Blumbergs Canadian Charity Law List - April 2011
Misuse of Charity Assets
1) Canadian Charities Recently Revoked for Cause by the Charities Directorate of CRA - April 2011
Here is a list of Canadian Charities recently revoked by CRA for cause -April 2011. The list also has the names of the directors of those charities. Charities that are concerned about their reputations may want to be cautious before having any of these people sit on their boards of directors or be involved in their organizations.
2) IRFAN-Canada has status revoked for supporting listed terrorist organization, Hamas
The International Relief Fund for the Afflicted and Needy Canada (IRFAN-Canada) has had its registered charity status revoked. They had their receipting privileges suspended last year because according to CRA they “Failed to maintain books and records in Canada in accordance with subsection 230(2), to provide records for audit in accordance with subsection 231.1(1), and to comply with a Requirement to provide documents in accordance with subsection 231.2(1)”. Well it appears that there may have been more here than just sloppy record keeping. According to CRA’s lengthy letter “IRFAN-Canada also transferred gifts-in-kind to non-qualified donees valued at more than $17 million. ... We have been able to establish that $13 million transferred to other organizations in the form of gifts-in-kind was provided to organizations which we have been able to document from
public records as having ties to Hamas.” Here are the CRA documents to IRFAN-Canada including various schedules. It is very important to remember than Canadian charities are allowed to operate in conflict areas such as Somalia, DRC, Gaza, and Pakistan but they cannot provide directly or indirectly material support to terrorist organizations. Also in this note I suggest some lessons Canadian charities operating abroad can learn from this case.
3) CRA wins motions on Operation Save Canada Teenagers and Revival Time Ministries International
Operation Save Canada Teenagers and Revival Time Ministries International, which were covered extensively by the Toronto and CBC were revoked by CRA for improper receipting, falsifying bank statements and other assorted problems. Attempts to appeal by Reverend Daniel Mokwe to the Federal Court of Appeal failed.
4) Fraser Milner Casgrain sued again in class action lawsuit on charity donation tax shelter scheme
The National Post reported that “Law firm Fraser Milner Casgrain LLP and accounting firm BDO Dunwoody LLP are among several defendants named in a proposed class action that seeks more than $300-million in damages due to a failed donation tax shelter.” I think this is the 4th time that a major Canadian law firm has been sued as part of a class action lawsuit.
5) Coleman and Ballard et al v. The Queen -Federal Court of Appeal sides with CRA on donation scheme
Here is a copy of the judgment of the Federal Court of Appeal in the Ballard and Coleman cases upholding a lower court decision in favour of CRA. It is a consolidated appeal of a number of cases. Over a year ago, in early 2010, the Tax Court of Canada had decided in Coleman
against some taxpayers who had made a “donation” to a charity called the National Foundation for Christian Leadership that provides a scholarship or bursary through a scheme to their child or grandchild. The Tax Court of Canada decided against the taxpayers who had “donated” to this scheme and now the Federal Court of Appeal dismissed the taxpayers’ appeal from the Tax Court of Canada. This again shows that the courts have no sympathy for schemes that provide official donation receipts, when none should be provided.
What’s New with CRA
6) CRA letter on public foundation borrowing money to pay for equipment for charitable activities
Here is a letter on whether a Canadian registered charity that is a public foundation can borrow money to pay for equipment to be used in charitable activities. The CRA advanced tax ruling is in French.
7) CRA letter on naming rights for business donation and whether advantage for split receipting rules
Here is a CRA letter on whether naming rights provided to a business that made a donation to a registered charity is an advantage under split receipting rules. In other words, if a business has a naming opportunity is there a value/advantage in that naming opportunity such that the Canadian charity must reduce the value of the gift when determining the “eligible amount of the gift” for Income Tax Act purposes?
8) CRA letter on clergy residence deduction confirms availability in particular case
Here is a recent CRA letter on the clergy residence deduction which confirms in this particular case of an ordained minister working as a chaplain/spiritual care coordinator in a long term care facility, that he qualifies for the clergy residence deduction under the Income Tax Act.
9) CRA updates spending requirement (disbursement quota) checklist
The Charities Directorate of the Canada Revenue Agency has updated the Spending requirement checklist to include information to help registered charities determine if they have met their disbursement quota spending requirement.
10) Canada Revenue Agency on Twitter
The Canada Revenue Agency (CRA) has recently started a Twitter account. You can sign up at http://twitter.com/canrevagency Some of the information relates to donors and charities, but most of it relates to other areas of tax compliance.
11) New York Times discusses Madonna and Kabbalah Centre debacle in Malawi
The New York Times, in an article entitled “Madonna’s Charity Fails in Bid to Finance School”, discusses how Madonna has abandoned her efforts to build an expensive school in Malawi after spending about $4 million in the initial work on the project. There are also articles discussing how Madonna and the Kabbalah Centre hired spin doctors to try and blame the employees in Malawi for the problems but it appears that most of the money was misappropriated in North America, and in this case specifically in Los Angeles. The FBI is apparently investigating.
12) Webinar “Responding to International Disasters: Fundraising and Coordination with Nicolas Moyer”
On February 28, 2011 I did a webinar with the Coordinator of the Humanitarian Coalition, Nic Moyer, entitled “Responding to International Disasters: Fundraising and Coordination with Nicolas Moyer”. You can watch the 1 hour webinar at: Responding to International Disasters: Fundraising and Coordination with Nicolas Moyer LINK It is free of charge and was prepared as part of the Charity Law Information Program (CLIP) which is supported in part by a contribution from the Charity Partnership Outreach Program of the Charities Directorate of CRA.
13) Humanitarian Coalition Release on “All aid dollars raised support survivors of disaster in Japan”
Here is an interesting press release from the Humanitarian Coalition on “All aid dollars raised support survivors of disaster in Japan”.
14) Globe and Mail article on Japan - my thoughts.
There was an article in the Globe and Mail on fundraising for Japan. I think that this article misses a number of very important points. I am not sure why the Globe and Mail decided to interview former hedge fund people who are in New York as to whether there was need in Japan for donations and to give their views greater prominence than some of the best charities in this country who have affiliates in Japan that are directly involved with the disaster. But anyway, you can read more on the blog.
15) Christchurch Earthquake Appeal Trust of New Zealand is added to IC84-3R and is now qualified donee
The CRA has just revised the attachment to IC84-3R, Gifts to Certain Charitable Organizations Outside Canada, to include Christchurch Earthquake Appeal Trust of New Zealand. As Christchurch Earthquake Appeal Trust of New Zealand is added to IC84-3R and is now a qualified donee, it means that Canadians can donate directly to the Trust and receive tax benefits.
16) CIVICUS World Assembly 2011 in Montreal - worldwide gathering of NGOS in Canada
The Civicus World Assembly 2011 will be held in Montreal around September 8-12, 2012. This is a great worldwide gathering of NGOs. For those interested in development as well as civil society this is a great conference to network, meet NGO and government representatives, and learn about civil society in other countries. As it is hosted in Canada this year, it is far more accessible and less costly than when hosted abroad.
Elections, Budgets and Legislation
17) Bill C-470 dealing with charity compensation disclosure dies on the order paper with election call
I have been blogging about C-470 since March of 2010 with many concerns about the process in which the bill was forwarded and the content of the bill. When this current election was called C-470 died on the order paper. Here is a note from AFP on C-470 and the National Philanthropy Day legislation. It is important that there is good transparency in the charitable sector - the sector definitely needs to grapple with this issue, preferably in concert with CRA but having members of parliament determine the content of a form (ie. the T3010), a form for which they don’t even know its name, is not a good way to prioritize their time. There is already quite a bit of disclosure on compensation in the T3010. As I discussed in my original blog there are a number of areas that require greater disclosure, which were to some extent dealt with in the proposed 2011 Budget.
18) Canadian Election 2011 - will there be an effect on Canadian registered charities
Like many Canadians I will be watching the election. I will be blogging on whether there are implications for the charitable sector and whether any of the parties have anything particularly interesting to say about the charitable sector. Also, a quick reminder to registered charities that they cannot be involved with partisan political activities and there are restrictions on the scope and resources that registered charities can use on political activities. Here is an article on legal requirements for Canadian charities wanting to conduct political activities in the 2011 Canadian Federal Election.
19) The Canadian Institute’s Advanced Forum on Government Relations and Lobbying - Mark will present
I will be delivering to The Canadian Institute’s Advanced Forum on Government Relations and Lobbying a presentation on “Charities and Lobbying: Ensuring the Sector’s Views are Heard on Funding and Policy” on June 8, 2011. This is a two day Forum on government relations and lobbying.
20) Tax rule changes in budget take charities by surprise - Globe and Mail
Here is an article entitled “Tax rule changes take charities by surprise” in the Globe and Mail.
21) 2011 Federal Budget - What’s new for Canadian Registered Charities
I had the privilege of attending the Budget 2011 Stakeholders Lock-up in Ottawa arranged by Finance. Here are the parts of the budget that relate to registered charities and other qualified donees. Also in this blog note are some of the highlights of the budget.
22) Alberta government budget warns taxpayers to beware of charitable donation schemes
The 2011 Alberta budget has a section in it warning Albertans about abusive charitable gifting schemes that offer a person tax savings that are greater than the “investment” by the taxpayer. The government is very direct and describes these as “illegal charitable donation “programs” or “tax planning arrangements””.
23) Upcoming FREE CLIP Webinars (Online internet seminars) on charity law, fundraising and receipting
Here are some of the upcoming FREE Charity Law Information Program (CLIP) webinars on appropriate receipting and fundraising that I will be delivering with links to the registration pages. The CLIP program of Capacity Builders is supported by a contribution from the Charities Partnership and Outreach Program of the Charities Directorate. There is no charge for these sessions at this time. You can register for any session by clicking the link. The short link for this page is: http://ow.ly/3jsBh
24) Foreign Activities by Canadian Charities - Free Archived Webinars from CLIP and Mark Blumberg
Here are some free archived webinars on Canadian charities and foreign activities. Each is approximately 1 hour in length If your charity conducts foreign activities these webinars will help in understanding some of the compliance issues. They were prepared as part of the Charity Law Information Program.
25) Charity Law Information Program (CLIP) Videos
The Charity Law Information program has posted various videos at http://www.vimeo.com/charitylaw These videos came from a conference entitled “Being Good and Doing Good” which was held in Toronto in 2010 and covers issues such as financial controls, foreign activities, avoiding misuse of charitable assets, etc..
26) CRA webinar on “Non-compliance issues and how to avoid them” - April 27, 2011
CRA announced today that “The registration for the April 27, 2011, Charities Information Webinar is now open. This webinar will be on Non-compliance issues and how to avoid them.”
27) CRA updates sections of website dealing with educational resources for Canadian registered charities
The CRA has updated its section “Webinars, Information Sessions, and other news” of the Charities and Giving website and renamed it “Educational resources for charities” . It now contains the Toolbox for directors, officers, and volunteers and a new page “Educational programs” offered by organizations serving the charitable sector.
In June I will be presenting at the Alberta Government’s Vitalize Provincial Voluntary Sector Conference in Edmonton. More information will be available at Vitalize
For upcoming CLIP webinars see: Upcoming CLIP webinars
I will be delivering a number of presentations to the Institute of Chartered Accountants of Ontario on Charity compliance issues. http://www.icao.on.ca/resources/publications/PD_SpringSummer_2011/index.html
I will be giving a presentation in Ottawa on May 26, 2011. I will be presenting at the AFP NS Conference June 9th and 10th on issues relating to fundraising including cost of fundraising.
In Toronto on June 13, 2011 I will be participating in a presentation for Greater Toronto Roundtable of CAGP on “You don’t need to be rich to be a philanthropist: Making an impact with your charitable giving”
On June 20, 2011 I will be presenting to the CGA Not-for-Profit Symposium on non-profit and charity issues in Toronto.
On March 28, 2011 CLIP and myself delivered a webinar with Ken Mayhew and AFP, entitled “Canadian Fundraising Matters 2011: From the CRA’s Guidance to Media Coverage” and we had over 200 people attend the webinar across Canada.
On April 7, 2011 I presented to the Global Youth Conference at Victoria Park Collegiate. On the bright side the participants were very smart and committed to international philanthropy. On the downside - they cannot vote in this election!
On April 11, 2011 I presented on the CRA Fundraising Guidance to the United Way of Canada Finance Forum in Calgary.
I delivered a large number webinars through CLIP on receipting and fundraising. For more information and a few of the upcoming topics see: CLIP webinars
I hope that you found the above material helpful and please feel free to forward the e-mail newsletter to anyone you think may be interested. They can also sign up for the BLUMBERGS non-profit and charities law newsletter at http://www.canadiancharitylaw.ca/index.php/pages/subscribe/
For further information on legal resources for Canadian Non-Profits and Charities please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca
If you use Twitter you might want to follow me at: http://twitter.com/canadiancharity
If you want general information on registered charities in Canada you might find the archived webinars that were prepared for the Charity Law Information Program (CLIP) of Capacity Builders helpful http://www.globalphilanthropy.ca/index.php/blog/comments/webinars_on_canadian_charity_law_-_charity_law_information_program_clip_by_/
Mark Blumberg, B.A., LL.B., LL.M., TEP
Blumberg Segal LLP
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