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April 26, 2010

IRS Databook has interesting statistics on US charity sector

According to the IRS in the US there are 1,238,201 organizations called 501(c)(3)s which are similar to our “registered charities”.  We often hear in Canada that we have too many registered charities at 85,300 - so how do you think the Americans feel!  In the US last year they approved 42,484 new 501(c)(3) organizations.

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April 24, 2010

Toronto Star investigation: The high cost of Canadian sport foundation charities

The Toronto Star looked at the high fundraising costs of certain Canadian professional team foundations in an article entitled “The high cost of sports charities”.  It would appear to me that Canadian registered charities need to spend a little more time reading CRA’s Fundraising Guidance and changing some of the techniques and cost structure of fundraising activities.

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April 23, 2010

Who will be hurt by salary cap in Canadian charitable sector?

I was looking at a partial list of Canadian registered charities that have employees being paid 350,000 plus.  It is partial because only about 30,000 registered charities by February 2010 had filed their 2009 T3010B return, out of 85,300 charities.  Charities have 6 months after their fiscal year end to file.  I thought the list would be a lot more mixed but in fact is largely dominated by hospitals and health authorities.  It occurred to me a recent private members bill to cap compensation that can be paid by a charity to any employee at $250,000 will potentially most adversely affect hospitals in small cities and rural areas who probably have to use higher compensation to get the necessary health care professionals and skills.  It then occurred to me that maybe hospitals are, as my mother-in-law says “overrated” - perhaps we should return to a simpler time where doctors were generalists, practiced alone, arrived on horseback and most people did not have access to healthcare so if you stub your toe, you get gangrene and you died at the age of 30!

April 22, 2010

CRA to remove Charities Information Letters and Employee Speeches as they are out of date etc

CRA has advised that they will remove Charities Information Letters and Employee Speeches as they are out of date or the information is contained elsewhere.

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April 22, 2010

New CRA Charities Connection newsletter - just released

Here is CRA’s new Charities Connection newsletter that was released today.  http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/nwslttrs/cnnctn/cnnctn01-eng.html

April 22, 2010

Ontario “Building A Strong Partnership With The Not-for-profit Sector” Announcement

Here is an announcement from the Ontario about developing a “comprehensive and long term strategic action plan for its partnership with the not-for-profit sector”.

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April 21, 2010

Canadian public’s very limited understanding of charitable sector

Unfortunately the Canadian public and many policy makers have a very poor understanding of the charity sector.  I thought this piece from a speech by Helen Burstyn of the Ontario Trillium Foundation summarized the issue nicely.

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April 21, 2010

Effect of 2010 Budget on T3010 Form

CRA will be releasing a new T3010 form.  Charities can still use the current form and here are some notes from CRA on what financial information is no longer necessary in light of the removal of the 80/20 expenditure requirement and certain related concepts.  See Budget_2010_effect_on_T3010_filing.pdf.  Thanks to the Canadian Council of Christian Charities (CCCC) for bringing this to my attention.

April 21, 2010

Toronto Star article “CRA targets David Singh’s charitable tax shelters”

Here is an article by James Daw on two registered charities that recently lost their charitable status for involvement with tax shelters.  http://www.thestar.com/news/canada/article/797804—cra-targets-david-singh-s-charitable-tax-shelters?bn=1 Although these charity gifting tax shelter “charities” are being attacked by CRA and falling like flies there are unfortunately tens of thousands of ‘investors’ in these “retail schemes” who are left holding the bag with disallowed donation receipts, interest, penalties, and headaches.

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April 20, 2010

Should I laugh or cry?  Salary disclosure/caps for Canadian charities -Bill C-470 passes 2nd reading

Here is the Hansard transcript of comments from April 19 with respect to Bill C-470.  The bill has passed second reading and will now be referred to committee.  Some good points in the Hansard but unfortunately a lot of errors and misinformation.  One good thing that has come out of this debate is that it has proved quite conclusively that most MPs who have spoken on this issue know little about the registered charitable sector in Canada which is the area of regulation covered by Bill C-470. I guess it only makes up 8% of the economy so why pay attention?  It only employs 2.4 million people.  I will try to do an annotated version of the Hansard with my comments on the most obvious errors but there are so many that I am not sure that I can do it justice.  Any comments would be appreciated.  I realize that some of the proposal in the Bill may be popular amongst the public - but that does not mean that it is the most important regulatory issue facing charities, that it is well thought through or a good thing for the sector.

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April 19, 2010

Bill C-470: Transparency, salary capping or knee-capping for the charitable sector?

Here is an article by Andy Levy-Ajzenkopf in CharityVillage on Bill C-470 http://www.charityvillage.com/cv/archive/acov/acov10/acov1012.asp

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April 19, 2010

The Canada Revenue Agency revokes the charitable status of Destiny Health and Wellness Foundation

The CRA announced today the revocation of another Canadian registered charity called “Destiny Health and Wellness Foundation” which was involved with charity gifting tax shelters.

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April 19, 2010

The Canada Revenue Agency revokes the charitable status of Liberty Wellness Initiative

The Canada Revenue Agency has just announced that it has revoked the charitable status of the Canadian charity “Liberty Wellness Initiative” for involvement in a charity gifting tax shelter.

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April 16, 2010

Legal fees and Canadian charities

There have come to light a couple of instances of large expenditures by Canadian charities on legal fees.  Canadian registered charities are allowed to spend funds on legal fees.  In some cases, say for example a legal clinic, such expenditures may be considered charitable.  In other cases they are administrative - ie. part of the normal cost of running a charity.  In this note I cite a couple of examples of very large legal fees.

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April 16, 2010

Israelite Church of Christ Canada - CRA wins procedural matter dealing with jurisdiction of FCA

The Israelite Church of Christ Canada is a short procedural case dealing with the jurisdiction of the Federal Court of Appeal in which the federal court of appeal granted CRA’s motion to quash the appeal .  Here is CRA’s summary policy on appeals to the Federal Court of Appeal.  http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-a14-eng.html Here is more information on the appeal choices that charities have http://www.cra-arc.gc.ca/gncy/prgrms_srvcs/dsgr/chrts-eng.html Here is the decision of the Federal Court of Appeal.

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April 15, 2010

Charity Workshops for boards, staff and other stakeholders

Here is a list of some of the top 10 workshops I have been delivering around Canada over the last year.  If you think that your organization can benefit let me know and maybe we can work something out.

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April 14, 2010

Article on salary cap bill for Canadian charities discussed in Globe and Mail by Paul Waldie

I got a mention in an article by Paul Waldie on the issue of salary disclosure and salary caps in the Canadian charitable sector.  The article is entitled Six-figure salaries the norm at top charities and it is located at:  http://www.theglobeandmail.com/news/national/six-figure-salaries-the-norm-at-top-charities/article1533823/  I was also on CTV’s CP24 discussing the impact of Bill 470 on certain charities.

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April 13, 2010

CRA Issues Notice of Suspension to International Relief Fund for the Afflicted (IRFAN-Canada)

The Charities Directorate of the CRA has issued a Notice of Suspension to International Relief Fund for the Afflicted (IRFAN).  Prior to this suspension there was only 1 other charity that was suspended.  CRA is making greater use of the intermediate sanctions - ie suspensions or penalties rather than revocation. Here is a copy of the CRA press release.

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April 13, 2010

Interesting UK study on public perception of charities depending on size

In this short article in Third Sector entitled “Public think small charities are least wasteful and closest to beneficiaries” there is a discussion of UK public perception of small, medium and large charities.

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April 13, 2010

Conflicts of interest, or perceived conflicts of interest, can be very costly for Canadian charities

The New York Times has reported that “The Gates Foundation has withdrawn a $5.2 million grant to a Canadian research center for planned tobacco control work in Africa, after learning that the chairwoman of the center’s board was also a board member for a unit of one of the world’s largest tobacco companies.”  What is unusual about this story is how public it has gotten with press releases etc.  Canadian charities should take the issue of conflicts of interest seriously and should have conflict of interest policies and they should follow them.  It is easier and better to avoid problems such as this one rather than having to deal with them.

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April 11, 2010

Interesting note from Ontario Trillium Foundation on importance of ethical, accountable governance

Here is an excerpt from a speech recently given by Helen Burstyn, Chairperson of the Ontario Trillium Foundation on the importance of ethical, accountable governance.

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April 10, 2010

Canadian Charities Recently Revoked by the Charities Directorate of CRA for Cause 2010

I was recently wondering how many Canadian charities have recently lost their registered charity status for cause?  Also for what reasons did they lose their registered charitable status?  See my note
Canadian Charities Recently Revoked by CRA for Cause.

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April 10, 2010

Charges laid by CRA in Canadian inflated donation tax fraud investigation

Here is a copy of a press release from the Canada Revenue Agency entitled “Charges laid in donation tax fraud investigation”.  In the press release CRA discusses the charges it has laid against three people who allegedly issued donation receipts for more than the amount of the donation.  CRA noted that “The Income Tax Act permits registered charities to issue tax receipts only for the amounts actually donated. Schemes that promise a tax receipt in excess of what a donor gives are usually fraudulent. The CRA audits charities to put a stop to such schemes and intends to prosecute tax preparers, directors of charities, and donors who are found to be involved.”

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April 10, 2010

Transparency - What can the Charities Directorate of CRA disclose about registered charities?

The Income Tax Act (Canada) sets tremendous limits on the ability of CRA to disclose information about Canadian charities.  Essentially, the Income Tax Act in section 241 and its confidentiality provisions forbid CRA from disclosing any information about any registered charities either through informal request or a formal access-to-information request unless the information falls within certain narrow exceptions.  I will note below the provisions but I think that CRA should have greater flexibility to be able, especially in the few cases of major charity scams or tax avoidance schemes, to warn Canadians about any concerns that CRA has.  Unless a charity consents to disclosure (not likely), CRA now can only provide, after the charity has lost its registered status, either its “entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment”.  By the time the charity has lost its registered charity status it could be years after CRA had significant concerns about the charity.

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April 10, 2010

Contact Information for the Charities Directorate of the Canada Revenue Agency (CRA)

Here is the contact information for the Charities Directorate of the Canada Revenue Agency.

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Charity Lawyer Mark Blumberg

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.

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