Partner with a charitable trustee

Resource | mars 27, 2018

Working with a charitable trustee is a common, and very important step in your group’s growth. If you’re hoping to raise funds for events or park improvements, you’ll need a charitable trustee to receive funds and provide tax receipts. However, the benefits of having a positive relationship with a charitable trustee far exceed fundraising objectives. When well aligned, a relationship with a trustee will help both groups flourish.

As a small, community-based organization, how do you raise funds to do the things you need to do? You need to bring on new members, undertake projects that may involve hard costs and publicize the events you hold. And when you want to do something ambitious, you really need to get creative about fundraising. Grassroots organizations in Canada can take the form of an Association, a Trusteeship, a Not for Profit, or a Charity. Only two of these will enable you to issue donor tax receipts and to apply for most forms of publicly available grants. They are trusteeships and charities.

Establishing a charitable trusteeship is the simplest, fastest way to issuing tax receipts and accessing grants. In essence, you align your organization with a charity whose mandate is somewhat similar to yours. Tax receipts are important to donors, especially larger donors, because a portion of funds donated gets deducted from their taxes. We spoke to Julet Allen, Program Director at Delta Family Resource Centre, a grassroots, non-profit, community-based agency in Toronto’s Rexdale community.

  1. The process

    The process of signing on a trustee is straightforward.

    • First, find a registered charity that does something similar to what you do. For example, if your mandate is to take care of and improve a local park, you could align yourself with a charity that has an environmental mandate, even if it’s, for instance, preserving wilderness areas across Canada.
    • Next, approach one or more organizations with a proposal. You will want to find an advocate within the organization. At some point, you will probably need to explain what you want to do to their senior staff or board of directors.
    • To establish a charitable trusteeship, you will need a Letter of Agreement that outlines the terms of the partnership and the roles and responsibilities for your group and for the charity. That’s pretty much all you need. There's a sample letter below.

    As far as responsibilities go, your group would typically be responsible for finding and writing grants, managing the deliverables and funding, managing the relationship with the funder and reporting back to them. The trustee would provide legal charitable status, history and credibility that you can mention in future proposals, a bank account and the financial infrastructure to manage money. As a charity, they will have a legal governance structure that likely includes a board of directors, audited financial statements and an annual report. These are things required by most funders.

    As Julet emphasizes, being a trustee is a commitment that takes time: “Ensure that the organization you want to work with has the same vision for you as you do for yourself...and that they have time to work with you.”

  2. Make it win-win

    The main reason that a potential trustee would take you on is to further their own mandate.

    If they want to educate the public about wild places while working to preserve them, they may see the value of your mandate to maintain the integrity and enjoyment of a local park. Likewise, if they work to improve living conditions in a high needs neighbourhood, they may understand the important roles a safe, enjoyable park plays in terms of outdoor recreational and mental wellness.

    Trustees get to further their mandates, but they also get a small portion of funds you raise—typically 10% to 15%. That may seem like a lot for not much, but keep in mind that the charity has infrastructure to maintain, returns to file, cheques to process and bookkeeping to perform. By taking you on, they are also taking on reputational risk.

    Another kind of risk, legal risk, is something to discuss before signing a partnership agreement. Are you going to be covered under their insurance policy? If so, they will have to contact their insurance representative and may incur additional cost. Or they might ask you to prove that you have liability insurance of your own.

  3. Why not just become a charity?

    You might be thinking: ‘well, if we register as a charity, we can keep all the money we raise’. You would be correct, but there is a reason why most grassroots organizations progress the way they do. Here are the steps that most groups take:

    1. Association
    2. Trusteeship
    3. Not for profit
    4. Charity

    The reason is that becoming a charity takes years, requires a lawyer and comes with obligations such as forming and keeping a board of directors and filing a charitable tax return every year. Most grassroots organizations find that in the early stages, these are not responsibilities they want to take on.

  4. Choosing a trustee for your group

    Any group that is a charity can be your trustee as long as you have something in common with their charitable mandate. We often advise park groups to find local organizations to partner with: if they are local, they can partner on doing things together. So if the charitable organization is having a street festival, you could complement it by putting on a park festival at the same time. As Julet aptly states:  “Trusteeship goes beyond the financial. A trustee can provide guidance, like how to plan a budget or get funding. Trustees have resources that you can tap into.”

    Not everyone knows where to find local charitable organizations. The best place to start is with precedents: park groups are often trusteed by local community health organizations, church groups and other neighbourhood organizations.

    Before you enter into an agreement, it’s important to find the right fit. Part of that involves having clear conversations with a potential trustee about your mandates, your planned activities and your goals. It’s a good idea to document those conversations through a Memorandum of Understanding (MOU) or a Letter of Agreement, also called a Partnership Agreement.

    A trusteeship is hands-down the best way for a smaller organization to gain the important advantages of a charity without all of the work and up-front cost. If you choose to go down that path, we wish you the best of luck in your quest! We’re looking forward to seeing you grow.


    This resource was developed with support from