CRA’s New Guidance for Canadian Registered Charities Carrying out Activities Outside Canada

CRA has just 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 indicates “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 charitable status then the same rules apply as a Canadian 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 documents 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 transfered 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;
c) foundations that provide funds for registered charities who carry out those activities;
d) 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 http://ow.ly/29hM4  I prepared it for the Capacity Builders Charity Law Information Program and it is listed under “Resources”  It is on the http://www.capacitybuilders.ca/clip/clip.php website.

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.capacitybuilders.ca/files/resources/Canadian_Charities_Working_with_Other_Canadian_or_International_Organizations_that_are_not_Registered_Canadian_1256067186.pdf

Simplified 10 Steps for Contractor Agreement implementation
http://www.capacitybuilders.ca/files/resources/Foreign_Contractors_of_Canadian_Registered_Charities_Carrying_Out_the_Canadian_Charity__s_Projects_1253585049.pdf

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

Here are some free archived webinars, some which deal with foreign activities:
http://www.capacitybuilders.ca/clip/clip.php

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario and lead trainer for Capacity Builders’ Charity Law Information Program (CLIP). He can be contacted at .(JavaScript must be enabled to view this email address) or at 416-361-1982. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit http://www.canadiancharitylaw.ca or http://www.globalphilanthropy.ca