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.
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.
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.
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 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.
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.
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".
CRA recently updated their guidance with respect to becoming a prescribed university outside of Canada. There are about 600 foreign prescribed universities and they can issue official donation receipts similar to a Canadian registered charity. The updated CRA publication (RC 191) includes some revisions to the information that CRA requires for applications for prescribed university status (eligibility criteria however has not changed). The main change is that CRA only asks for 5 years information on Canadian students at the foreign university and not 10 years as they had previously requested.
The Charity Commission has released a case report that deals with political activities of a UK charity and also its funding of a non-charity. This case report is interesting from a Canadian perspective as there have been people in Canada advocating for changes to the rules relating to Canadian charities and political activities and also "direction and control" by Canadian charities when they are providing resources to non-qualified donees (such as foreign organizations). This particular case report covers both of these types of issues.
On Sunday January 29, 2017 there was a terrible tragedy in Quebec City. A right-wing terrorist massacred six people praying at the Centre Culturel Islamique de Québec and injured almost 20 others. This is the worst terrorist attack in Canada in over 25 years.
In August 2016 we launched a website to improve transparency on Canadian registered charities. It is at www.charitydata.ca We have just made a number of improvements to the website.
Kate Robertson and Mark Blumberg recently prepared an article, "Some thoughts on Professional Athletes and Philanthropy in Canada: Part 1" which provides helpful information and guidance for professional athletes and their trusted advisors who are exploring philanthropic options in Canada. Part 2 of this article series will provide suggestions and tips for professional athletes on operating a successful Canadian registered charity.
CRA uses a risk based approach to deciding which charities are to be audited. CRA a few months ago announced they are adjusting their audit strategy to focus more on larger Canadian registered charities. I guess someone in the past might had thought that smaller organizations, many without any staff, might be less legally compliant and they should be focused on. I guess someone now at the Charities Directorate has worked out that larger organizations have a large amount of resources, generally a lot more complexity and are more likely to be non-compliant with the requirements of the Income Tax Act and such non-compliance could affect much larger amounts of resources.
CRA's Guidance CG-002, Canadian Registered Charities Carrying Out Activities Outside Canada discusses a "development project". The guidance provides Canadian registered charities greater leeway in certain instances when conducting a "development project" to be able to hand over capital assets and immovable assets to a foreign non-qualified donee. I have always thought that a development project would be carried out in what is referred to as the Global South/Third World/Developing Countries (the "South") and would be trying to reduce poverty, promote education, improve the environment, or improve access to health care to provide some examples.
The Charity Commission of England and Wales recently published an Inquiry Report into a former charity named REDAID. It is well worth reading. In Canada, directors of registered charities sometimes focus too much on the Income Tax Act requirements of a charity and ignore or are unaware of their fiduciary obligations. Directors of registered charities have fiduciary duties that in some cases can be at a much higher standard than that which is provided under the Income Tax Act.
Tides Canada quietly announced earlier this year that their international donation matching system between the Tides US and Tides Canada is being shutdown as of the end of this 2016 year. The Tides mechanism was essentially a matching mechanism between Tides US foundation and the Tides Canada foundation.
There is an amazing tax incentive available to Canadians. Few people who are knowledgeable about charities want to discuss it. It just does not get any respect! I am referring to the ability of Canadians to donate to "foreign prescribed universities". For a foreign university to be eligible to be on the list that university needs to be a university that typically has Canadian students studying there. Then once the university is on the list, the Canadian donor obtains the same tax benefits as if they donated to a Canadian university or registered charity even if they have never visited the university or even the country it is located in.
Here is an article I wrote entitled "Some thoughts on the Trump victory and its impact on Canadian nonprofits and charities"
I am pleased to be co-presenting to the ICN a webinar on "CRA Regulations and the Political Activities of Charities".
We are proud to present the Blumbergs’ Snapshot of the Ontario Charity Sector 2014. The data subset used is the CRA's 2014 T3010 data but only for registered charities based in Ontario.
Currently there are only two organizations on the "List of foreign charities that have received a gift from Her Majesty in right of Canada". They are the Aga Khan Foundation and the Woodrow Wilson International Center for Scholars, both of which were off the list and now are on again. No rhyme or reason why these groups are picked out of millions of foreign ngos. Meanwhile Auschwitz-Birkenau Foundation, The Rhodes Trust, and the Bill, Hillary & Chelsea Clinton Foundation are no longer on the list. Seriously this list needs a rethink and greater transparency.
The Liberal Government has made some noises about modernizing charity law. Who could be opposed to modernization? As there is no idea as to what "modernization" means, it has opened up all sorts of calls for changes to charity law in Canada - many of the ideas would be expensive, counterproductive, stifling, or ultimately destroy the positive reputation of the charity sector. Wikipedia defines a Pandora's box as "a process that generates many complicated problems as the result of unwise interference in something." Although only time will tell, it appears that "modernizing charity law" has a small upside and a very large downside.
Here is a CRA document provided under access to information rules which includes their media response on Canadian charities and funding or supporting terrorism. Not surprisingly because of the very limited scope for CRA to divulge information under the confidentiality provisions of the Income Tax Act (Canada) there is little information divulged.
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.