The Canadian Press article “Controversial Islamic school ordered out of Toronto public school property” raises some interesting issues.  The TDSB is the largest registered charity in Canada with over $3 billion in revenue.  Many people don’t know but lots of school boards are registered charities. 

The US House of Representatives is conducting hearings on Tax Exempt Organizations.

CRA has imposed a penalty on the HINDU MISSION OF MISSISSAUGA and the HINDU TEMPLE SOCIETY OF CANADA.  You can read on the CRA website the amounts and the reasons.

There have been a number of articles dealing with Canadian charities and political activities over the last few weeks.  Here are some of them:

The Federal Court of Appeal recently released a decision in The Sheldon Inwentash and Lynn Factor Charitable Foundation matter.  Essentially the question is whether an charity that has one trustee can be a public foundation or must it be a private foundation.  The Trust was given charitable status as a private foundation and the Trust appealed arguing that it should be designated a “public foundation”.  The court starts of by discussing the standard of review that would be used and then analysed the relevant Income Tax Act provisions.  In terms of standard of review CRA argued that a decision on whether a charity is a private or public foundation is “mixed fact and law which is subject to review on the standard of reasonableness.” as opposed to an “extricable question of law to be reviewed on the standard of correctness”.  The Court felt that some piece of the decision as to whether a charity is a private foundation could a matter of law and then subject to the higher standard of correctness.  So the courts applied the higher standard of correctness to the CRA decision and then agreed with the CRA that they had acted correctly.  The court concluded that a charity with one trustee will be a private foundation as CRA had determined.  The decision also looks at the differential treatment of private foundations and discusses some of the history of why private foundations were treated differently than public foundations and concerns about private foundations. 

I presented to the House of Commons Standing Committee on Finance today along with 5 other witnesses.  There was a lively discussion of transparency, cross border philanthropy, tax incentives and preventing abuse of registered charities.

Imagine Canada launched today their new Standards Program.  It provides accreditation to certain charities and the standards focus on certain issues such as board governance; financial accountability & transparency, ethical fundraising, staff management; and volunteer involvement. .Charities should look at this voluntary program as it provides some very useful ideas, irrespective of whether one joins the initiative.

The Canada Revenue Agency has revoked the registration of Help Eliminate Disease and Addiction Canada as a registered charity. 

The Standing Committee on Finance (FINA) is holding hearings on tax incentives for charitable donations.

The Charity Commission of England and Wales has released its revised Counter-terrorism Strategy recently.  It also has links to a number of helpful UK guidances on how charities should operate to avoid involvement with terrorism.  Many of the same principles apply here in Canada and Canadian charities may find reviewing the strategy and UK guidance helpful.

Here is information on a webinar that I will be delivering with AFP International entitled “Fundraising from Canada” on May 22, 1-2:30 p.m. ET.

Here is an interesting article entitled “The worst way to judge a charity”.  Notice in paragraph 3 an attack on Canada! 

I have been asked to testify before the House of Commons Standing Committee on Finance which is studying various issues relating to the charity sector including tax incentives for charitable donations, charities and political activities, and cross border philanthropy.  My comments will probably focus on the importance of transparency in the charitable and non-profit sector. 

The Chronicle of Philanthropy recently published an article “Good Governance Makes Tax Compliance More Likely, Says IRS Study”. 

Brad Offman, Vice President, Strategic Philanthropy at Mackenzie Financial Corporation and Managing Director of the Mackenzie Charitable Giving Fund has written an interesting article entitled “Canada’s Charities Deserve Better”.  Brad argues quite correctly that using one or two financial ratios to judge a charity is shortsighted and basically “Canada’s Charities Deserve Better”.

On April 20, 2012 CRA released a new Guidance on Fundraising for Canadian registered charities.  This guidance is the most important information from the Charities Directorate on the obligations of Canadian registered charities when it comes to fundraising.

The Charities Directorate of CRA does Charities Information Sessions (which used to be called RoadShows).  The registration for new sessions has been announced and you can register at: http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/sssns/nvttn-eng.html

Here is an article in the Toronto Star ““Catholic teachers under fire for promoting pro-life motion to students”. 

Finance has just released the “Notice of Ways and Means Motion to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures”.  There are also “Explanatory Notes” that are helpful. 

Imagine Canada has announced that they will be launching their new Standards program on May 8, 2012.  According to Imagine “The Standards Program features a Canada‐wide set of shared standards for charities and nonprofits wishing to enhance and demonstrate their effectiveness in the fundamental areas of board governance, financial accountability and transparency, ethical fundraising, staff management, and volunteer involvement.”

Here is a press release from CRA relating to a tax preparer who pleaded guilty to fraud for filing false income tax returns with false charitable donation receipts.

I was on a panel today at the Green Living Show.  There was an interesting discussion on the environment, political activities, and charities.

The Toronto Star covered the story of a tax preparer from Vaughan, Ontario who is a fugitive after having prepared thousands of tax returns with fraudulent charitable donation receipts amounting to millions of dollars.  Most interesting is that the CRA cannot release a photo of the woman even though she is a fugitive.  I think S. 241 of the Income Tax Act (confidentiality provisions) needs to be modified to allow CRA to release more information on charities and now tax preparer fugitives.  I have sent submissions to Finance on that and lets wait and see. 

Canadian registered charities must file the T3010 Registered Charity Information Return within six months of the end of their fiscal year, although some are not able to meet that deadline and file soon thereafter.  It is a very important form because despite its limitations it is really the only uniform way to obtain information on all registered charities in Canada.  Some people are surprised to find out that answers on the T3010 are not always reliable.  I am going to make a few comments on the reliability of the T3010 and specifically with respect to questions relating to “political activities”.

The Charities Directorate of CRA has a guidance entitled “Political Activities” for Canadian registered charities. CRA notes in the guidance that it”... provides information for registered charities on political activities and allowable limits under the Income Tax Act (the Act). It also provides a framework that explains how we distinguish between political and charitable activities. In addition, it seeks to clarify the extent to which charities can usefully contribute to the development of public policy under the existing law.  The guidance in this policy statement is based on subsections 149.1(6.1) and 149.1(6.2) of the Act and on general principles of charity law and court decisions that define what is charitable and what is political. This information applies to all registered charities.”  While CRA’s Guidance is pretty good and will probably be improved over the next few months or years - it is of little assistance to a charity if they don’t know it exists or don’t read it.

Whether I like it or not the involvement of Canadian charities in political activities has become a major issue.  Therefore, I am creating a new blog category on Canadian charities and political activities.  The discussion has been squarely on environmental groups and the oil pipelines.  It is interesting because environmental groups actually have very little funding compared to other far better funded charities and perhaps some environmentalists wish that all those funds can be used for political activities but in fact a tiny percentage of their funds of environmental groups receive are spent on political.  If you are looking for the big bucks and political activities you are going to have to look elsewhere.  The media in Canada will eventually wake up and follow a more balanced approach.  In fact I will blog further on the US and UK - the big money and scrutiny has been on certain right wing groups using almost all their money on funding political activities - some of which are decidedly partisan.  I guess one could say that a Pandora’s box has been opened and it will be interesting to see where it goes.  It is important that Canadian charities follow the rules - whether environmental groups, “business” think tanks or religious organizations. 

In an article by The Chronicle of Philanthropy by Caroline Preston entitled “Update: IRS Levies Fine on Food for the Hungry Over Drug Valuations” it describes how the US IRS has levied a penalty against a charity that misreported donations on its annual return.

Kathryn Blaze Carlson of the National Post has written another article on charities and political activities entitled “The politics of charity: When is a tax-exempt organization too political?”

On March 4, 2012 Debra E. Blum of the Chronicle of Philanthropy wrote an interesting article “Think Tank in Koch Brothers Dispute Could Find Its Tax Status at Risk”.  The article discussed the litigation surrounding the US Cato Institute.  It also has ramifications in Canada in that we are dealing with some similar issues of political involvement by think tanks and also the Cato Institute apparently funds initiatives in Canada.

Here is an Op Ed in New York Times that I just noticed in November 2011 entitled “Tax Write-Off Now, Charity Later” which discusses donor advised funds in the US and how they may disproportionately high net worth individuals and financial institutions and provide little benefit to charities.  The piece suggests some improvements to the rules around donor advised funds to increase their public benefit.