CRA’s new Guidance on foreign activities by Canadian charities

August 02, 2010 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams

CRA has recently 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 suggests “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 Canadian registered charity status then the same rules apply as to a Canadian registered 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.

 

Who should be reading and understanding the guidance?  The main groups are:
a) registered charities that conduct foreign activities;
b) registered charities that work with intermediaries in Canada that are not qualified donees; [update - you can see CRA’s new guidance or policy CRA’s new Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”
c) professional advisors, such as lawyers, accountants, who advise charities.

Here is a bigger font PDF version of the guidance “Canadian Registered Charities Carrying out Activities Outside Canada”.  This is easier to read, download, highlight and comment on. Guidance_for_Canadian_Registered_Charities_Carrying_Out_Activities_Outside_Canada_-_July_8,_2010.pdf

For those that are interested 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) and it is listed under “Resources”.  As well here is a copy on my website: http://www.globalphilanthropy.ca/images/uploads/Contractor_Agreement_sample_for_Canadian_Charity_Conducting_Foreign_Activities_-March_31,_2010.pdf


As well, here are some other resources on foreign activities that I have prepared that may be of interest:

Conduit vs. Structured Arrangement:
http://www.globalphilanthropy.ca/index.php/articles/structured_arrangement_versus_conduit_for_canadian_charities_and_foreign_ac/

Foreign Contractors of Canadian Registered Charities Carrying out the Canadian Charity’s Projects – A Very Simplified View of the Process
http://www.globalphilanthropy.ca/images/uploads/Foreign_Contractors_of_Canadian_Registered_Charities_Carrying_out_the_Canadian_Charity%E2%80%99s_Projects_%E2%80%93_A_Simplified_View.pdf

Here is an article I wrote in The Philanthropist on foreign activities:
http://www.globalphilanthropy.ca/index.php/articles/canadian_charities_and_foreign_activities_-_by_mark_blumberg_in_the_philant/

Here are three one hour webinars I have prepared on foreign activities by Canadian charities:
http://www.globalphilanthropy.ca/index.php/blog/comments/foreign_activities_by_canadian_charities_-_free_archived_webinars_from_clip/

Here are the individual webinars (they are free and 1 hr in length)
Foreign Activities 101: Introduction to Canadian charities carrying out foreign activities
https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=2684252&act=pb&rKey=6364630da4a6584a

Foreign Activities 201: Advanced issues with CRA’s Guidance on Activities outside of Canada
https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=2685297&act=pb&rKey=4107d10c94fdcc0e

Foreign Activities 301: Responding to Legal and Ethical Challenges in International
https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=2686677&act=pb&rKey=3176f5e632864819

Other webinars from the Charity Law Information Program including some on foreign activities:
http://www.globalphilanthropy.ca/index.php/blog/webinars_on_canadian_charity_law_-_charity_law_information_program_clip_by_/

Here is the section of the GlobalPhilanthropy.ca (TM) website on global giving: http://www.globalphilanthropy.ca/index.php/blog/category/global_giving/

Here is the short link for the page “CRA’s new Guidance on foreign activities by Canadian charities”  http://bit.ly/ybUGAB

In 2011 CRA released a guidance entitled “Using an Intermediary to Carry out a Charity’s Activities within Canada”  http://www.globalphilanthropy.ca/index.php/blog/comments/cras_new_guidance_using_an_intermediary_to_carry_out_a_charitys_activities_/  It is very similar to the foreign activity guidance except it deals with Canadian charities dealing with non-qualified donees in Canada.

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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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.

mark@blumbergs.ca
416.361.1982
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