Questions and Answers
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As the Executive Director of the Victoria Hospital Foundation, I can report that my last year and a half has been nothing short of earnest learning and incredible inspiration! It has been 18 months of getting to know our community’s generous supporters, studying what we have done well and improving in areas where growth was needed. Along the way, I have been asked the same handful of questions time and time again from friends of the Foundation. I would love the opportunity to shed some light on these important questions.
How much of my donation actually goes to the hospital?
Last year, our Foundation purchased $600,000 worth of vital medical equipment for the Victoria Regional Hospital. And, similar to any other registered Charity or business, we must incur operating costs in order to make that happen. The Canada Revenue Agency has updated their Guide to Fundraising by Registered Charities in 2012 and strongly suggests that Registered Canadian Charities aim for a 35% ratio of costs to revenue ratio. As a general rule, the higher a charity’s ratio, the more likely it is that the CRA will seek additional justification for fundraising costs. A high ratio is an indicator that a charity may be engaged in fundraising that is not acceptable – forming a collateral non-charitable purpose, delivering a more than incidental private benefit, or being contrary to public policy or deceptive.
For example:
• Ratio of costs to revenue over fiscal period – under 35%
This ratio is unlikely to generate questions or concerns by the CRA.
• Ratio of costs to revenue over fiscal period – 35% and above
The CRA will examine the average ratio over recent years to determine if there is a trend of high fundraising costs. The higher the ratio, the more likely it is the CRA will be concerned the charity is engaged in fundraising that is not acceptable, requiring a more detailed assessment of expenditures.
• Ratio of costs to revenue over fiscal period – above 70%
This level will raise concerns with the CRA. The charity must be able to provide an explanation and rationale for this level of expenditure to show that it is not engaged in unacceptable fundraising.
The Victoria Hospital Foundation takes our responsibility of accountability to our community seriously. We are continually reviewing and examining our operating and fundraising practices to ensure we are resourceful, effective and always ethically answerable to our community. The Victoria Hospital Foundation and our Board of Directors is proud to report that our cost to revenue ratio is well within the suggested 35% target as recommended by the CRA. Our Foundation maintains financial transparency and makes available our Annual Report to any donor who wishes to view it.
