Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams
Here is the Blumbergs Canadian Charity Law List - May 2010. My apologies for the length of this newsletter - it is the March, April and May newsletter in one! As well quite a bit has happened recently and I have been very busy. If you want to keep up to date and are not already signed up to my newsletter you may want to sign up at: http://www.globalphilanthropy.ca/index.php/pages/subscribe/
1) CRA Charities Directorate in 2010 - Cathy Hawara’s presentation to CBA National Charity Law Symposium Cathy Hawara, Acting Director General of the Charities Directorate, delivered a presentation to the National Charity Law Symposium in Toronto on April 30, 2010. The presentation provided an update and discussed a number of important topics involving the regulation of registered charities.
2) Bill 65, Not-for-Profit Corporations Act, 2010 - Ontario to get new non-profit corporate legislation to replace the Ontario Corporations Act - it will affect 55,000 Ontario non-profit corporations The Ontario government introduced Bill 65, Not-for-Profit Corporations Act (Ontario), 2010. This act will replace the Ontario Corporations Act which deals with non-profit corporations. The bill passed first reading May 12, 2010. Some of the bullet points sound interesting - will have to review the bill.
3) Archived Online Webinars on Canadian charity law from the Charity Law Information Program (CLIP) Here are about 25 archived webinars, each about 1 hour in length, which will be available in May at no charge from the Charity Law Information Program (CLIP) and Blumbergs. Try them out. It is time to stop complaining that board members know little about governance, ethics, financial controls, legal regulation, fundraising, reading financial statements, etc. Here is your chance to educate them without breaking your budget. CLIP was supported by a contribution from the Charities Directorate of the Canada Revenue Agency.
4) International Pentecostal Ministry Fellowship of Toronto (IPM) v. Minister of National Revenue- (FCA) important case on jurisdiction of the Charities Directorate In International Pentecostal Ministry Fellowship of Toronto (IPM) v. Minister of National Revenue (FCA) the Federal Court of Appeal confirmed CRA’s jurisdiction over Canadian charities registered under the Income Tax Act (Canada). In quite a strongly worded statement the decision states “We have not been persuaded that there is any merit to the Appellant’s argument that the provisions of the ITA dealing with the registration and deregistration of charities are an unconstitutional infringement on provincial legislative authority. In our view, these provisions relate, in their pith and substance, to federal taxation, and accordingly they are intra vires the Parliament of Canada under subsection 91 (3) of the Constitution Act, 1867. Both the advantages of registration and the drawbacks of revocation relate solely to the tax treatment of charities and their donors. They do not impermissibly affect the affairs of charities in any other way, nor do they impede provinces from otherwise regulating charities.” This is an important victory for charities and CRA in that it makes it clear that CRA can remove the charitable status of a sufficiently non-compliant charity. As well, it confirms that if you are a charity you need to comply with provincial rules but if you are a registered charity you need to comply with provincial rules and the Income Tax Act which is administered by the CRA. The public in Canada expects the Charities Directorate of CRA, as regulator, to regulate and sometimes that involves removing the registered charitable status of groups that do not comply with the basic requirements of being a registered charity.
5) Social enterprise and Canadian charities - How will recent changes to the Disbursement Quota and Charitable Gifts Act (Ontario) affect charities carrying out social enterprise This note discusses why recent changes to the disbursement quota and Charitable Gifts Act (Ontario) will make it easier for certain charities to conduct certain types of social enterprises. It discusses the real impediments to social enterprise and if you guessed it is not charity law then you are right!
BILL 470 - SALARY DISCLOSURE AND CAPS FOR REGISTERED CHARITIES
6) Private members bill on Canadian registered charity salary disclosure and salary cap not helpful The Globe and Mail reported on March 16, 2010 that a Liberal MP is proposing a private members bill that would make salary disclosure mandatory for the top 5 executives of a registered charity and cap all payments to any employee of a Canadian registered charity at $250,000 per year. In this article on the Bill I criticize the author of the private members bill for not consulting with charities, for knowing very little about the charitable sector when she introduced this legislation and for months thereafter, despite attempts by some to engage with her, and for cynically exploiting the public’s lack of knowledge about charities for her own political ambitions.
7) Letter from Albina Guarnieri re: private members bill on registered charity compensation Here is a copy of a letter sent by the author of the above private members bill. The letter is in italics. I have placed in bold italics the parts that I find most objectionable and at the end of each paragraph in brackets and bold my comments.
8) Who will be hurt by salary cap in Canadian charitable sector I was looking at a partial list of Canadian registered charities that have employees being paid $350,000 plus. It is partial because by February 2010 only about 30,000 registered charities, out of 85,300 charities, had filed their 2009 T3010B return. Charities have 6 months after their fiscal year end to file their T3010B. I thought the list would be a lot more mixed but in fact is largely dominated by hospitals and health authorities. It occurred to me that the private members bill to cap compensation that can be paid by a charity to any employee at $250,000 will potentially most adversely affect hospitals in small cities and rural areas which probably have to use higher compensation to attract the necessary health care professionals and skills.
ABUSIVE CHARITY GIFTING TAX SHELTERS, FRAUD, ETC
9) Coleman v. The Queen - CRA wins case that no donation when children/grandchildren benefit from gift I think that some people assume that if a tax avoidance scheme is sufficiently complicated or “grey” and sufficiently and cleverly documented to take advantage of some “loophole” that the courts will allow those schemes. If you make that assumption you might want to read Coleman v. The Queen, 2010 TCC 109 (January 25, 2010) as this case may change your mind. Coleman discusses in detail whether a “donation” to a charity that provides a scholarship or bursary through a scheme to their child or grandchild should be receiptable. The decision is 45 pages long which will presumably be “welcomed” by those who complain that some of the recent Federal Court of Appeal decisions are too short! Blake Bromley of Benefic Law Corporation represented the unsuccessful appellants. Mr. Justice Campbell J. Miller of the Tax Court of Canada decided in favour of the CRA in this very well written decision in which he held that there is no donation when the children or grandchildren of a donor benefit from the gift. In addition to the pure legal issues in this case, there are also some interesting ethical issues raised by the conduct of the registered charity (National Foundation for Christian Leadership), the Christian colleges cited and the donors.
10) Lockie v. The Queen - court sides with CRA again on charity gifting tax shelters -FMW=what you paid In Lockie v. The Queen, 2010 TCC 142 (March 18, 2010) the Tax Court of Canada ruled that, with a donation scheme involving pens and toothbrushes that were donated to a registered charity as part of a charity gifting tax shelter scheme, the fair market value of the items is not the retail fair market value of the items as suggested by the taxpayer but is the amount paid by the taxpayer for the items. That is how a $20,043 tax receipt should only have been $3,800. Every year there are a number of new gifting tax shelter schemes that argue they are different than earlier schemes. It is interesting to see how carefully the judges went into detail to discredit the valuation provided in support of the taxpayer position. There is no reason to believe that with any charity tax shelter gifting arrangement that I have seen that promised more than your out of pocket costs, the result would be any different.
11) CRA discloses substantial penalty against promoter of tax shelter gifting arrangement In this recent press release from CRA they noted that “Promoters and other third-party representatives are penalized when they make false statements involving schemes that are against the law. Currently, there are 71 audits involving promoters. Recent examples include a scheme involving RRSPs, for which the promoter was assessed a penalty of $1.8 million, and a tax shelter gifting arrangement case where the Canada Revenue Agency (CRA) proposed two penalties of $24 million against the promoters involved.”
12) CanadaHelps free webinar on fraud prevention and their Charity Fraud Awareness Quiz These resources may be of interest to those who wish to combat fraud in the charitable sector or targetting charities.
13) CRA publication on “Using Tax Havens to Avoid Paying Taxes -Worth the Risk?” Abusive tax schemes involving tax havens or secrecy jurisdictions undermine our tax system and all the programs that are supported by taxes - not to mention the additional burden imposed on other taxpayers. I thought that this sentence from the above CRA publication is interesting: “For tax shelters that involve gifting, CRA audits have determined that 96% of these arrangements make use of tax havens.”
14) Gordon Pape warns against charitable donation tax shelters In a recent article by Jonathan Chevreau of the National Post, Gordon Pape warns Canadians not to be involved with charity tax shelter schemes that promise an official donation receipt greater than your cash contribution.
15) The Canada Revenue Agency revokes the charitable status of Destiny Health and Wellness Foundation and Liberty Wellness Initiative The CRA announced the revocation of two Canadian registered charities, one called “Destiny Health and Wellness Foundation” and the other, Liberty Wellness Initiative
16) Toronto Star article “CRA targets David Singh’s charitable tax shelters” Here is an article by James Daw on the above two registered charities that recently lost their charitable status for involvement with tax shelters. http://www.thestar.com/news/canada/article/797804—cra-targets-david-singh-s-charitable-tax-shelters?bn=1 Although these charity gifting tax shelter “charities” are being attacked by CRA and falling like flies, there are unfortunately tens of thousands of “investors” in these “retail schemes” who are left holding the bag with disallowed donation receipts, interest, penalties, stress and headaches.
17) CRA revokes the charitable status of Canadian Charity “The Orion Foundation” The CRA announced May 5, 2010 the revocation of charitable status of The Orion Foundation. It was a bad scam, but by no means the worst. They receipted $91 million dollars and spent $70,000 on charitable activities.
18) CRA revokes charitable status of Henvey Inlet First Nation Community Support Organization The Canada Revenue Agency announced the revocation recently of the charitable status of Henvey Inlet First Nation Community Support Organization. Apparently they issued $44 million in receipts and transferred 99% of the receipted amount to the tax shelter promoters as fundraising fees and investments in off-shore accounts.
19) Latest Charity Tax Shelter Information from CRA - further decline in charity tax shelters In Cathy Hawara’s presentation to the Canadian Bar Association on April 30, 2010 in slide 15 she notes the most up to date statistics on charitable gifting tax shelters: “The scope of the problem is significant; the CRA estimates that since 2003 there has been approximately: 172,300 participants, $5.4 billion in claimed donations. The Charities Directorate has revoked 35 charities and RCAAAs for participating in tax shelter schemes. 2006 to 2009 saw participation drop by 80% to 10,800 individuals and the amount of “donations” drop by 76% to $284 million.”
20) Charges laid by CRA in Canadian inflated donation tax fraud investigation Here is a copy of a press release, “Charges laid in donation tax fraud investigation” from the Canada Revenue Agency. In the press release CRA discusses the charges it has laid against three people who allegedly issued donation receipts for more than the amount of the donation. CRA noted that “The Income Tax Act permits registered charities to issue tax receipts only for the amounts actually donated. Schemes that promise a tax receipt in excess of what a donor gives are usually fraudulent. The CRA audits charities to put a stop to such schemes and intends to prosecute tax preparers, directors of charities, and donors who are found to be involved.”
21) Charities Directorate of CRA now displaying T3010 information for revoked charities The CRA has just announced that “The Charities Directorate is now displaying T3010 returns for revoked charities, and detail pages for annulled charities in the Charities Listings.” Instead of revoked charities information disappearing, information like who were the directors of the charity and how much did they receiptwill remain available.
22) Transparency - What can the Charities Directorate of CRA disclose about registered charities? The Income Tax Act (Canada) sets tremendous limits on the ability of CRA to disclose information about Canadian charities. Essentially, the Income Tax Act in section 241 and its confidentiality provisions forbid CRA from disclosing any information about any registered charities either through informal request or a formal access-to-information request unless the information falls within certain narrow exceptions. I will note below the provisions, but I think that CRA should have greater flexibility to be able, especially in the few cases of major charity scams or tax avoidance schemes, to warn Canadians about any concerns that CRA has. Unless a charity consents to disclosure (not likely), CRA can only provide, after the charity has lost its registered status, either its “entirety of or any part of any letter sent by or on behalf of the Minister to the charity relating to the grounds for the revocation or annulment”. By the time the charity has loses its registered charity status, years could have passed since CRA started having significant concerns about the charity.
23) Free International Seminar on Transparency and Effectiveness in the Charitable Sector on May 14 This seminar in Kitchener looks very interesting and I will hopefully be able to make it. It is an international gathering on transparency and accountability.
2010 FEDERAL BUDGET 24) Canadian Budget 2010 announces disbursement quota reform for Canadian charities The Canadian federal government announced disbursement quota reform in the 2010 Budget to remove the 80/20 expenditure requirement for registered Canadian charities. For many charities this will have no real impact - they were handily satisfying their disbursement quota requirements and for those that were not (except in extreme cases) CRA was not using the DQ to revoke charitable status. As one observer noted on the changes “No more 80/20 ordinary gift. No more enduring property, including 10 year gifts. No more specified gifts. No more intercharity transfer rules based on original DQ designation. Just a simple obligation to use the equivalent of 3.5% based on previous 24 month market average for charitable purposes. ... The 3.5% obligation doesn’t kick in for charitable organizations until there is $100k in assets, while for foundations it stays at $25k.” There will be a revised T3010 at some point to reflect these changes. With the simpler formula one can expect that in the future CRA will more vigorously enforce the DQ provisions. There is no cost associated with this change and a number of other proposals from some organizations to increase tax incentives were not included in the budget, which makes sense in light of the difficult fiscal situation in addition to other reasons.
25) 2010 Federal Budget enhances anti-avoidance rules for Canadian charities The 2010 Canadian Federal budget had some changes to the Income Tax Act to prevent transactions by registered Canadian charities that “may reasonably be considered that a purpose of the transaction was to avoid or delay unduly the expenditure of amounts on charitable activities”.
26) Budget 2010 Questions and Answers from CRA There are some that are wondering how the budget, revisions to the disbursement quota, some changes to the T3010 and new anti-avoidance rules will affect their charity. The Charities Directorate recently posted a “Questions and Answers” on the subject.
27) Effect of 2010 Budget on T3010 Form CRA will be releasing a new T3010 form. Charities can still use the current form and here are some notes from CRA on what financial information is no longer necessary in light of the removal of the 80/20 expenditure requirement and certain related concepts. Thanks to the Canadian Council of Christian Charities (CCCC) for bringing this to my attention.
28) Toronto Star investigation: The high cost of Canadian sport foundation charities The Toronto Star looked at the high fundraising costs of certain Canadian professional team foundations in an article “The high cost of sports charities”. It would appear to me that some Canadian registered charities need to spend a little more time reading CRA’s Fundraising Guidance and changing some of the techniques and cost structures of fundraising activities.
29) Mark’s mini poll at AFP Conference on CRA’s Fundraising Guidance In December 2009 I delivered a presentation on “CRA’s Fundraising Guidelines –Legal, Ethical and Practical Issues” to the Association of Fundraising Professionals (AFP) GTA Congress 2009. Prior to giving the presentation I handed out a mini poll to the 100 or so attendees at my session and about 47 of them returned the poll to me. The attendees were almost all fundraisers and probably the fundraisers who had the greatest interest in the topic. This is certainly not scientific but you might find it interesting.
30) Fundraising rules for Canadian registered charities The most important document for Canadian registered charities to understand their obligations for fundraising is the CRA’s Fundraising Guidance. 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. To make it more convenient for some, 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 Guidance it is referring to. A reader can read the Guidance from beginning to end without having to jump backward and forward 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.
GENERAL CHARITIES DIRECTORATE NOTES
31) 10 Most Useful Features of the CRA’s Charities Directorate Website for Canadian Charities Here is a copy of an article I wrote for the newsletter “Charitable Thoughts” of the Ontario Bar Association Charity and Not-for-Profit Law Section.
32) Objects and Activities of Canadian charities - CRA discusses importance when registering charity The CRA discusses questions including 1.What is meant by broad and vague objects? 2.What is the problem with broad and vague objects? 3.Is there a way to keep our objects broad and still be eligible for registration as a charity? 4.What is the difference between purposes (or objects) and activities? 5.Why are purposes and activities important? 6.What is “sufficient” information?
33) Charities Directorate Website will have new look to home page separating charities + donor section CRA has updated the Charities and Giving home page. Here is a note on the What’s New section of the CRA website. As well CRA will be using shorter web addresses (URLs) - see: http://www.globalphilanthropy.ca/index.php/blog/comments/holy_web_changes_batman_-_charities_directorate_changing_urls/
34) Canadian Charities Recently Revoked by the Charities Directorate of CRA for Cause 2010 I was recently wondering how many Canadian charities have recently lost their registered charity status for cause? Also for what reasons did they lose their registered charitable status? See my note and also see who were the directors of the last 49 charities that lost their status for cause - you may even know one or two of these people.
35) CRA to remove Charities Information Letters and Employee Speeches as they are out of date, etc. CRA has advised that they will remove Charities Information Letters and Employee Speeches as they are out of date or the information is contained elsewhere on the CRA site.
36) New CRA Charities Connection newsletter - just released Here is CRA’s new Charities Connection newsletter that was recently released: http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/nwslttrs/cnnctn/cnnctn01-eng.html
37) Israelite Church of Christ Canada - CRA wins procedural matter dealing with jurisdiction of FCA The Israelite Church of Christ Canada case is a short procedural case dealing with the jurisdiction of the Federal Court of Appeal. The FCA granted CRA’s motion to quash the appeal. Here is CRA’s summary policy on appeals to the Federal Court of Appeal. http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-a14-eng.html Here is more information on the appeal choices that charities have http://www.cra-arc.gc.ca/gncy/prgrms_srvcs/dsgr/chrts-eng.html
38) CRA Issues Notice of Suspension to International Relief Fund for the Afflicted (IRFAN-Canada) The Charities Directorate of the CRA has issued a Notice of Suspension to International Relief Fund for the Afflicted (IRFAN). Prior to this suspension there was only 1 other charity that was suspended. CRA is making greater use of the intermediate sanctions - ie suspensions or penalties rather than revocation.
39) T3010B - CRA’s views on “What constitutes a completed annual filing?” It is very important that Canadian registered charities file their T3010B Registered Charity Information Return. This is supposed to be done within 6 months of the year end of the registered charity. However, it is important not only that it is filed but also that it is accurate and complete. In the Charities Directorate mailing called RC296E What’s the Scoop 2010 the CRA discusses “What constitutes a completed annual filing?”. Remember that over 90% of Canadian charities that lose their registered charity status, lose it because they fail to file a completed T3010.
40) T3010B - Common mistakes with Form RC232-WS or Form RC232 - director worksheets for Ontario charity In this piece CRA identifies certain common mistakes in how registered Canadian charities that were incorporated in Ontario and subject to the Ontario Corporations Act file Form RC232-WS or Form RC232. This directors/officer worksheet is filed with their T3010B Registered Charity Information Return.
41) New CRA Charities Directorate electronic publication to replace Registered Charities Newsletter The CRA has announced that they will be producing an electronic publication to replace Registered Charities Newsletter. It will be called “Charities Connection”. Here is the first edition: http://www.cra-arc.gc.ca/chrts-gvng/chrts/cmmnctn/nwslttrs/cnnctn/cnnctn01-eng.html
42) Improved turnaround time for Canadian charity applications at CRA with backlog removed According to CRA, “Thanks to changes in processes, more resources, and the dedication of staff and management in the Directorate’s Assessment, Determinations and Monitoring Division, it now takes significantly less time to process applications for registration as a Canadian charity.” More complicated applications that I file that used to take 6-9 months are now being responded to in 6-9 weeks. It is an amazing improvement which is welcomed by all those involved with applications for charity status. On a sad note, after four years in the Charities Directorate, David Moore, the Director of the Determinations Division, and instrumental in reducing the backlog, has moved to the Treasury Board Secretariat (TBS) from the Charities Directorate. David Moore was responsible for establishing the Client Interface and Service Division and led the work on the Small and Rural Charities Initiative which was and continues to be very succesful in making CRA more responsive to the needs of small and rural charities. David will be missed. I understand that Linda Desrochers will become the interim Director of the Determinations Section.
43) Confirmed that Charities Directorate gets more calls than my son Ethan gets from Gerald I was wondering whether the Charities Directorate got more calls from the public than my son Ethan gets from his friend Gerald. It appears that CRA wins by a slight margin because it gets 120,000 calls per year! I cannot wait for Ethan to become a teenager! Client services staff also answered 11,000 written enquiries which according to CRA now means the backlog in written enquiries has been eliminated. For CRA to be responding to written requests more quickly is very important because some issues require a written communication from CRA. By eliminating the backlog in responses to written communication, CRA will be helping charities to more efficiently and effectively comply with their legal obligations and move ahead with operational issues.
44) CRA publication “What’s the Scoop 2010” - Information for Canadian Registered Charities The Charities Directorate of the Canada Revenue Agency has recently mailed out a one-time direct mail piece to Canadian registered charities. We have included an electronic copy of the English edition of RC296E What’s the Scoop 2010 or the French version RC296F En exclusivité 2010 Renseignements pour les organismes de bienfaisance enregistrés on our website.
45) CRA’s Charities Partnership and Outreach Program The Charities Partnership and Outreach Program (CPOP) is an important CRA initiative to enhance Canadian charity’s understanding of their compliance obligations. Over the last few years there have been about 20 programs run by Canadian registered charities and funded in part by the CRA. One of the projects that I worked on, the Charity Law Information Program of the Ontario Community Support Association, has received funding from the CRA.
46) CRA publishes GI-067 Basic GST/HST Guidelines for Charities as well as for public institutions The CRA has just released a brochure GI-067 Basic GST/HST Guidelines for Charities http://www.cra-arc.gc.ca/E/pub/gi/gi-067/README.html. This will be helpful especially to charities in BC and Ontario that are moving to HST on July 1, 2010. They have also put out GI-066 How a Charity Calculates the Net Tax to be Reported on its GST/HST Return at http://www.cra-arc.gc.ca/E/pub/gi/gi-066/README.html. CRA has also put out a brochure for “Public Institutions” which includes registered charities that are a “school authority, a public college, a university, a hospital authority, or a local authority determined by the CRA to be a municipality” and it is located at http://www.cra-arc.gc.ca/E/pub/gi/gi-068/README.html
47) Conflicts of interest, or perceived conflicts of interest, can be very costly for Canadian charities The New York Times has reported that “The Gates Foundation has withdrawn a $5.2 million grant to a Canadian research center for planned tobacco control work in Africa, after learning that the chairwoman of the center’s board was also a board member for a unit of one of the world’s largest tobacco companies.” What is unusual about this story is how public it has gotten with press releases, etc. Canadian charities should take the issue of conflicts of interest seriously and should have conflict of interest policies and should follow them. It is easier and better to avoid problems such as this one rather than having to deal with them.
48) Interesting note from Ontario Trillium Foundation on importance of ethical, accountable governance Here is an excerpt from a speech recently given by Helen Burstyn, Chairperson of the Ontario Trillium Foundation, on the importance of ethical, accountable governance.
49) Canada Blacklists Somali group, al-Shabab, because of involvement with terrorism The Canadian government recently blacklisted a Somali group called al-Shabab for involvement with terrorism. Canadian charities and individuals must take care not to support directly or indirectly any groups that are on Canada’s terrorism watch list.
50) CRA’s New Guidance for Canadian Registered Charities Carrying out Activities Outside Canada It is anticipated that the CRA will be releasing a new guidance called “Guidance for Canadian Registered Charities Carrying out Activities Outside Canada” within the next month or two. When that guidance is released we will have full details here at this location. For now you can see CRA’s last public consultation draft at http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cnslttns/ccrc-eng.html
51) UK Guidance “Charities working internationally” is helpful for Canadian charities Although the law in the UK is not identical to Canada there are a number of interesting parts to this UK Charity Commission Guidance “Charities working internationally” which Canadian charities conducting foreign operation may find useful.
52) Preventing Corruption in Humanitarian Operations: A Handbook of Good Practices It was a pleasure having Marie-Luise Ahlendorf of Transparency International Global Programmes presenting this report and handbook at the recent Charity Law Information Program conference in Toronto. The handbook is easy to read and “compiles best practice from the field, including ways to track resources, confront extortion and detect aid diversion.” Preventing the diversion of humanitarian assistance should only be a concern of those who care whether beneficiaries actually receive the aid! http://www.transparency.org/content/download/49759/795776/Humanitarian_Handbook_cd_version.pdf
53) Federal Government Budget increases foreign aid by 8% this year The March 4, 2010 Federal budget increased Canada’s foreign aid or “International Assistance Envelope” by 8% for the 2010/2011 year. The government has said that it will review thereafter whether there is any increase. In light of the difficult financial circumstances in Canada this is a good news story. Hopefully the government will continue in future years to increase the budget as Canada is a wealthy nation and we are still far below the 0.7 gross national income target. There will also hopefully be greater transparency at CIDA and in the aid process so that Canadians and others can understand how their money is being spent and how decisions are arrived at to spend that money.
54) Changes to Accounting Standards for Not-for-Profit Organizations Over the next few years there may be changes to the accounting standards for non-profit organizations in Canada. This piece “Changes to Accounting Standards for Not-for-Profit Organizations” from the Canadian Institute of Chartered Accountants (CICA) reminds those who are interested that certain exposure drafts were released March 3, 2010 by the Accounting Standards Board and the Public Sector Accounting Board. The public can comment on those drafts until July 15, 2010.
55) Canadian Charities and their obligation to safeguard children Scandals involving certain religious leaders and abuse of children, or the cover-up of such abuse, have highlighted the importance of Canadian charities having policies and taking steps to prevent the abuse of children. The UK Charity Commission has a policy “Safeguarding Children - Protecting children in your organisation” which provides some good suggestions for charities dealing with children.
56) Is a particular First Nation band a public body performing a function of government This letter from CRA discusses whether a particular First Nation band is a public body performing a function of government.
57) CRA letter on Canadian students attending Canadian campus of foreign university/distance education This letter from the Canada Revenue Agency discusses the issue of “Are students who attend classes at a Canadian campus of a foreign institution “enrolled at an educational institution in Canada” for purposes of 118.5(1)(a) of the Act?” and also “Do students who are taking distance education courses (internet) from a foreign university with a Canadian campus rely on 118.5(1)(a) or 118.5(1)(b) for the tuition tax credit?”
58) Ontario “Building A Strong Partnership With The Not-for-profit Sector” Announcement Here is an announcement from the Ontario Government about developing a “comprehensive and long term strategic action plan for its partnership with the not-for-profit sector”.
59) Legal fees and Canadian charities There have come to light a couple of instances of large expenditures by Canadian charities on legal fees. Canadian registered charities are allowed to spend funds on legal fees. In some cases, say for example a legal clinic, such expenditures may be considered charitable. In other cases they are administrative - i.e. part of the normal cost of running a charity. In this note I cite a couple of examples of very large legal fees.
60) Interesting UK study on public perception of charities depending on size In this short article in Third Sector entitled “Public think small charities are least wasteful and closest to beneficiaries” there is a discussion of UK public perception of small, medium and large charities.
61) Public Sector Compensation Restraint to Protect Public Services Act freezes certain charity salaries The Ontario government in the Public Sector Compensation Restraint to Protect Public Services Act, 2010, has proposed to freeze the salaries at certain Ontario charities. The bill has passed second reading. It includes school boards, hospitals, universities and colleges. It also applies to charities that received at least $1,000,000 in funding from the Government of Ontario in 2009, as determined for the purposes of the Public Sector Salary Disclosure Act, 1996. It freezes salaries for a period of 2 years, although there are certain exceptions including for those covered under a collective agreement.
62) IRS Databook has interesting statistics on US charity sector According to the IRS in the US there are 1,238,201 organizations called 501(c)(3)s which are similar to our “registered charities”. We often hear in Canada that we have too many registered charities at 85,300 - so how do you think the Americans feel! In the US last year they approved 42,484 new 501(c)(3) organizations.
My past few months
In mid February I co-chaired the Ontario Bar Association Charity and Not-For-Profit Law Program Doing Good, While Avoiding Legal and Liability Problems: A Primer for Lawyers on Advising and Sitting on Non-Profit Boards and Charities at the Ontario Bar Associations’ 35th Annual OBA Institute. I also delivered a presentation “Top 15 Legal and Ethical Concerns for Charities in Ontario - Red, White and Yellow Flags”. Before my program I heard a presentation by Dr. Samantha Nutt, the founder of War Child Canada. She is quite an amazing speaker.
In late February I chaired a conference in Toronto called Being Good at Doing Good. It was organized by the Charity Law Information Program (CLIP) of Capacity Builders. It was a very succesful two day conference with 180 attendees and speakers from a number of countries. We had so many great speakers I will not even try to recount them - here is a list of the speakers http://www.capacitybuilders.ca/clip/conference/documents/SpeakerListing_Working.pdf. Thanks to the Charities Directorate and Mackenzie Financial for being sponsors.
I was in Israel for 9 days and had meetings with a number of very interesting non-profits. I also learned a lot about charity transparency initiatives in Israel. I was in Las Vegas for almost a week with my wife Lisa and did not have one charity meeting!
I recently attended the following: “8th Annual Global Health Conference - Social Responsibility: Global health perspectives” at University of Toronto; “Beyond the Next Disaster: Challenges of Cross-Sector Collaboration” organized by Philanthropic Foundations Canada; and the 2010 CBA/OBA National Charity Law Symposium.
I recently delivered webinars for Centrepoint on “CRA’s New Fundraising Guidance” and “Basic Internal Financial Controls”.
I will be delivering a presentation to the MyCharityConnects 2.010 Conference - Presented by CanadaHelps in Collaboration with SiG@MaRS on the topic of Social Media, Charity Compliance and Risk Management. For information on the conference being held June 7 & 8, 2010 in Toronto see http://mycharityconnects2010.eventbrite.com/ There will be some interesting programming involving the G8 and G20 in Toronto that I will hopefully also be attending.
I will be making a presentation to the Non-Profit and Voluntary Sector Management and Governance course at Carlton’s Centre for Voluntary Sector Research and Development in July.
Here is a list of some of the top 10 workshops I have been delivering around Canada over the last year. If you think that your organization can benefit let me know and maybe we can try to organize something.
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/
If you are on Twitter you might want to follow me at: http://twitter.com/canadiancharity I now have over 250 followers on Twitter.
If you want general information on registered charities in Canada you might find the archived webinars at Capacity Builders helpful http://www.capacitybuilders.ca/clip/clip.php
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.