2.1.2. Evaluating contributions received in the form of services
Office or management work performed free of charge by a professional:
Ask the donor for a document indicating the market value of the services provided free of charge (i.e., the price they would usually charge for these goods or services). A donation of services is not eligible for a charitable tax receipt (see Section 5.3, and Diagram 3 in the Toolkit)
Media placement, transportation, or other service providers:
If the donor is a merchant, ask for an invoice indicating the retail price and the amount of the donation (or discount).
In general, volunteer labour is not recorded in an organization’s income and expenses for two reasons:
- 1. Evaluating its fair value is too difficult;
- 2. The organization does not have the financial ability to purchase these services and therefore the third condition for accounting (that the organization would have otherwise purchased the service) cannot be met.
However, such information can be included in the notes to the financial statements (see example of note below).
Example 1 - volunteer labour not accounted in financial statements
If an organization determines that it does meet the third condition (i.e., that it would have otherwise purchased these services), the basis for this evaluation should be provided — for example, by obtaining an estimate of the hourly rate for similar services, or by using an existing wage policy.
To disclose this information in its financial statements—whether in the organization’s revenues or in the notes—the organization must implement a system to collect the information. An example of such a system could be a register in which the volunteer records their name, the date they volunteered, and the event or activity for which they volunteered.