WRITING THE APPLICATION
STEP FOUR:

PROOF OF FUNDS -
AND SETTING UP
THE BANK ACCOUNT

Banking and finances, and putting together a successful ‘Proof of Funds’ document, are probably the hardest part of the application for private sponsorship. The difficulty is on purpose, to answer two questions from Canadian immigration. 1) Is there enough money for the refugees to live on when they arrive? 2) Where did the money come from? Because it’s not allowed to come from the refugees themselves.

Keeping those questions in mind as we go step by step through the process – which isn’t that hard after all, if you have a trusty guide to show you the way! 

Application checklist.docx

Proof of Funds

The objective here is to establish where the money for your sponsorship came from. The main worries that Canadian immigration has is that the refugee is paying for their own application (which would be buying their way into the system) or that they are being funded by nefarious sources. 

But first you have to find the funds!

Step one: Figure out the funding

Before you even start on the process of writing an application, it’s a good idea to know how you’re going to raise the money – a path to success. Otherwise you might find yourself with a sponsor team and a completed application, but no way to have the necessary funds required by Canadian immigration.

As a reminder, this money is supposed to be used by the refugees themselves to live on during their first year in the country. Thanks to these funds, the newcomers will not have to go on social assistance (not allowed in their first year) or be forced to take on work until they are ready (though they can work if they wish).

And all the money must be in the bank before you can even apply! The only exceptions: if you use ‘proof of income’ by the sponsors against the final total, which we don’t generally recommend, or if you’re applying through an SAH, who may not require you to have all the funds ready at the time of application

Check out this handy ‘Sponsor Costs Table’ from RSTP to see how much money is needed per person or family. Note that a ‘dependent’ is a child under 23 years of age, or a spouse, typically. So a mom and young daughter require less funding than two adult sisters, for example.

Generally the funds will come in through one of three methods:

We’ll tackle each of these fundraising routes below.

Step two: Figure out if you want to donate

Many sponsors naturally want to contribute to the fundraising effort to bring 'their' refugee to Canada. And yet it's not a good idea, since it places a huge burden of paperwork on that same sponsor. Even if a member of a Group of 5 or Community Sponsor makes a donation of $1, that person must then also provide:

A signed financial profile

A notice of assessment

Proof of income, such as T4s and so on. It's basically all the same documents that you'd submit for your taxes, and about as much fun to assemble. 

Note, however, that at least Canadian immigration doesn't actually care if you have a healthy income, or very little income at all. It's the paperwork itself that matters, not so much what the paperwork actually indicates about your financial position.

Bonus tip: If your application is through the Community Sponsor or SAH route, the sponsoring organization will also need to provide their audited financial statements - the sort of thing they'd be doing anyway, specially if they're a registered charity.

Step three: Complete the fundraising

If crowdfunding is still permitted by the time you read this post, be sure to check out these other posts for best practises on fundraising, how to take a storytelling approach to raising money, as well as FAQs on online fundraisers in general.

As you’ll see in these guides, the best person to set up the fundraiser is whoever is most capable of raising the money. Usually that’s the person with the biggest, most active social network, or who just happens to be good at raising money. Sometimes such a person is also the sponsor of the refugees in question, but just as usually it’s a friend or supporter who may not live in Canada at all.

Once all the funds are raised, the person who launched the campaign and has the money can transfer it directly to the sponsors, or even better, into the trust account that’s been set up for the refugees. See Step 6 for more of that.

And note that you should not shut down the fundraiser when it’s done, or delete it. It shows a record of donations that will be needed for the ‘funds explanation letter’. And Immigration might even check out the fundraiser themselves, to confirm the list of donations, donors and dates that you’ve provided for them.

Step four: Get ready for the bank appointment

In years past, it was always a good idea to set up the bank account as soon as possible. Starting in April 2021, however, the hosts of the RSTP webinars on private sponsorships hinted at a new rule that these accounts should be 6 months old or less at the time of submission. So maybe hold off until you really are ready to start receiving funds – and hopefully all the funds required by immigration.

Setting up the account properly is tricky. So let’s break down the steps further.

A.   Figure out which of the two sponsors will set up the account. Since two of the five sponsors need to manage the account, it’s an interesting discussion as to which two to choose. It can be those who know the most about finances and accounting, or it can just be whoever is available for a daytime bank appointment! Either is fine. And note that the same two people can set up accounts for other refugee applications. The rough limit is one person can be on 5 applications for families, and 7 or so for individuals. The same goes for how many bank accounts a single person can help open.

B. Figure out which bank to use. Immigration seems to prefer the 5 major Canadian banks to credit unions, so probably stick to them. And you may want to go to a bank where you already have accounts, since they know you already. There’s a TD branch on Parliament Street in downtown Toronto that has done dozens of these accounts for Northern Lights-related applications, for example.

C. Call the bank and set up an appointment. When you do call, indicate that you are coming to set up a ‘non-business trust account for the purposes of immigration’ and would prefer to meet with someone from the bank who has set up one of these accounts before. And let them know you will only need about an hour of their time to do this: 45 minutes if they have done it before.

D. Get ready for the appointment. You’ll need a copy of your driver’s license and passport to set up the account. And if you have any debit cards or accounts with the bank already, bring them to make it easier for the bank to find them in their system. Also bring out a print out (or just write down) how the ‘principal applicant’ of the refugees you’re sponsoring has their name spelled on their UNHCR identification. This may come in useful as well.

E. Have examples ready: It’s often good to bring sample paperwork from other trust accounts that have been set up for the same purpose of private sponsorship. The best examples are those created at the same major bank, which will go a long wait he helping your banker know what’s required. Let us know if you need any and we’ll provide a copy.

Step five: Go to the bank

This is kind of a continuation of the last step, so here goes...

F. Go to the appointment. Don’t worry about the lineup for the bank machine! Just tell the security dude or bank employee who you’re there to see, and see them. 

G. State your purpose and let the banking staff helping you that your goal is to set up a ‘non-business trust account for the purposes of immigration.’ If this is new for them, you may have to explain how private sponsorship works. Let them know that this is money that will be held until the refugees arrive, at which point it will be transferred to them, in instalments, to live on during their first year. Note that the account should be savings, not chequing, since chequing accounts usually have a monthly fee.

H. Get ready for a surprise. Some bank employees, especially those at branches outside of downtown Toronto, are not familiar with private sponsorship or what the bank needs to do. So you may have to talk them through it, using the sample paperwork from step #9 as your guide. Also, things change – as of May 2021, the Royal Bank of Canada, for example, put in a new policy that they would only create business trust accounts for immigration. At TD, however, it’s still non-business accounts. And some branches appear to make up their own rules. 

To save yourself misery, show the person setting up your account the guide from RSTP describing what needs to be on the final bank letter. While you don't need the lee letter now, you need assurance that the bank will be able to produce the letter in the future, so you're not wasting all your time and energy.

Bank Information PRIVATE SPONSORSHIP OF REFUGEES PROGRAM.docx

I. Confirm the details. The bank should take the details of both sponsors, since they’re the two signatories on the account, along with their home address and other identifying information. And if you’re lucky, the bank will also make note of the refugee’s name (as spelled on their UNHCR card). But that’s just for the ‘notes’ on the account. The actual two account holders are the sponsors. Once the papers are printed up, check to make sure everyone’s names are spelled correctly.

J. Ask the bank to set up the account so you can see money going into it. That’s because you want to be aware of whether the wire transfers worked or not, and have an idea when all the funding is done, so you can finish that part of the application.

K. Do not put any money in this account. Sometimes the account holders think they should put a bit of money in the account, to cover bank or future wire transfer fees. That’s not a good idea. Even if a sponsor donates a single dollar to the application, he or she needs to provide a burdensome bunch of extra documents, including a signed financial profile, a notice of assessment, and various forms of proof of income. It’s a headache equivalent to filing your taxes. So no, don’t put any money in the account, unless it’s from another donor. And if the account does charge monthly fees, tell the bank manager that you need these fees to not be required.

L. Ask to keep the account separate from your own. Once money is put in the trust account, it really shouldn’t be taken out again, since it raises red flags with Canadian Immigration. And thanks to online banking, it’s very easy to screw up and withdraw or deposit money into the trust account, which may appear alongside all your own personal accounts, with nothing to indicate its unique purpose. So ask the bank to help you avoid making this mistake – for example, by putting a block on withdrawals from the account, or to require a separate login to view the account online.

M. Ask for a wire transfer form. You should leave the bank with a wire transfer form, which states the branch transit number, institute number and account number. And since you’re likely to be receiving money from outside of Canada, it should also list the Swift code. You may also want to write down the two names of the account holders, in case the person sending the money needs to indicate that for his or her own wire transfer form.

N. Ask for a business card. You’re going to need to contact the bank employee who set up the account later on, when it’s time to generate the bank documents needed for the application (see step 9). So take his or her bank card now, and say you’ll be in contact soon to arrange for these documents once the fundraising is done.

And you’re done! Bank appointment now over! But note: you’ll have to return to the bank once all the money is in the account, to get a bank letter and all the account statements. So the banking is just over… for now.

And note: the process described above may vary widely according to the bank and bank branch you visit. Each one seems to do things slightly differently. Here's what one sponsor shares:

"The Royal Bank only does business trust accounts, not non-business. In our case, they required that a group be formed, which we named the West Nipissing Refugee Group, with two signatories from the group on each account.  The Royal Bank did not ask for the name of the refugee/eventual recipient of the funds. Also: online access to the account is not possible. So to check how much money is in the account, we will need to check the monthly statements, or directly contact our bank representative."

Step six: Put funds in the account

Now that you’ve got the bank account set up and a wire transfer form to share around, time to start putting money in it! That’s true whether the money was collected through a crowdfunding campaign, or is being held by a family member or friend. The money can come from any country, as long as you have a paper trail of who sent it, and how, and as long as the funds don’t come from the refugees being sponsored.

So take a picture or send a PDF of the wire transfer form that your bank gave you, and the donor(s) can use it to send funds straight into the trust account. It may look something like this...

For reasons of cost and reliability, the best way to send money is often through a bank-to-bank transfer. The fees are lowest – as low as $5, though typically more like $16 on either end. In some countries, like Afghanistan and Syria, the banks are not really integrated into the global financial system. In that case, the donor may need to use a third-party vendor like Wise, which offers higher fees, but is fairly reliable.

If you’re getting a large donation (anything $1,000 or more is ‘large’), ask the person to first send a test amount, like $20, to see if it works. That way you’re not spending weeks trying to figure out where the $5,000 went, for example. The transfer should be done within 5-7 days, and once you know it works, at least for that donor, it’s time to start sending more.

It’s also very important to ask your donors to keep a copy of every wire or bank-to-bank transfer form they used to send the money. Copies of these will be needed in the funds explanation letter, the next step in this guide.

Step seven: Work on the ‘Funds explanation letter’

Once you’ve fundraised the full amount, it’s time to start working on the funds explanation letter. This letter, written by the two sponsors who set up the bank account, states the amount of money in the account, and states how it got there. 

The funds explanation letter is a cover letter stating: 

The cover letter must be signed by the bank account holders.

Single Donations

For single donations that went straight into the trust account, you need to indicate who sent the money: fill the right information into the brackets and the blanks…

Donor 1: [Person X]

Name:
Email:
Date of birth:
Phone number:
Address:
Occupation:
Relationship to applicant: 

Amount transferred: On [X date], funds totaling $ [X amount] CAD were sent by wire transfer to the non-business trust account established by [Sponsor 1] and [Sponsor 2], arriving in the account [X date].

[ID: An image of their driver’s license or passport]

[An image of the wire transfer form or screen capture of the funds leaving a bank account]. Make sure the details on the receipt match what you say in the sentence about ‘Amount transferred’. If the money was delivered by cheque, include an image of that, and drop it right into the World doc.

Crowdfunding

If some or all of the funds were raised through crowdfunding, you need to provide ample detail on it too for the funds explanation letter. Such as:

Public events

If you raised the money through a public event, like collecting money in a box or passing around a collection plate, it may be harder to track down who donated what. In that case, put in the funds explanation letter how much was raised, along with as much detail as you can about the fundraiser - screen grabs showing your ads promoting it, details of when it took place, and where, and who organized it. 

There's no science to which exact details will satisfy immigration, but the point is to show them that the event was real and really did generate these funds.

Who is the donor of record?


IRCC needs to see a clear paper trail from the last person who held the money, to the trust account established for the refugee. 

Sponsors who also donate

When a sponsor is a donor of record, the sponsor must include:

Step eight: Get a bank letter and account statements

Once every last part of the application is done and ready to send, get the final banking docs. The reason you want to wait until the last minute to do this step is the bank account statements need to be as recent as possible, to show immigration that the money is still being kept in safekeeping. (In prior years, people would set up the accounts, get the bank letter printed, and then take the money out again to use in other applications. Cheating, in other words).

One of the sponsors should email your contact at the bank now (probably the employee who set up the account) saying you need some documents on the account. Those are:


The letter should have the following details:

While some banks won't do it, others will agree to put the name of the refugee in the “Re” field. So “Re: the private sponsorship of Ali Hamed Naqvi” (or whatever the name is), using the same spelling as on the UNHCR card.

Again, we can provide a sample copy of one these letters so you know what they look like. And there's a copy of RSTP's guide to this bank letter, above.

Step nine: Put together the Proof of Funds document

Once you have the funds explanation letter, bank letter and account statements, you have everything you need for the Proof of Funds part of the application!

Note that they all need to be turned into PDFs (so the funds explanation letter, which probably started as a Word doc, needs to be saved as a PDF). Then you combine them, using a website like this one, and compress the final file, using a website like this one. And give the final file the usual funny name required by immigration.

PA LAST NAME, First Name – Proof of Funds

Search "Proof of Funds" on this Immigration website to find out more.

Bonus tip: Many banks do not know how to set up one of these accounts, which are a ‘joint personal deposit account as an informal trust'. So bring a copy of this letter to give them an idea.

Asleep yet? Take a rest before moving on to our next post. 

NEXT UP: STEP 5 - THE REST OF THE DOCUMENTS