Why nobody gets a tax benefit when you donate at the checkout

It happens almost every time you pull out a wallet to pay for groceries, a coffee or a cheeseburger.

A friendly face on the other side of the till asks if you would like to donate an extra loonie or toonie to charity. If you nod your head in agreement, the cashier adds an additional few dollars onto your transaction.

The practice is called point-of-sale fundraising, as the charitable donations are funnelled through retailers at the final point customers make their purchases.

All that extra change brings in big money for charities, but it does not give individual Canadians the same tax benefits as donating directly to charity without a cash register in between.

Nobody gets a tax receipt. Really!

In 2021, grocery chains Metro and Calgary Co-op collectively brought in more than $5.5 million for food banks, emergency shelters, cancer research and hospitals in Quebec, Ontario and Alberta.

So who gets to write all those donations off their income? Customers or retailers?

The correct answer, according to accounting and charity experts, is neither. When it comes to checkout philanthropy, in Canada, no one gets a tax benefit. 

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"The individual [customer] would need to donate directly to the charity to obtain a receipt," wrote Toronto-based chartered accountant Brian J. Quinlan in an email to CBC Radio's The Cost of Living.

"It would not be ethical for the grocery store to request a charitable receipt as it is not donating its own money."

Higher donations and lower costs

Even so, some non-profit organizations say there are big benefits when retailers ask you for change at the checkout.

"It is the cheapest way for charities to raise money," said Gena Rotstein, principal at Karma & Cents, a Calgary-based consultancy that advises on philanthropy. 

According to Rotstein, there are major savings for non-profit organizations.

"They're not issuing the tax receipts. They're not tracking down donors. They're not writing thank you notes, all the stuff that costs money to raise money," she said. 

Fundraising costs are high and retailers can help lower them

A lot of time, planning and labour go into more traditional fundraising efforts, such as canvassing door-to-door, or putting on a glitzy gala.

According to Charity Intelligence Canada, which tracks and analyzes what charities donated money, fundraising costs make up about 20 per cent of Canadian charities' annual operating budgets.

When grocery stores or fast-food chains collect donations at the checkout for a charity, a lot of those fundraising costs can be eliminated.

LISTEN | Hear about why Canadians should or shouldn't donate at the cashier: 

Cost of Living5:35Charity at the checkout

Point-of-sale fundraising isn't 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 $4.9-billion US has been raised through checkout tills and similar efforts.

There are other incentives for stores

In the absence of tax receipts, many Canadian retailers who ask for donations at the checkout have self-stated mandates to be good corporate citizens or community players.

However, Rotstein points out another reason stores team up with charities is for good marketing.

Retailers can leverage a charity's positive brand to promote their own outlet, which delivers good brand equity at a lower cost to the store than more traditional marketing. As well, customers are already at the checkout ready to spend money, so fundraising expenses are also lower.

"It's a win-win for the charity and for the company because they've now got their brand recognition even further into the community," said Rotstein, noting retailers are strategic about which charities they partner with.

"You're going to be giving to kids, puppies and health care," she 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, aside from the fact that it's a good thing to do, it's aligned to the type of customer they have, which are typically families buying in bulk," said Rotstein. 

Do your research before giving, says charity expert

On the other hand, charitable industry watcher Kate Bahen is not a fan of point-of-sale giving.

"I call it the hold at the checkout. Like, hands up. Do you want to give $2?"

It might just be $2 … but at the end of the day, those $2 add up to millions of dollars.- Kate Bahen, Charity Intelligence Canada

The managing director of Charity Intelligence Canada is adamant that customers avoid donating at the till, unless they are fully informed about the charity.

Canadians should give to charities that matter to them, according to Bahen, and research how those charities spend their money before they donate. 

"It might just be $2 here and $2 there. But at the end of the day, those $2 add up to millions of dollars," she said.

"It's absolutely fine when you have no information about a charity to say, 'No thank you' and not feel guilty."