GlobalPhilanthropy.ca assists Canadian charities understand their legal and ethical obligations when operating in Canada or abroad. GlobalPhilanthropy.ca also provides insights and information to non-Canadian charities interested in operating or fundraising in Canada.
The charitable sector in Canada has become highly competitive. There are over 86,000 Canadian registered charities. Donors, regulators, media, the public as well as other stakeholders, have increasingly high standards for charities and their operations. GlobalPhilanthropy.ca will assist non-profits and charities in Canada in trying to be transparent, legal, ethical and effective.
This site is divided into articles, blog, archived free webinars on charity compliance issues and our contact information if you need to retain a charity lawyer. You can also find information on foreign activities, planned giving, recently revoked charities, charity statistics, and new corporate acts.
If you require legal advice with respect to Canadian or Ontario non-profits or charities please contact Mark Blumberg at .(JavaScript must be enabled to view this email address) or 416-361-1982 x237 or visit www.canadiancharitylaw.ca
The CRA has been sending out a “Notice of Filing Omission” to charities who don’t file their financial statements with the T3010. This is an important reminder that you don’t have to just file the T3010 - you also need to complete it properly and attach necessary schedules and financial statements.
...read moreIn Gateway City Church and The Minister of National Revenue, the Federal Court of Appeal dismissed Gateway’s appeal to prevent the Minister from revoking its charitable status. CRA revoked the registered charity’s registration for 3 reasons namely “Failure to maintain adequate books and records, failure to devote all of its resources to its own charitable activities, and provision of personal benefits to a proprietor, member, shareholder, trustee or settlor”. The Court noted ”...the Church’s application can be granted only if the Church meets the test for the granting of stays and injunctions. The Church must show as per (RJR-MacDonald v. Canada (Attorney General): it has an arguable case against the revocation, it will suffer irreparable harm if the revocation is allowed to happen, and the balance of convenience lies in its favour.” The FCA found that Gateway did not meet the test for irreparable harm and dismissed the application. The FCA provided a detailed analysis of the irreparable harm requirement including some tangible examples of why Gateway did not meet the test.
...read moreCRA has released a letter providing responses to the questions posed at the 2011 Canadian Tax Foundation National Conference. CRA provides comments on the NPO Risk Identification Project and various comments on previous Interpretation Bulletin’s regarding NPO’s that have been released. It is interesting to note CRA identifies that there “39,000 entities that file T2, T3 and/or T1044 returns.” There are a large number of non-profits that do not need to file such returns and presumably some NPOs that are supposed to file but don’t. The bulletin also discusses profit that is “incidental” and what are reasonable operating reserves for a non-profit.
...read moreCRA recently released a letter that provides general comments and suggested information that needs to be submitted to the Charities Directorate of the CRA when municipal or public bodies performing a function of government in Canada are applying to be a ‘qualified donee’. This new requirement to apply and be registered on a publicly available list of qualified donees came into effect on January 1, 2012. This category is particularly relevant to the Aboriginal community such as Indian bands. The CRA is still developing the process for applying for registration. However, this letter provides groups with an idea of the information that CRA would require.
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The Charities Directorate is launching a new Charities Program Update bulletin. It will be sent to the 23,000 subscribers to the Charities Directorate email list. Lots of interesting information and statistics are contained in the Update.
...read moreToday the Ontario government announced the release of the plain language guide to the ONCA.
...read moreThe CRA has revoked the registration of The Life Centre Word of Faith Ministries Inc. as a charity. The Globe and Mail covered this story in “Toronto pastor, wife charged in alleged $8.6-million Ponzi scheme” http://soa.li/mVtmmlY
...read moreThe Canada Revenue Agency has revoked the charitable registration of the Canadian registered charity Trinity Global Support Foundation. The London Free Press has written extensively on this charity and we have covered here: “FCA case on Trinity Global Support Foundation - CRA wins again” http://www.globalphilanthropy.ca/index.php/blog/comments/fca_case_on_trinity_global_support_foundation_-_cra_wins_again
...read moreOn October 15, 2013 we will be having the 2nd Annual Blumbergs’ Canadian Charity Law Institute in Toronto. It will be a full day of practical legal and ethical compliance information geared toward charities, professional advisors and those interested in regulatory issues affecting charities.
Industry Canada today announced today that “The forms under the Canada Not-for-profit Corporations Act have been modified to ensure a high level of Web accessibility to which the Government of Canada is committed. Only the format and look have been modified. The content of the forms remains unchanged. Corporations Canada will continue to accept applications that use the old versions of the forms. Please refer to our website to find specific forms.”
...read moreIn this case Trinity Global Support Foundation (the “Foundation”) asked the court to delay CRA publishing a notice of intention to revoke the registered charity status until the Foundation’s other legal claims have been dealt with. The FCA ruled against the Foundation because the Court determined that “there is no substantive evidence that the Foundation or its clients will be forced to shut down or be significantly affected prior to its notice of objection being considered.” The Court also did not think that losing its charitable status caused irreparable harm as “It is clear from the evidence that the reputation of the Foundation has already been subject to intense public scrutiny for reasons distinct from the notice of intention to revoke. As such, I see no basis upon which to conclude that any possible further harm to the Foundation’s reputation will be such as to amount to irreparable harm.” The judge does not mention the London Free Press coverage but presumably that is what is being referred to. The conclusion of the FCA decision is important “Given my conclusions with respect to irreparable harm, I need not consider the balance of convenience element of the test. However, it is clear that serious allegations have been raised in the context of the proposed revocation. It is clear from the Foundation’s own evidence that it has been engaged in fundraising activities using tax shelter arrangements, which have been an activity of legitimate concern generally to the Minister. As such, in my view the public interest in the Minister protecting the integrity of the charitable sector outweighs the Foundation’s interest in staying revocation and I see no reason for the Court to grant an equitable remedy to the Foundation.”
...read moreCRA released a letter that discussed the issue of whether a member of the clergy who performs occasional liturgical services would satisfy the “function test” of ministering to a congregation, diocese or parish on a part-time or assistant basis. The CRA said no and stated that, “Where ministering duties performed by a member of the clergy are incidental to and not an integral part of his or her overall job responsibilities, it is our view that the function test would not be satisfied and that he or she would not be eligible to claim the clergy residence deduction provided for in paragraph 8(1)(c) of the Act.”
...read moreLast month CRA released an updated Guide which explains how the goods and services tax/harmonized sales tax (GST/HST) applies to non-profit organizations. This includes registration requirements, exemptions, rebates, and simplified methods of accounting that may apply to a non-profit organization.
...read moreLast month the CRA released an updated Guide which explains how the goods and services tax/harmonized sales tax (GST/HST) applies to registered charities or registered Canadian amateur athletic associations.
...read moreToday the Department of Finance released the “Notice of Ways and Means Motion to amend the Income Tax Act, the Excise Tax Act and Related legislation”. This will introduce the First-Time Donor Credit, improve the efficiency of the Tax Court of Canada which has been bogged down with charity gifting cases and allowing CRA with abusive gifting tax shelters to collect 1/2 of the taxes allegedly owed.
...read moreThe Ontario government has published an ONCA draft organizational by-law.
...read moreOn April 18, 2013 we will have the first Blumbergs’ Charity Law Boot Camp in Toronto. It will be a one day boot camp on compliance and standards issues for Canadian charities led by charity lawyer Mark Blumberg.
...read moreThe CRA has provided more information on the provision in the 2013 Federal Budget dealing with taxes in dispute and abusive charity gifting tax shelters.
...read moreIn the 2013 Federal Budget there was a small tax incentive for first time charitable donors called the “First-Time Donor’s Super Credit”. CRA has provided additional information on the administration of this small tax incentive for giving.
...read moreI wish it was an April Fool’s joke but unfortunately there are still Canadians investing in the ‘abusive charity gifting tax schemes’. The Globe and Mail had an article today by Paul Waldie discussing “New Canada Revenue rules target charitable tax shelters”. The article discusses a measure in the 2013 Federal Budget dealing with donation tax shelters. Over the last decade over $6 billion in receipts have been issued as part of abusive charity gifting tax schemes. As a result billions of dollars have either not been collected or have been delayed in collection. The CRA has been winning these cases (for example Marechaux) and now the CRA will be given an increased ability to collect funds on disputed amounts related to donation tax shelters. In the past CRA could not collect until the process was completed (sometimes 10 or more years later). Now CRA can collect on 50% of potential taxes if CRA disputes the charity donation tax shelter. If the taxpayer wins they would get their 50% back. This just makes these schemes a little less attractive. It also reduces the likelihood of someone trying to avoid a large amount of taxes and then skipping off to Bermuda or Panama or wherever people skip off to these days.
...read moreIn an article today in the Globe & Mail entitled “Canada Revenue Agency struggling to put a lid on tax fraud” Kathryn Blaze Carlson discusses false receipting schemes.
...read moreThe following text is from the Ontario government website: “ONCA is targeted to come into effect no earlier than January, 2014. Existing not-for-profit corporations will have a three-year transition period once ONCA is in effect. Community Legal Education Ontario (CLEO) will provide support to not-for-profit corporations as they make the transition to ONCA.” Therefore, the July 1, 2012 target date has been delayed by at least 6 months. Also the Ontario government is noting that CLEO will be providing support but no details have been provided at this time.
...read moreThe Federal Government has announced in the 2013 Federal Budget that the Canadian International Development Agency (CIDA) will be amalgamated with the Department of Foreign Affairs and International Trade (DFAIT) to form the Department of Foreign Affairs, Trade and Development. It will be interesting to see how this change will affect the Canadian governments international development work and its relationship with Canadian charities.
...read moreOn March 21, 2013 at 4pm, Finance Minister Jim Flaherty delivered the 2013 Canadian federal budget. There were a number of interesting proposals relating to charities. Some of the highlights include a new temporary First-Time Donor’s Super Credit (FDSC) designed to encourage new donors to give to charity. “The FDSC will increase the value of the federal Charitable Donations Tax Credit by 25 percentage points if neither the taxpayer nor their spouse has claimed the credit since 2007” Flaherty has ignored many suggestions for increased tax incentives that would have been expensive and disproportionately benefitted the rich such as the elimination of capital gains on donations of land or private shares.
...read moreJeff Gray of the Globe and Mail is reporting today in an article “Tax-scheme case revived against Bay Street law firm” that the class action lawsuit against Cassels Brock & Blackwell LLP has been certified by a decision of the Ontario Court of Appeal.
...read moreThe Charities Directorate of the Canada Revenue Agency has announced the revocation of Marketplace Ministries International as a registered charity for its involvement in the “Insured Giving Donation Program tax shelter gifting arrangement”.
...read moreCRA has provided some comments on registered charities and political activities.
...read moreThe CRA has two upcoming Charities Information Webinars being offered in the month of March. Upcoming webinar topics include Completing Form T3010 (13), Registered Charity Information Return, and Arts Activities and Charitable Registration (Guidance CG-018).
...read moreIn January, CRA released a revised T4033 Guide which we blogged on earlier, which assists Canadian registered charities with completing the Registered Charity Information Return.. Now they have slightly revised the T4033 again.
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In The World Job and Food Bank Inc. (WJFB) CRA revoked the registered charity’s registration for 3 reasons namely “WJFB failed to demonstrate that it devotes all of its resources to charitable activities carried on by itself, it failed to keep information in such form so as to enable the Minister to determine whether there are any grounds for the revocation of registration, and it failed to keep a duplicate of each receipt containing prescribed information for donations received by it.” The Court noted ” In order to succeed in this appeal, WJFB had to demonstrate that all three bases for the Minister’s and the CRA’s conclusion are unreasonable, as each of them is sufficient to justify the decision to revoke. WJFB has evidently not done so. There is evidence in the record to support the decision on all three grounds. It is not this Court’s role to re-weigh the evidence. ”
...read moreCanadians are increasingly asking “How Much Should A Canadian Charity Spend on Overhead?” Is this the right question?
89% of charities issue inappropriate receipts according to statistics from the CRA when they audit charities. Other than non-filing the T3010 this is the greatest reason that charities face revocation. Here is my paper that I delivered to the Ontario Bar Association (OBA) Institute 2011 entitled Top Receipting Concerns for Canadian Registered Charities.
Here is a revised version of the Canadian Charity Law Checklist by Mark Blumberg. In addition to reminding charities of questions to ask, it also provides links to relevant resources.
CRA has just released a new guidance called “Canadian Registered Charities Carrying out Activities Outside Canada”. http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/tsd-cnd-eng.html Although the name indicates “foreign activities” this document deals with a lot more than foreign activities. It covers the relationship between a Canadian charity and any non-qualified donee, whether in Canada or abroad. If a Canadian charity has dealing with, for example, a non-profit that does not have charitable status then the same rules apply as a Canadian charity dealing with a foreign entity. Essentially, almost all organizations outside of Canada are non-qualified donees. If you are going to transfer resources to them you need to maintain “direction and control” over those resources. This document helps a Canadian charity understand what is required for direction and control. Failure to maintain direction and control can result in a 105% penalty of the amount transferred and/or revocation of charitable status.
In this article I discuss how Canadian charities can work with other Canadian or International Organizations that are not registered Canadian charities as long as they maintain direction and control of the Canadian resources.
So much is written about legal issues relating to charities in Canada. In this article I try to distill the ten most important things you need to know about charity law in Canada.
The title is self-explanatory. CRA’s website is a valuable resource for anyone involved with charities. As a charity lawyer I am at the website daily and encourage others to make use of the material and information.
Charities, by virtue of their reputation and access to resources, in some cases make a tempting target for terrorists who are trying to acquire funds and/or legitimacy. Canadian charities need to be diligent in ensuring that their resources are used appropriately and not diverted to non-charitable uses, including terrorism. This article provides some basic guidance as to steps a Canadian charity can take to avoid having their resources misappropriated for terrorism or other inappropriate uses such as fraud.
Here is a sample contractor agreement for a Canadian registered charity conducting foreign activities I prepared it for the Capacity Builders Charity Law Information Program (CLIP) in order to assist charities with understanding what such an agreement could look like.
Canadian Charities and Foreign Activities -This article published in The Philanthropist describes the permissible structured relationships and agreements, review a number of cases dealing with Canadian charities operating abroad, and highlight some of the challenges facing Canadian charities that have foreign activities.
32 ideas for managing risk with volunteers.
Most Canadian charities that lose their registered charity status have lost it for one reason - that is non-filing of the T3010 Registered Charity Information Return.
Canadian charities generally cannot just gift funds to foreign charities. This article discusses appropriate direction and control over foreign activities and projects by Canadian charities.
In April 2008, CRA released a Consultation on proposed policy regarding fundraising by Registered Charities (RC4456-e) (“Fundraising Consultation”). This document is a relatively short six page overview, and CRA has recently provided charities with a more detailed document entitled “Background information for proposed policy on fundraising by Registered Charities” which is 29 pages (“Background Document”). The background document provides greater detail, further definitions of terminology and CRA’s positions on various points. In this article I will discuss the content of the Fundraising Consultation and Background Document, discuss and analyze the criticisms from others of these documents, and provide my own comments.
Here is my article on Canadian Private and Public Foundations and International Activities. In this article I suggest 4 ways that Canadian Private and Public Foundations can carry on foreign charitable activities outside of Canada or assist with humanitarian relief or international development.
In this article I discuss various options for non-Canadian non-profits and charities interested in fundraising or operating in Canada.
This article discusses certain ‘charitable’ gifting schemes which threaten to undermine the public and regulators confidence in the charitable sector. This article also discusses a plan to deal with this problem.
There are many options for foreign universities who are interested in fundraising in Canada and I have discussed 6 different options. It is time to think of your alma mater or your parent’s alma mater and how Canadians can support these universities.
[Here is an updated version of the article ]http://www.globalphilanthropy.ca/images/uploads/Canadian_Charities_and_Terrorism_-_Preventing_Abuse_of_Your_Favourite_Charity.pdf] This article provides practical ideas for Canadian charities and non-profits to avoid involvement with terrorism and money laundering.
Here is a copy of a presentation I recently delivered on promoting bequests to charities. As charities seek to diversify or increase revenue, bequests become an even more important potential source. It covers some of the advantages and disadvantages with using bequests, whether an organization should create a bequest program, 16 steps to setting up a planned giving program that emphasizes bequests, as well as legal, ethical, and practical issues to keep in mind.
Here is a copy of a presentation I recently delivered to a number of Canadian charities in Ottawa entitled “Legal Issues for Canadian Charities Conducting Foreign Activities and International Development”.
Here is a copy of a paper I wrote a few years ago on Charitable Remainder Trusts (CRT) in Canada. The CRT vehicle is extensively used in the US and less so in Canada. There is a concern that if the rules for CRT are made more favourable this will result in greater immediate tax benefits to a few wealthy people, but not much benefit for Canadian charities for decades to come if at all.
On July 2, 2008 the Lobbying Act came into force and many non-profits and charities are completely unaware of its existence or its effect on their activities. Lobbying is defined broadly under s. 7 of the Lobbying Act and includes the development of any legislative proposal by the Federal Government, or lobbying on the passage, defeat or amendment of any bill or resolution, advocating for amendments to any regulation, “the development or amendment of any policy or program of the Government of Canada”, or “the awarding of any grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada”. Canadian non-profits and charities that do political advocacy or lobbying with the federal government need to consider whether their activities fall within the requirement to register under the Lobbying Act. This article may be helpful in understanding whether a charity or non-profit must register.
I recently delivered a presentation to a number of international development charities in Ottawa entitled “Encouraging Bequests While Avoiding Legal and Ethical Issues”. It covered issues such as the CRA Fundraising Policy and its effect on planned giving and bequests, 15 steps to create a basic planned giving program with or without money, 18 legal concerns with bequests to avoid, and 6 ethical issues with bequests and planned giving to be aware of. A copy of the presentation is in PDF here.
This article discusses the T3010 and the importance of filing it accurately and on time.
This article discusses the difference between an acceptable intermediary relationship between a Canadian charity and a foreign charity or NGO (a structured arrangement) and an unacceptable arrangement such as a conduit.
Here is a copy of my presentation to the Canadian Association of Paralegals on Establishing a Canadian Non-Profit or Charity - Avoiding practical, legal and ethical problems.
Here is a copy of my article ‘Bequests - Avoiding problems with the ultimate planned gift’ which was presented at a recent Ontario Bar Association Conference.
This article discusses how Canadian charities can obtain legal services in a way that will not break the bank. This is a big problem. According to the T3010 statistics a majority of charities spend zero on professional services which services include legal and accounting services. This is far from desirable if one thinks that accountability, transparency, good governance and compliance with the laws are important.
This article discusses considerations in setting up a registered Canadian charity and how to establish the charity.
This article provides information and suggestions as to how a Canadian charity should, and should not, deal with CRA audits. It also discusses possible CRA responses and the likelihood of each response.
In this article “CRA’s Consultation on Foreign Activities: What is New and Interesting with Canadian Charities Conducting Foreign Activities” I discuss what is new in the draft consultation.
Here is an article I wrote for Charity Village entitled “Is it legal and ethical to take over a dormant Canadian charity? ”
Here is a copy of the powerpoint slides from a presentation delivered by Danie Huppé-Cranford to the International Committee on Fundraising Organizations (ICFO) Annual General Meeting, May 14, 2010 entitled “Compliance Overview - Major Non-Compliance Issues”.
CRA has released its guidance “Upholding Human Rights and Charitable Registration”. Any Canadian charity dealing with human rights issues will want to read this document.
If you require legal advice with respect to Canadian or Ontario non-profits or charities please contact Mark Blumberg
