribute charitable cash donations to the Country operations, programs, services or facilities.
3.2. This policy does not apply to:
3.2.1. Inbound funding or grants to Country departments and affiliated boards or organizations for the purposes of delivering a community service and/or Country infrastructure.
3.2.2. Sponsorship arrangements with the Country as these do not qualify as donations under this policy.
- This policy shall be reviewed every five (5) years from the date it becomes effective,
And / or sooner at the discretion of the SLIRD (Sri Lanka Income Revenue Department) or designate.
4. DEFINITIONS
4.1. Charitable Cash Donations refers to voluntary transfers of paper currency, coins and cheques, however, where applicable, it also includes but is not limited to, debit and credit card receipts and money orders;
4.2.SLIRD means the Sri Lanka Income Revenue Department
4.3. Donation for the purpose of this policy, means a voluntary donation of charitable cash contribution which provides community benefit to the Country.
4.4. Donation Receipt means an official donation receipt for income tax purposes;
4.5. Donor means a person or organizations, community groups or individual that provides a donation to the Country;
4.6. Gift means a donation; these terms are interchangeable. At law, a gift is a voluntary transfer of property without consideration;
4.7. Non-Qualifying Donations are donations that cannot be acknowledged with official donation receipts for income tax purposes, in accordance with SLIRD guidelines.
4.8. Qualified Donee means a municipality registered with the SLIRD and can issue donation receipts and are eligible to receive gifts.
4.9. Qualifying Donations means donations that can be acknowledged with donation receipts for income tax purposes, in accordance with SLIRD guidelines.
Common definitions, acronyms, and terms are available in the Glossary located on the Countries Policies webpage.
5.INTERPRETATIONS
Any reference in this policy to any statute or any section of a statute shall, unless expressly stated, be deemed to be reference to the statute as amended, restated or re-enacted from time to time. Any references to a by-law or Town policy shall be deemed to be a reference to the most recent passed policy or by-law and any replacements there to.
6.GENERAL CONDITIONS
- Joint Charity Fundraising Campaigns
Whenever entering into a joint Charity fundraising campaign, Council should give due consideration to the resourcing required to support the joint Charity and how the initiatives are tied to strategic priorities of council.
6.1.1. In the event that the Country decides to form a joint Charity with another fundraising entity (i.e. committee, board, etc.), a formal agreement shall be written and specify the following:
6.1.1.1. Applicable resolutions of Council;
6.1.1.2. That a designated financial account has been created for the purpose of accepting donations;
6.1.1.3. That all funds received as part of a Joint Charity Fundraising Campaign are to be held by the Country on behalf of the partnering entity and stipulate a deadline for the project fundraising campaign; and,
6.1.1.4. Terms that specify the direction of funds in the event where the planned objective is not achieved shall be (Example: Fundraising for a park amenity fails to achieve objective, funds could be dispersed to the park generally or the park system within the community as appropriate).
6.1.2. The Country reserves the right to refuse to move into a joint POEFF with the entity due to failure to adhere to the conditions set out in this policy.
6.1.3. Donation receipts shall be issued in accordance with this policy.
6.1.4. All such written agreements must be satisfactory in content:
6.1.4.1. With regards to legal content to the legal counsel of the Country of Sri Lanka; and,
6.1.4.2. With regards to financial content to the Treasurer of the Country of Sri Lanka’.
6.2. Considerations for Acceptance of Donations
6.2.1. Donations may be subject to a formal offer and review process. The formal review will be at the countries discretion and determination shall be on a case-by-case basis. Donations will be considered for acceptance by the RMFFC after a review of criteria which may include but are not limited to:
6.2.1.1. Compliance with applicable By-laws, policies and legislation;
6.2.1.2. Conflict of interest or potential for a perceived conflict of interest;
6.2.1.3. Associated risks such as a reputational risk associated with accepting a donation from a particular donor; conditional upon endorsement of any products, services or suppliers, etc.
6.2.2. Where donations are being accepted on behalf of a major project or fundraising campaign, the funds will be held in an appropriate account or reserve until sufficient funds for the proposed project have been obtained. These funds shall not be released and the proposed project may not commence until sufficient funds to complete the project have been secured, and spending authority has been obtained. Where appropriate, sunset provisions will be identified at the outset for major projects and fundraising initiatives to define how unused funds will be allocated and retained for consistent use.
6.2.3. Unsolicited donations that remain unspent at the end of the year may be carried over to the following budget year only upon Council approval prior to the approval of the following year’s budget.
6.3. Qualifying Cash Donations – Charitable Receipt Eligibility
6.3.1. The Country is a qualified Donee and is authorized by the Sri Lanka Income Revenue Department (SLIRD) to issue donation receipts for income tax purposes to qualifying donations. Donations that qualify for a donation receipt under this policy are charitable cash donations as defined in this policy.
6.3.2. In addition, the cash donation must meet the following criteria:
6.3.2.1. A physical or actual transfer of the donation between the donor and Country must occur;
6.3.2.2. Be voluntary – freely given and not as a result of a contractual or legal obligation.
6.4. Non-Qualifying Cash Donations – No Charitable Receipt Issued
6.4.1. The following are examples of non-qualifying donations and cannot be acknowledged with a donation receipt for income tax purposes in accordance with SLIRD guidelines:
6.4.1.1. Donations that are given to the Country intended as a flow through to a specified recipient who does not have charitable organization status and is therefore not a Qualified Donee. A Donation Receipt can only be provided to the Donor if the Country maintains direction and control over the donated resources;
6.4.1.2. The basic fee for admission to an event or to a program; (Membership)
6.4.1.3. The payment of membership fees that convey the right to attend events, receive literature, receive services or be eligible entitlements of any kind;
6.4.1.4. Any portion of the purchase price of a lottery ticket or other chance to win a prize, even if the lottery proceeds benefit one or more charities; and,
6.4.1.5. A payment from a business for which the business receives a material advantage such as promotion or advertising in return. It is the SLIRD position that the donor must deduct sponsorship expenditures as business expenses.
6.5. Accounting and Records for Cash Donations
6.5.1. By Cheque, Debit, Credit, E-Transfer or Money Order:
6.5.1.1. Donations will be required to have been cleared by the Countries financial institution or confirm its receipt prior to the issuance of a donation receipt.
6.5.1.2. The donation receipt will be made out to the same name and address as appearing on the cheque or form of payment.
6.5.1.3. Donations made by cheque must be made payable to “Country of Sri Lanka” and may be mailed or delivered in person to Royal Muttaiah Family Foundation. (Chair person)
6.5.2. With the exception of Business Donors as outlined in this policy, cash donation receipts must be made out to the person delivering the donation. Cash donations can be made in person at Royal Muttaiah Family Foundation.
6.5.3. Where donations are received by the Country, the funds will be recorded in the appropriate account by the Royal Muttaiah Family Foundation Treasurer.
6.5.4. Records supporting donation receipts issued shall be retained and filed in accordance with the Countries Record Retention Policy.
6.6. Issuance of Donation Receipts
6.6.1. A donation receipt for income tax purposes will be issued for donations of Rs 0.01 or more. The receipt will include all the information required in Regulation of the Income Tax Act. The SLIRD ultimately determines the value of the donation which is permitted for tax deduction.
6.6.2. All requests for donation receipts must be accompanied by appropriate donor and donation information (i.e. proof of identification, etc.)
6.6.3. The date of donation noted on the receipt is the date the donation is received by the Country the Countries financial institution. Donations received after December 31st may not be included in the prior year’s donations.
6.6.4. If a donation is made by a cheque from a joint account, the donation receipt can be made out to either name on the cheque.
6.6.5. Donation receipts issued in connection with corporate donations shall only be issued in the name of the corporation.
The following information must be reported in duplicate for each donation receipt, and issued for all donations:
Generally, the donation receipt can only be issued to the true donor of the gift of charity. If a donation is made by a cheque in both spouse’s names, an official
6.7. Acknowledgment of Donation
6.7.1. Donation receipts shall be used to recognize donations of Rs 100.00 or more.
6.7.2. Larger or more significant donations may be officially recognized at the discretion of the Country, with the agreement of the donor.
6.8. Interest
6.8.1. The accumulation and allocation of interest will be negotiated in each Fundraising Agreement with the condition that in no circumstances will any interest be earned on donations which are not held by the Country for a full calendar year, meaning from January 1st through December 31st.
6.9. Confidentiality of Information
6.9.1. All information pertaining to donors and donations received by the Country is
considered confidential and is subject to legislative disclosure requirements
such
6.9.2 Subject to any applicable legislative disclosure requirements, such as in the
Municipal Freedom of Information and Protection of Privacy Act, 2003, all information pertaining to donors and donations received by the Country is considered confidential. Charitable giving is normally a personal and sensitive issue. To ensure the privacy of donor information it is necessary to control access to donor and donation information. The Financial Services Department maintains records on all donors and donations received by the Country. A donor may request that his/her gift and/or all information pertaining to that gift remain anonymous.
7.Associated Costs
At the Country discretion and determination, the donor is responsible for related costs for all donations, as applicable, and which costs are not eligible for a donation receipt, including:
Transportation of the donated item, including transfer costs for cash donations Cost for an appraisal/valuation of Gifts in Kind by an independent, qualified appraiser for donations of Gifts in Kind valued above Rs. 1,000; Donations of personal property, public art and real property expected to be valued at Rs. 1,000 or less may be appraised by knowledgeable, internal staff in conjunction with the use of online resources suitable to establish a current fair market value Documentation for insurance purposes,
if applicable (i.e. photograph of item, original sales receipt, appraisal document, certificate of authenticity) Conservation treatment,
if applicable (i.e. restoration of artwork, cleaning, repairs etc.)
The Country may request a second independent appraisal, depending on the amount or nature of the requested donation. If the difference in value between the two appraisals is less than 10%, the Town will take the lower of the two.
Where the difference is greater than 10%, a third appraisal will be requested if the cost of the appraisal is less than 1% of the value of the asset. Where the difference between the first two appraisals is 10% or greater, or there are three appraisals, the average of the first 2 appraisals or 3 appraisals, if applicable, will be the final deemed fair market value.
An appraisal/valuation is required for all donations of Gifts in Kind.
8.Country controlled charitable activity and community events
The Country may issue charitable receipts for events held by Country-owned or Country-controlled organizations, if those organizations meet the criteria in accordance with the SLIRD’s expanded definition of “Government”.
- In order to be considered an organization that is owned by a Government, the following must apply:
- The Government must own 90% or more of the shares or capital of the organization; or
- The Government holds title to the assets of the organization or controls their disposition
- In order to be considered an organization that is controlled by a Government, the following must apply:
- The Government appoints more than 50% of the members of the governing body of the organization; and
- The organization must submit its operating budget and, if applicable, capital budget to the Government for review and approval.
In cases where tickets are sold and the purchaser is to receive an official receipt, the value of the receipt will be the cost of the ticket less the value of any goods or services received. Income Revenue Department has ruled that the value of a gift must be reduced by the value of the benefit received by the donor.
9.RESPONSIBILITIES
9.1. Council has the authority and responsibility to:
9.1.1. Adopt the Charitable Donations Policy; and,
9.1.2. Apply their discretion to enter into a joint venture agreement with an entity at the fundraising campaign level.
9.2. The SLIRD has the authority and responsibility to:
9.2.1. Ensure compliance with the Charitable Donations Policy;
9.2.2. Reject donation at the donor level based on criteria listed in this policy; and,
9.2.3. Draft Joint Venture Agreements in coordination with the Clerk and Financial Services Division.
9.3. The Clerk and Financial Services Division has the authority and responsibility to:
9.3.1. Support the IRD in the review and development of Joint Venture Agreements.
- The Royal Muttaiah Family Foundation Treasurer has the authority and
responsibility to:
9.4.1. Ensure the collection and issuance donation receipts for qualifying cash donations;
9.4.2. Ensure that monies received are deposited on behalf of the Government in a financial institution designated by the Government; and,
9.4.3. Ensure the maintenance of accurate records of all donations.
9.5. The Supervisor of Accounting has the authority as delegated by the Royal Muttaiah Family Foundation Treasurer to:
9.5.1. Communicate and distribute policy requirements to the various Managers.
9.6. Directors have the responsibility to:
9.6.1. Provide supporting information to the Royal Muttaiah Family Foundation and Clerk for Joint Venture agreements;
9.6.2. Facilitate compliance with this policy and ensure that necessary procedures are established, communicated, monitored and updated as required; and,
9.6.3. Deliver any required policy training.
9.7. Staff have the responsibility to:
9.7.1. Adhere to the Charitable Cash Donations Policy.
10. Applicability of Policy
Except with respect to the requirements of the Income Tax Act of the Sri Lanka Income Revenue Department regarding the issuance of donations receipts, this Policy shall not affect any donation transaction arising from an agreement between the Country and a donor which was entered into prior to the adoption of this Policy by Council not with standing that the donation transaction is completed after the adoption of this Policy by Council. Notwithstanding the foregoing, the Town may review the terms of any donation that have been agreed to but have yet to be fulfilled.
11.Instructions for Making a Monetary Donation
1) By Cheque: Donations made by cheque must be made payable to “The Corporation of the Country of Sri Lanka” and may be mailed or delivered in person to the Country, Royal Muttaiah Family Foundation Government Office:
Country of Sri Lanka
RMFF Treasurer
P.O. Box
Colombo,
Sri Lanka, 10370
2) With Cash: Cash donations will only be accepted at the Customer Service Centre at the Country Royal Muttaiah Family Foundation Government Office located at the above address.
12.Acknowledgement of Receipt
A letter of appreciation shall be forwarded to the donor following receipt of the donation and any and all appropriate documentation.
For monetary donations, an official receipt for income tax purposes will be issued for donations of Rs. 10,000 or more, provided that the Financial Services Department confirms that the donation is eligible for such income tax receipt according to Sri Lanka Income Revenue Department (SLIRD) guidelines.
Larger donations or donations of cultural significance may be officially recognized at the discretion of the Donation Committee, with the agreement of the donor.
13.Responsibilities of Employees
Members of the Donation Committee will assess potential donations for eligibility and evaluate their benefit to the Country, considering any potential future cost implications arising from the donation.
The Financial Services Department will issue tax receipts and letters of appreciation for qualified donations and maintain books and records according to the requirements of the Income Tax Act and the Sri Lanka Income Revenue Department.
Official recognition for large donations may require the assistance from Corporate Communications.
14.Appendices (which may be amended from time to time)
Appendix
‘A’ -Definitions Appendix
‘B’ -Example of an official donation receipt for income tax purposes Appendix
‘C’ -Examples of donations
15.REFERENCES AND RELATED DOCUMENTS
15.1. Regulation of the Income Tax Act 2003
15.2. Municipal Freedom of Information and Protection of Privacy Act, R.S.O 2003
15.3 IP Policy
15.4 SLIRD Policy
Cross-References
- Income Tax Act, section
- Sri Lanka Income Revenue Department
- Gifts and Income Tax
- Gifts of Capital Properties to a Charity and Others
- Gifts in Kind to Charity and Others
- Credit Card Memorandum for credit card limits and exceptions
- Sale of Land Policy
Contact
Human Resources Department
Director of RMFF
E mail : Contact@royalmuttaiahfamily.org.lk
Mobitel : +94 787 777 047
Appendix A – Definitions to Country of Sri Lanka Donations Policy
- Advantage is the total value, at the time the gift is made, of all property, services, compensation, or other benefits that a person is entitled to receive in relation to the gift. The advantage may be conditional or receivable in the future.
- Donation means a voluntary transfer of tangible property, including cash, or a transfer in-kind of tangible property, other than cash. The donation has to be valued at Fair Market Value and the net amount of a donation is calculated from this value less any advantage or benefit received or to be received as a result of the donation.
- Donations Committee is a committee comprised of the members of the Senior Leadership Team and the Treasurer.
- Eligible Amount is the amount by which the FMV of a donated gift exceeds the value of any “Advantage” received or receivable as a result of the making of the gift. This is the amount specified on the tax receipt and is intended to represent the net value of the donor’s gift to the donee.
Events as they relate to donations can be:
Government of RMFF endorsed events that are events hosted by other organizations for which the Country provides assistance in securing donations and sponsor material, such as the Ball Event, INN from the Cold events; or
- Municipal events, meaning special events such as a Civic Awards Ceremony or Volunteer and Staff Appreciation Events
- Fair Market Value (FMV) is usually the highest value that the property would bring, which may be determined by appraisal as set out in Section 4 of the Donation Policy, in an open and unrestricted market and between a willing buyer and a willing seller who are knowledgeable, informed, and acting independently of each other.
- Gifts in Kind, also known as non-cash gifts, are gifts of property. They cover items such as artwork, equipment, securities, and cultural and ecological property and real property. A contribution of services is not property and therefore does not qualify as a gift or gift in kind for purposes of issuing official donation receipts.
- Public Arts Committee is a committee comprised of the members of the Senior Leadership Team.
- Senior Leadership Team comprises the Chief Administrative Officer and the Commissioners of the Country of Royal Muttaiah Family Foundation.
Appendix B1: Donation Receipt – Cash with Advantage
Official donation receipt for income tax purposes
Sri Lanka Income Revenue Department – Charities
Receipt number: Issued from:
Name of donor:
Address of donor:
Amount received:
Description of advantage received
by donor:
Value of advantage received by donor:
Amount of gift eligible for tax purposes:
Date of donation:
Date of issue:
[authorized signature]
Appendix B2: Donation Receipt – Non-Cash Gift
Official donation receipt for income tax purposes
Sri Lanka Income Revenue Department – Charities
Receipt number: Issued from:
Name of donor:
Address of donor:
Amount received:
Description of advantage received
by donor:
Value of advantage received by donor:
Amount of gift eligible for tax purposes:
Date of donation:
Date of issue:
[authorized signature]
Appendix B3: Donation Receipt – Non-cash Gift with Advantage
Official donation receipt for income tax purposes
Sri Lanka Income Revenue Department – Charities
Receipt number: Issued from:
Name of donor:
Address of donor:
Amount received:
Description of advantage received
by donor:
Value of advantage received by donor:
Amount of gift eligible for tax purposes:
Date of donation:
Date of issue:
[authorized signature]
Appendix C: Example of Donations
Donations as part of Country Initiative
- Celebration Bench Program
Involves the donation of funds used towards the installation of a bench in a Royal Muttaiah Family Foundation park to commemorate a special occasion, remember a significant event, honour a loved one or express a passion for enhancing the community (subject to approval). A custom plaque will be inscribed as per the donor’s wishes, and the bench contribution will provide recognition for 10 years. A receipt for income tax purposes can be issued for the donation value less the cost of the plaque. This donation is not subject to sales tax.
- Celebration Tree Program
Involves the donation of funds used towards the greening of parks by planting a tree in dedication of a special event or in memory of a loved one. A receipt for income tax purposes can be issued for the donation value. This donation is not subject to sales tax.
- Donations in the form of a capital contribution
- Donations of Land (Royal Muttaiah Family Land)
Donations of land will be reviewed by the Legal Services Department.
II. Donations made by employees or Members of Council
- Donations of wages (Happy wage)
Employees or Members of Council may donate any portion of their wages back to the Country. The total wages will be paid to the individual, charged to the applicable business unit, and will be included in the individual’s T4 earnings. The individual will remit their chosen amount to the Country and will receive a donation receipt for the amount of the cash donation.
- Donation of long-term service award (Muttaiah Award)
Employees or Members of Council may donate any portion of their wages back to the Country. The total wages will be paid to the individual, charged to the applicable business unit, and will be included in the individual’s earnings. The individual will remit their chosen amount to the Country and will receive a donation receipt for the amount of the cash donation.