We have provided two letters recently released by the Canada Revenue Agency.
We have provided two letters recently released by the Canada Revenue Agency.
On the CRA database it has become apparent that CRA has recently revoked the charitable status of two religious organizations that conduct significant foreign activities. We have put in a request to CRA for information on why they were revoked. Unfortunately under the current rules even if CRA is aware of a problem with a charity it can only advise the public AFTER formal revocation has taken place. So the details available at this point are very sparse.
Here is an article that I wrote for the Ontario Hospital Association entitled Seven Key Tasks of Hospital Foundation Boards.
Many people know that CRA has a publicly accessible database of Canadian registered charities. They may also be aware, that if you are in the database, you are registered charity. There are many benefits of being a registered charity including the ability to issue official donation receipts and to receive gifts from other registered charities. But, did you know that there are approximately 38,299 former registered charities that you can search as well? Some of these former charities have lost their charitable status for non-filing or even voluntarily requesting the loss of status. The status of others were revoked for significant transgressions, such as issuing $600m in questionable receipts! There is quite a continuum here. Everything from absolutely no problem but the volunteers are tired to high questionable conduct.
Carleton University has a Master of Philanthropy and Nonprofit Leadership (MPNL). They do some very interesting programs relating to the non-profit and charity sector. On April 28, 2017 they will be holding a one day program entitled The Future of Charity Regulation: Lessons from International Experience. You can find out more information here.
Here is an interesting article from the NPQ entitled "Wallace Global Fund Fires Law Firm for Aiding Trump’s “Ethical Carnage”. It discusses how a large US charity has decided to sever a long term relationship with a major US law firm because they represent Donald Trump and blessed the highly questionable trust arrangement that Donald Trump is using to ostensibly avoid conflicts of interest while he is President of the US.
Canada has a mechanism to recognize certain foreign universities for purposes of donations. It is probably the most generous tax incentive system of any country in the world. Essentially if you are a degree granting university outside of Canada and you have 2 Canadian students generally studying at your university/college then you can apply to get on a list maintained by the Canada Revenue Agency. Once you are on the list you are considered to be a "qualified donee". That means you can issue Canadian official donation receipts under the Income Tax Act (Canada). WIth such status a Canadian who donates to your prescibed foreign university obtains the same benefits - of between 40 - 70% as if they had donated to a Canadian university.
We have just released our Blumbergs' Canadian Charity Sector Snapshot 2015. Lots of interesting statistics and information on the Canadian charity sector. As well if you want information on individual charities or want to sort charities based on about 20 criteria checkout our charity data site at www.charitydata.ca.
Kate Robertson and Mark Blumberg recently prepared Part 2 of the article series, Guidance for Professional Athletes considering Philanthropy in Canada. This article provides suggestions and tips for professional athletes (and their trusted advisors) with respect to estabishing and operating a successful Canadian registered charity.
His Excellency The Right Honourable David Johnston, Governor General of Canada, is organizing a conference in Ottawa in late April entitled Giving: Working Together for the Common Good. I look forward to attending with others who are interested in the topic such as "State of the Nation on Giving" and "Millennials, Values and Giving Behaviour".
For Ontario non-profit corporations the next few years will be challenging from a corporate law point of view. Here is our article "Fed up with ONCA yet? Consider skipping it altogether and moving to the Federal CNCA".
The 2017 Canadian Federal Budget was released today. Here is our article 2017 Canadian Federal Budget - How will it affect the Canadian charitable sector?
The Ontario Hospital Association is having a conference entitled "Strengthening Foundation Governance: Current Issues, Challenges and Solutions". I will be presenting on Charitable Giving, Transparency and Standards. There will be a number of other interesting presentations.
The Charity Commission has recently updated their guidance "Charity finances: trustee essentials". It provides helpful information on finances that Canadian directors and trustees, as well as staff, should be aware of. Keep in mind that on certain points the law in Canada is different than in England and Wales. Unfortunately the CRA provides far less guidance on financial management and governance to the charity sector than I would like.
This recent article in The Guardian entitled Charity regulator to crack down on political advocacy after complaints discusses how the Australian Charities and Not-for-profits Commission (ACNC) has cracked down on certain political activities by charities in Australia and how the ACNC is asking for less secrecy and more transparency in dealing with charity compliance issues.
The Vancouver Sun is reporting that North Shore Rescue is suing the Search and Rescue Society of B.C. over allegations that the latter groups has been using the name of the North Shore Rescue to raise money. It will be interesting to see what happens with the lawsuit. Here is the article "Charity denies wrongdoing in lawsuit over search-and-rescue fundraising". There is also a CBC article entitled "SARBC 'extremely shocked' over North Shore Rescue fundraising lawsuit".
Here is a redacted copy of a notice sent by the Charities Directorate of CRA reminding charities of their filing date and the consequences of not filing the T3010 Registered Charity Information Return within 6 months of the end of your fiscal year.
The Federal Trade Commission (FTC) and National Association of State Charities Officials (NASCO) are organizing a conference called "Give & Take: Consumers, Contributions, and Charity" on Tuesday March 21, 2017. It will be in Washington but it will be live streamed for free for those who are interested. The live link will be available on the day of the conference.
The Canadian Charity Law Association is delivering some upcoming webinars. Registration is free but space is limited.
A number of Canadian charities have been revoked by CRA for supporting terrorism in addition to other concerns. One of those organizations was The International Relief Fund for the Afflicted and Needy (Canada) or IRFAN Canada. It lost its charitable status in 2011. Subsequently in 2014 it was added to the list of terrorist organizations maintained under the Criminal Code. Apparently a request had been made by IRFAN Canada to the Minister of Public Safety to de-list the applicant from the list of terrorist organizations. On December 22, 2016, the Minister of Public Safety denied the request. Now IRFAN Canada has made an application to Federal Court for judicial review to set aside the denial.
AFP recently published an article of mine on the CRA’s Report on the Charities Program 2015-2016. They noted "Statistics, while helpful, sometimes require interpretation to fully understand the context of the material being presented. Lawyer Mark Blumberg provides a summary of the key takeaways from the Canada Revenue Agency's 2015-2016 Report on the Charities Directorate and Sector." Here is the article CRA’s Report on the Charities Program 2015-2016.
The consolidation of all Government of Canada websites into one domain at www.canada.ca has started. In theory this is an opportunity to have a more streamlined, secure government website. I have two concerns about how this will affect charities.
There are many rules and restrictions on Canadian private foundations and their investments. In 2015, the Federal government gave private foundations greater ability to invest in limited partnerships. If certain conditions are met from a CRA Income Tax Act perspective a private foundation can invest in limited partnerships. Keep in mind there are also corporate, trust law and fiduciary requirements that also need to be complied with.
The Charity Commission of England and Wales recently released an Inquiry Report on a UK charity that identified concerns with fundraising and foreign activities. There were a number of concerns raised but perhaps most interesting is the discussion around due diligence and internal controls, and specifically "receipts, invoices or other documentation to support the project expenditure".
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.