Vetting Third-Party Fundraisers: A Legal How-To

Synopsis

Third-party fundraisers can help charities increase their reach and impact—but without proper vetting, they may also expose your organization to legal, financial, and reputational risks. 

This article offers guidance on how Canadian charities can responsibly vet third-party fundraising arrangements, set clear expectations, and protect their mission through written agreements and due diligence.

Why Vetting Matters

Third-party fundraisers often act as public-facing representatives of your organization. Without thorough vetting, your charity could be held responsible for misleading messaging, poor donor experiences, or mishandled funds—even when the fundraiser acts independently.

A strong third-party relationship—built on clear expectations and legal safeguards—helps you:

• Protect your reputation with donors

• Comply with CRA fundraising and receipting standards

• Prevent miscommunication or fraud

• Maintain control over messaging and brand use

Even if the fundraiser is external, your charity is accountable for how funds are raised in your name.

Steps for Effective Vetting

In Canada, there is no specific regulatory body governing third-party fundraisers. That makes it critical for charities to implement a strong internal vetting process. Consider the following steps:

1. Review past performanceRequest case studies, references, or campaign reports from previous clients. Look for indicators of transparency and impact.

2. Examine their public reputationAssess how they present themselves on social media, in media coverage, or in previous fundraising efforts. Do their values align with yours?

3. Verify legal and financial standingEnsure they are legally registered (if applicable) and ask how they track, hold, and transfer funds. Ask for documentation of prior practices or protocols.

4. Clarify expectations upfrontBefore any work begins, confirm that both parties agree on roles, communication methods, and reporting structures.

   
   

What to Include in a Written Agreement

To avoid confusion and protect your organization, every third-party fundraising arrangement should be governed by a written agreement. Key elements include:

• Scope of the fundraising activity

• Roles and responsibilities of each party

• How donations will be collected and transferred

• Reporting timelines and access to financial records

• Rules for using your charity’s name, branding, or promotional content

• Confidentiality, conflict resolution, and termination clauses

Case Study: What Can Go Wrong

An Ontario charity once collaborated with a third-party event organizer without a formal agreement or review process. The fundraiser used outdated branding, offered inaccurate tax receipt promises, and delayed the transfer of funds. 

The charity was left cleaning up the mess—fielding donor complaints, fixing financial records, and issuing public clarifications. A simple written agreement and vetting checklist could have prevented the fallout.

FAQs

What should charities verify first when evaluating a third-party fundraiser?

Reputation, experience, and financial practices. Always ask for references and check how previous campaigns were managed.

Are third-party fundraisers regulated in Canada?

Not specifically. This makes internal vetting and contractual safeguards all the more important.

Should we review our third-party fundraising relationships regularly?

Yes. At least annually—or any time there’s a change in scope, staffing, or campaign structure.