Avoiding 'Charity' Scams

CRA supports additional charitable organizations’ innovative educational and training projects

The CRA has announced contribution funding for eight new projects under the Charities Partnership and Outreach Program (CPOP).  One of the announced projects will be handled by the Ontario Community Support Association under its Charity Law Information Program (CLIP).  The CLIP project announced today has two aspects.  First, to educate Canadian charities about the requirement of gifting only to other qualified donees.  This affects Canadian charities who transfer resources to organizations that are not qualified donees, whether such organizations are inside Canada or outside Canada (foreign activities). It will emphasize the importance of having proper structured arrangements with local and foreign intermediaries (agents, partners, contractors etc)  The second part of the project is to increase the financial management capacity of the charitable sector and to avoid misuse of charities assets including with fraud, money laundering, terrorism and excessive private benefit.  For more information see http://www.capacitybuilders.ca/clip/clip.php

Charity Law Information Program (CLIP) Toronto workshops on charity law and risk management Oct 6/09

I will be delivering two workshops in Toronto on October 6, 2009 for the Charity Law Information Program (CLIP) of CapacityBuilders.  For further information see the Toronto Brochure and registration information for CLIP.

Canadian charities and intermediate sanctions by the Canada Revenue Agency

It used to be that if a registered charity was non-compliant CRA either revoked the charity or could do little about the non-compliance.  The times have changed.  With the introduction of “intermediate sanctions” CRA now has lots more flexibility in how it deals with non-compliance.  For example if you issue a receipt that contains false information CRA can fine the charity 125% on the eligible amount stated on the receipt.  If a Canadian charity working with a foreign charity (or other non-qualified donee) does not maintain direction and control over transfers of funds and resources then such behaviour can land a charity with a 105%-$110% penalty on the amount of the transfer.  Ouch!.

Upcoming Charity Law Presentations in Canada by Mark Blumberg for CapacityBuilders

For a list of some of my upcoming workshops for CapacityBuilders you can visit http://www.capacitybuilders.ca/clip/clip.php

Insight Canadian Non-Profit and Charity Law Conference in Toronto - November 23-24, 2009

I am the program chair for a conference organized by Insight that will be held November 23 – 24, 2009 at the St. Andrew’s Club and Conference Centre at 150 King Street West, Toronto.  The Conference is called NON-PROFIT and CHARITY SEMINAR: Legal, Regulatory and Governance Issues.  Here is the Insight Brochure 

Ontario Public Guardian and Trustee’s Tips for Managing Fundraising Risks

Here are the Ontario Public Guardian and Trustee’s Tips for Managing Fundraising Risks.

CRA publishes warning on issuing official donation receipts for gifts of services by Charities

CRA has just published a reminder to charities that “Issuing receipts Caution: Gifts of services.  A registered charity is not permitted to issue an official donation receipt for a gift of service. At law, a gift is a voluntary transfer of property. Gifts of services (donated time, skills, or efforts) provided to a charity are not property, and therefore do not qualify as gifts for the purposes of issuing official donation receipts.”

David Baines article on fundraising telemarketing firm Xentel DM Inc.

David Baines, a reporter with the Vancouver Sun, recently wrote an article on a telemarketing firm Xentel DM Inc..  It is entitled “Charity fundraisers not so charitable”.  The article is at http://www.vancouversun.com/health/Charity+fundraisers+charitable/1450998/story.html or http://74.125.93.132/search?q=cache:nNTR88K0xPUJ:www.vancouversun.com/story_print.html%3Fid%3D1450998%26sponsor%3D+xentel+vancouver+sun&cd=1&hl=en&ct=clnk&gl=ca

Paper on “Regulating Self-Regulation in the Charitable Sector:” is very thought provoking

I recently read a draft paper entitled Regulating Self-Regulation in the Charitable Sector: Innovation or Contradiction? by Susan D. Phillips, Professor and Director of the School of Public Policy and Administration at Carlton University.  It is very well written and thought provoking discussion of self-regulation of the non-profit and charitable sectors in Canada and the limitations and opportunities for self-regulation.

The article is at: http://www.anser-ares.ca/files/conf09/Phillips_ANSER2009.pdf

Canada Revenue Agency Guidance on Fundraising by Canadian charities

[Here is CRA’s 2012 updated fundraising guidance information - http://tinyurl.com/8x99n2j ] CRA has just released its Guidance on Fundraising by Canadian charities.  You can see the document in English at:  http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-eng.html and in French at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-028-fra.html  It is 35 pages at 9.5 font.  To make it easier to read I here is my slightly larger font (13 point font) version of the Guidance on Fundraising from CRA which is placed it in one PDF document if that helps anyone who wants to save it to their laptop or desktop and make notes on the document.  For those who find it more convenient the Charity Law Information Program (CLIP), which is supported in part by funding from the Canada Revenue Agency, has taken the main 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 read the guidance from beginning to end without having to jump backwards and forwards between the two documents. The CLIP version of Fundraising Guidance is at: http://www.capacitybuilders.ca/files/resources/CRA_Fundraising_Guidance_1259599283.pdf
Whatever version you wish to use - this is a guidance document that anyone involved in governance and fundraising of charities should review.

For those that are interested in knowing more about the Fundraising Guidance as well here is a free 1 hour webinar on the CRA Fundraising Guidance - you can download it here https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=440027&rKey=482cc2c6dcf99042&act=pb

Major Canadian law firm sued for negligent RCAAA tax opinion

Cassels Brock & Blackwell has just been hit with a major lawsuit over a tax shelter scheme.  Here is a copy of the Statement of Claim in Lipson v Cassels Brock Blackwell LLP.  None of the allegations in the statement of claim have been proven in court.

CRA Charity Checklist on Terrorism

Here is a “Checklist for Charities on Avoiding Terrorist Abuse” put out by the Charity Directorate of Canada Revenue Agency.  It is a concise and helpful tool for charities to use to ensure that their resources are not misused by those who support or are involved with terrorism.  Many charities tell me that terrorism is not an issue for them - in fact the precautions suggested in this checklist are just as important for charities to understand and impliment to avoid money laundering, tax evasion, and general missappropriation of resources for non-charitable purposes.  Terrorism is local as well as international.  (for example the FLQ and the Oklahoma City bombing).  http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/vtb-eng.html

What is a Good Canadian Charity?

What are the hallmarks of a good charity.  Boy that is hard.  Easier to know what are the hallmarks of a bad charity.  Well luckily the UK Charity Commission has come up with the following 6 hallmarks for a good charity.  Except for the English accent, these hallmarks would seem to be equally relevant and useful here in Canada.  Staff and directors of charities might find it useful to read the hallmarks and ask ‘does our charity live up to this?’.  By the way this is not pass/fail - it is more a matter of continual improvement no matter how good we are.

CRA successfully attacks abusive charity gifting tax shelters

According to CRA In 2008, the value of charity tax shelter gifting arrangements has been reduced by 1/2.  This is an important victory for CRA in curbing some of the more extreme charity tax shelter arrangements.

OECD acknowledges “Tax haven crackdown will benefit developing countries”

The OECD acknowledges that “a crackdown on tax havens and cross-border tax evasion will help developing countries to raise more revenues to pay for much-needed schools, roads and hospitals…”  The OECD also says that “improving the effectiveness of developing countries’ tax systems is the “new frontier” in development policy”.  While trade and aid are important, tax policy and tax enforcement is vital for developing countries governments to provide basic services.

Supreme Court dismisses appeal with costs for Choson Kallah Fund of Toronto

The Supreme Court of Canada has dismissed an appeal with costs by the Choson Kallah Fund of Toronto to a Federal Court of Appeal decision which I had written on previously at:
http://www.globalphilanthropy.ca/index.php/blog/cra_revokes_choson_kallah_fund_of_toronto/ and http://www.globalphilanthropy.ca/index.php/blog/canada_revenue_agency_deregistering_record_number_of_questionable_canadian_/ and
http://www.globalphilanthropy.ca/index.php/blog/millennium_charitable_foundation_case_fca_not_impressed_with_charity_tax_sh/  This is an important victory for those who do not want the charity sector in Canada to be overrun by tax avoidance and evasion schemes.  It also shows that with abusive charity tax schemes the Supreme Court is prepared to allow CRA to immediately revoke the charitable status rather than allowing them to keep their status while appealing all the way to the Supreme Court.

Checklist for Canadian Charities on Avoiding Terrorist Abuse from CRA

The CRA has just published a very helpful page entitled “Checklist for Charities on Avoiding Terrorist Abuse” and it can be found at:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/vtb-eng.html

CRA adds disclaimer to T3010 Registered Charity Information Return data on website

CRA has added a disclaimer at the top of its T3010 Registered Charity Information Return information on their website:

“The information displayed below has been manually entered by the CRA from the registered charity’s Registered Charity Information Return. This information has not necessarily been verified for accuracy or completeness by the Charities Directorate.  Registered charities that notice problems with their online information should visit the amendment page for instructions on how to correct the information.” (my emphasis added)

New CRA Support for charity legal and compliance education in Canada

The Honourable Jean-Pierre Blackburn announces an investment of $3.1 million to assist small and rural charities understand their legal and compliance requirements

Is this a legitimate Canadian charity?  A Comment by Mark Blumberg

The Federal Court of Appeal (FCA) recently dealt with a case called The Millennium Charitable Foundation (The Millennium Charitable Foundation vs. MNR 2008 FCA 414).  In The Millennium Charitable Foundation case the law firm of Miller Thomson LLP, which represented the Foundation, apparently stated or inferred that the Foundation was a “legitimate charity”.  I am not sure exactly what a “legitimate” charity is, it certainly is not a defined term in the Income Tax Act, but I think it is worth considering whether The Millennium Charitable Foundation is a “legitimate charity”.

US targets tax havens with Stop Tax Haven Abuse Act: Will Canada Follow?

Tax havens and tax evasion costs governments, including Canada, the US and those in the developing world a substantial amount of revenue.  Although it undermines Western governments these tax havens devastate the capacity of many Southern countries to provide basic services to their own people.  At the upcoming G20 meeting financial regulation and stopping tax haven secrecy will be at the top of the agenda.  If the US loses $100 billion in tax revenue every year from tax havens, then how much does Canada lose every year?  Why not take the money currently lost and use it to increase grants and contributions to the Canadian charitable sector?

April 1st is coming up.  What should the Charities Directorate of CRA do??

April 1st is April Fools Day.  There is so much craziness in the Canadian charity sector right now that you can either ignore it, or laugh or cry.  I thought that CRA may want to get into the tradition of putting out something funny on April 1st so that we can laugh together instead of crying. 

Canadian National Avoid a Charity Scam Day

For those interested in celebrating National Avoid a Charity Scam Day you might find this interesting.

Charity Scams in Canada - Costing Us All A Lot

Here is some statistical information on Charity Scams - Costing Us All A Lot.  Just to give some perspective far more funds flow to charity tax avoidance schemes in Canada than to all the money spent by Canadian charities on relieving poverty in the developing world!! 

Tax Havens Cause Poverty

If you are interested in assisting reduce or eliminate extreme poverty and you want more than writing a cheque to fix a symptom of a problem then you might find this note interesting.  Various groups have highlighted the importance of tax havens in undermining foreign governments in their development work by being a mechanism by which the wealthy can avoid paying taxes.  What does government in Canada provide to us?  Schools, hospitals, universities, social safety net, police.  Imagine what Canada would look like if we had almost no tax revenue.  Within a decade or two there would be no schools, hospital, universities, social safety net, police etc. 

Obama Budget to drastically reduce tax incentives for the wealthy who donate to charity

OECD Report on Abuse of Charities for Money Laundering and Tax Evasion - Canada does very poorly

The OECD Report on Abuse of Charities for Money Laundering and Tax Evasion is well worth reading for anyone who cares about the Canadian charitable sector.  On my quick read of the report it seems that Canada has probably more charity tax evasion than any other country.  The complete report is at: http://www.oecd.org/dataoecd/30/20/42232037.pdf  I will be writing an article on the ethics of professional advisors, especially charity lawyers, being involved with advising and defending charity tax evasion schemes. 

Millennium Charitable Foundation Case - Federal Court (FCA) not impressed with charity tax shelters

The Millennium Charitable Foundation Case deals with abusive charitable gifting schemes.  The Federal Court of Appeal (FCA) sided with CRA in this matter.  It is well worth reading for anyone concerned with the charity sector.

Canadian charities and pharmaceutical donations -some ethical issues

There are many legal and ethical issues with the donation of pharmaceuticals to developing countries.  In this note I will touch upon some of the ethical issues.

Canada Revenue Agency Charities Directorate Update November 2009

This CRA Charities Directorate Update presented in November 2009 provides some interesting information and statistics on compliance issues for the sector.