First Nations Groups and qualified donee status

In Registered Charities Newsletter No. 24 Summer 2005 the CRA discusses the status of certain First Nations groups as qualified donees.  The qualified donee status is important as organizations that are qualified donees can issue “official donation receipts”.  If you have questions about whether your First Nations group is a qualified donee you can call the Charities Directorate of the CRA.

When should a Canadian charity not issue a “official donation receipt” (tax receipt)?

I am often asked “When should a Canadian charity not issue a “official donation receipt” (tax receipt)?”  First of all Canadian charities do not have to issue tax receipts - however, if they are going to issue official donation receipts, commonly known as tax receipts, then the registered charity must ensure that it is only issuing the receipt for a “gift” and subtracting any “advantage” that the donor may receive. If in doubt call CRA or contact a charity lawyer.  Here is a list of transactions that generally do not result in a tax receipt being issued. 

Interaction Forum 2009 – the learnings of a Canadian charity lawyer in Washington, D.C.

I recently attended the Interaction Forum held in Washington, D.C. on July 6-9, 2009.  The Interaction Forum is the largest gathering of US ngos involved with development.  I met some very interesting people and learned quite a lot.  Here are some of my learnings from the Interaction Forum ...

http://www.socialfinance.ca/ provides useful information on social enterprise in Canada

Karim Harji and his team of bloggers at http://www.socialfinance.ca/ cover everything from CSR to social enterprise to philanthropy.  They are trying to expand the development of a social finance marketspace in Canada.

How does a Canadian registered charity know the value of a pharmaceutical donation for development?

Valuation is complicated but don’t rely on the donor to tell you the value or use some optimistic number.  If a charity provides an official donation receipt for a donation of pharmaceuticals to a donor that charity is obliged to determine the fair market value.  If you can order similar pharmaceuticals internationally at 1% of the cost it is difficult legally (and perhaps unethical) to claim a far higher Canadian value or “wholesale” value in Canada.  This can result in a charity losing its charitable status. You might find The International Drug Price Indicator Guide helpful http://erc.msh.org/dmpguide/index.cfm?search_cat=yes&display=yes&module=dmp&language=English&year=2008  Here is the print version of the International Drug Price Indicator Guide. http://erc.msh.org/dmpguide/pdf/DrugPriceGuide_2008_en.pdf

Google Grants - useful for Canadian charities who want free inkind internet advertising

Google has lots of free tools.  Here is one tool that costs money but that google is giving to some Canadian charities for free and it is “Google Adwords” through their google grants program.

Nantel, M. et al. v. The Queen (TCC) - Tax Court of Canada sides with CRA on valuation of art

You can find the Nantel v. The Queen (TCC) decision in French at http://decision.tcc-cci.gc.ca/fr/2009/2009cci599/2009cci599.html  According to the headnote it involved the valuation of a donation to a charity of a number of pieces of art that were bought by the donor about 10 years before the donation to a charity.  CRA disputed the donors valuation and ultimately brought in their own valuator.  Court had problems with two valuators brought in by the donor and court accepted the valuation by the CRA’s valuator which was approximately 1/6 of the donor’s valuators’ opinion. 

Interesting article on Jewish ethical perspectives on taxation and charity compliance

An article entitled Jewish Ethical Perspective to American Taxation by Kenneth H. Ryesky provides a Jewish law perspective on the US tax system.  Many of the points made here would be equally applicable to the Canadian tax and registered charity system.  It is a heavily footnoted and well written article. I like the conclusion “If practiced and applied properly, Jewish law has a very salutary effect upon taxation ethics and the welfare of the nation. But if Jewish children do not learn taxation ethics through the words and actions of their parents, teachers and rabbis, then they may well hear discourses on Jewish taxation ethics from Gentile judges in secular courtrooms.”

Transitioning from the Canada Corporations Act to the New Canada Not-for-profit Corporations Act

After the new Canada Not-for-profit Corporations Act comes into force (probably around 2011) Canadian federal charities under the Canada Corporations Act that wish to continue existing will have a further three years to continue (essentially to covert) under the new Canada Not-for-profit Corporations Act

Can a Canadian charity under the new Canada Not-for-profit Corporations Act have no members?

No.  The new Canada Not-for-profit Corporations Act requires that corporations have members however the board of directors and the members can be identical as is often the case with Canadian charities.

Will the New Canada Not-for-profit Corporations Act limit foreign activities by Canadian charities?

I am not even going to try to answer this issue.  I tried before to deal with Subsection 16(3) and got the answer wrong.  I am excerpting a piece from a paper entitled Insight on C-4, the New Canada Not-for-profit Corporations Act By: Wayne Gray, who is a partner at McMillan LLP, Toronto. http://www.mcmillan.ca/waynegray to answer the question.

When will the new Canada Not-for-profit Corporations Act come into force and we can start using it?

The New Canada Not-for-profit Corporations Act while passed has not come into force yet.  The experts best guess (see Wayne Gray below) is early 2011 for it coming into force.

CRA’s Guidance Fundraising by Registered Charities - Amalgamated into One Document

CRA’s Guidance “Fundraising by Registered Charities” is in two separate documents namely the main guidance at http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-eng.html and http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-ddn-eng.html (entitled Additional information on Guidance CPS-028, Fundraising by Registered Charities). These documents are hyperlinked together and you can go back and forth between the documents to obtain all the information.  For those who find it more convenient CLIP has combined the two documents in this one document and inserted the content of the “Additional Information” directly next to the part of the the Guidance it is referring to. A reader can using this document read the guidance from beginning to end. As well it is in PDF format to make it easier for some to download to a laptop and review when they have time or to place comments or mark up. We have also increased the font size to make it easier for some to read.CRA’s_Guidance_Fundraising_by_Registered_Charities.pdf

“Transparency and accountability are crucial for NGOs” Op Ed Piece from Oxfam UK

Here is an OP ED piece by the finance director of Oxfam UK.  There is also a response from the UK TaxPayers’ Alliance in the comments section.   

CIDA press release on food security

Here is a CIDA press release on food security http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/En/NAD-111881935-HMS?OpenDocument

Can a Canadian non-profit earn a profit?  CRA’s views on the subject

Can a Canadian non-profit under 149(1)(l) earn a profit.  Does it matter if the profit is intentional and/or will be used to further the organization’s purposes? 

Maréchaux, F.M.E. v. The Queen (TCC) - leveraged donation scheme nixed by Tax Court of Canada

In Maréchaux, F.M.E. v. The Queen the case revolved around whether F. Max E. Maréchaux, was entitled to a charitable donation tax credit.  Maréchaux is a lawyer at the law firm Miller Thomson LLP. http://www.millerthomson.com/index.cfm?cm=Employee&ce=details&primaryKey=16425  CRA had disallowed the donation claiming it was not a gift.  The appeal which relates to the 2001 taxation year and the tax court dismissed his appeal with costs and ruled for CRA. 

Are charitable donations in Canada down in 2008?  Depends how you define donation/legitimate charity

According to Statistics Canada total charitable donations in 2007 were $8,648,660,000 ($8.6Billion) and in 2008 $8,189,280,000 ($8.1B).  I am not great at math but that seems to indicate a drop of about $450 million dollars.  That is only part of the story.

Carol Goar asks interesting questions about use of volunteers in recent Toronto Star article

Carol Goar in her article “All dressed up and nowhere to volunteer” asks some interesting questions about why we are not adequately using volunteers.  Hopefully the article will intensify the discussion on the point.

CRA Charities Directorate Website Survey

CRA is asking those who visit their Charities and Giving Web pages which are geared towards donors and charities.  You can take their survey at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/srvy-eng.html

Russel v. Queen - Tax Court of Canada crushes abusive tax gifting schemes

Russel is an art donation case.  However, it is more than that.  It might be the beginning of the end of the abusive charity gifting tax shelters in Canada.

Social Enterprise for Canadian Charities: Legal Compliance from A-Z in Toronto Nov 21, 2009

Social Enterprise for Canadian Charities: Legal Compliance from A-Z (9:00 AM – 5:00 PM) Saturday November 21, 2009

Charities are under increasing pressure to increase and diversify revenue. At the same time social enterprise offers a method to tackle complex social and economic problems. In this full day workshop charity lawyers Mark Blumberg (http://www.canadiancharitylaw.ca) and Richard Bridge (http://www.lawyerforcharities.ca) will cover the top 15 key legal issues facing charities in the morning and in the afternoon, specific legal issues affecting charities that wish to be involved with business activities, earned income, social enterprise, community economic development and fundraising. There are many advantages of being a charity and also many restrictions and responsibilities. It is important that Canadian charities comply with their legal responsibilities or the consequences in terms of reputation, charitable status and assets can be substantial.

Social Enterprise for Canadian charities - Legal Compliance from A-Z with Mark Blumberg and Richard Bridge

Article by Lee Berthiaume on CIDA, Auditor General’s Report, Government Response and future of CIDA

Here is an interesting article by Lee Berthiaume in Embassy on CIDA http://embassymag.ca/page/view/cida-11-11-2009

New UK Charity Commission online toolkit to help trustees manage risks to their charity

The first chapter of the online toolkit covers charities and terrorism.  The next chapters will deal with Safeguarding charity funds; Safeguarding charities – people, property, reputation; and a case study archive (good practice examples from the sector for all chapters) and other sources of help.  http://www.charitycommission.gov.uk/investigations/toolkitintro.asp

Ontario PGT bulletin entitled Charitable Fundraising: Tips for Directors and Trustees.

The Ontario Public Guardian and Trustee has produced a charity bulletin entitled Charitable Fundraising: Tips for Directors and Trustees.  In that bulletin they discuss fundraising requirements for charities that operate in Ontario. 

Faith Assemblies Mission International v. H.M.Q.

Another case involving a charity losing its charitable status.  Another example of a very weak case being brought that just helps perpetuate bad case law involving charities. 

What’s Wrong With Charitable Giving—and How to Fix It - very interesting WSJ article

Here is an interesting article on the US foundation sector that appeared recently in the Wall Street Journal entitled “What’s Wrong With Charitable Giving—and How to Fix It”  http://online.wsj.com/article/SB10001424052748704500604574481773446591750.html?mod=article-outset-box

Auditor General Report on the Canadian International Development Agency (CIDA) out

Here is the 2009 Fall Report of the Auditor General of Canada and Chapter 8—Strengthening Aid Effectiveness—Canadian International Development Agency which is located at http://www.oag-bvg.gc.ca/internet/English/parl_oag_200911_08_e_33209.html#hd3a

Charity Legal Compliance Risk Assessment Tool from the Charity Law Information Program

I recently prepared a Charity Legal Compliance Risk Assessment Tool for the Charity Law Information Program.  It is available at the CLIP website.

Major updates forthcoming in Ontario for charity law including repeal of Ont. Charitable Gifts Act

The Ontario government has put forward a “Good Governance” bill - “The majority of the nearly 600 items included in the Good Government Act, 2009 were contributed to by 22 ministries and propose technical changes that would simplify government processes, update, language and clarify administrative processes. ”  There are a number of changes including the repeal of the Charitable Gifts Act which had provided an Ontario charity may not own more than 10 per cent of an interest in a business.  Ontario was the only province to have such a restriction and it applied to all charities.  That is probably the most significant change. Although there were workarounds with trusts etc. such a restriction in my view never made much sense and with “registered charities” having to comply with the “unrelated business” rules under the Income Tax Act there is a system in place to regulate charities involvement with business.