April 3, 2008 - CRA has just released the latest T3010 information which is for the year 2006 and it shows another large increase in funds spent by Canadian charities operating abroad. In fact in 2006 Canadian charities spent over $2.3 billion. That is an increase of about $214 million over 2005 or about 10%.
In the year 2006, 83,223 Canadian registered charities filed their T3010A Registered Charity Information Return with the Charities Directorate of the Canada Revenue Agency. This is an increase of almost 3000 charities from the 2004 (78,893) and 2005 (80,304) years.
In 2006, 12,319 charities identified themselves as carrying on programs directly or indirectly outside of Canada compared to 12,320 in 2005 and 11,969 in 2004. This reflects approximately 15.30% of the charities which is similar to 15.34% (2005) and 15.17%(2004) in previous years.
In 2002, the total amount spent by all charities outside of Canada was $1.4 billion. In 2004 it had risen to $1.8 billion which was a significant rise. In 2005 it was $2.1 billion which is a substantial increase over 2004. ($2,128,863,092.00.)
In 2006 it was $2,343,163,623 ($2,468,425,755.00 if you do not remove duplicate listings and some abusive tax schemes). That is an increase of about $214 million or about 10%.
Here is a List of Canadian Charities Spending over $1 million outside of Canada in 2006. There are 237 Canadian charities on the list. This compares to 232 ‘millionaires’ in 2005.
As discussed before on the website there are a number of problems in dealing with the information contained in the T3010A Registered Charity Information Return.
1) Although an important legal document, it is often filled out by volunteers or others who have little understanding of the nuances of the Income Tax Act, or for that matter, basic accounting, may have limited language skills and, in some cases, may not have easy access to the correct information.
2) In question C5 dealing with the list of countries or regions where programs were carried out the form provides only ten boxes. Clearly some charities conduct operations in more than 10 countries or regions.
3) The fact that a charity is allowed to list regions, in addition to or instead of specific countries, will always undercut the accuracy of the statistics on countries. The list that I was provided with by CRA is in both French and English and I have translated the French into English in order to better aggregate the information.
4) If one even quickly reads the actual data inputted for regions and countries one will find that there are all sorts of inaccuracies either on the T3010 that was filed or on CRA’s inputting of the information.
5) Last year The Christian Children’s Fund of Canada sent me a note that they were surprised that they were not on the list. After investigation they wrote “The CRA manually mis-keyed our T3010 into their database. The field for line F1/5400 should be $24,185,324, not $24,185. We are contacting CRA to have this fixed. ... It’s unfortunate that CCFC did not get the recognition for its sizable foreign operations that is the main focus of our charitable work. Thanks for pointing out the issue to us.” This would have put CCF in 14th place on the list last year. I expect this year that there will be similar issues with other charities.
6) The CRA raw data includes duplications which I have removed.
7) The CRA raw data includes “charities” that from press reports appear to be abusive tax avoidance schemes or charities that fundraise a lot but there is little verification that they have done anything worthwhile. I have not made, and cannot make, a determination as to whether the press reports are all completely accurate, as neither CRA for ‘privacy’ reasons nor the particular charities is likely to be overly forthcoming as to whether or not they are under investigation. Personally I would prefer if CRA removed these tax avoidance schemes/“charities” from the data as they distort the important and hard work of legitimate charities. Just to give one extreme example of these “highly problematic” charities – one small church which was a registered charity in Canada was apparently issuing hundreds of millions of dollars in receipts according to reports from the Toronto Star – I removed the church as an example from the list that I have above. Just to give you an idea of how problematic these tax schemes are - at least two of the ones I removed from the list were “ostensibly”, if one relies on their T3010 filings, in the top ten of the list. This does not by any means, mean that the charities on the list are all legitimate or effective. I would point out that there are some superb charities on the list that are doing work that is absolutely breathtaking.
Perhaps in the future it would be possible to do T3010 filings electronically, which would perhaps reduce the input errors.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.