This FAQ looks at whether there are residency requirements for Canadian charities.
This note discusses why low overhead may not be a good thing for a charity and what is appropriate.
Canadian registered charities need to scrupulously avoid involvement with partisan political activity. In this brief note we cover CRA policy statement CPS-022 on political activity by charities and CRA’s Advisory on Partisan Political Activities. It is really important for Canadian charities to understand the policy statement and advisory for two reasons: 1) failure to do so can result in a charity losing its charitable status; and 2) many charities can in fact do more allowable political activities than they currently do but they misunderstand CRA’s views on this important topic and they think that CRA disapproves of all “political” activity, which is clearly not the case. Full Article in PDF
Here is a copy of a powerpoint presentation Blumbergs recently delivered to a US 501(c)(3) on Fundraising and Grantmaking from Canada
This case dealt with whether the Charities Directorate of CRA requires judicial authorization to request certain information from a registered charity and CRA won the appeal. The CRA note headnote/summary is below.
It looks like Industry Canada will be making a second attempt to pass a new federal non-profits act to replace the Canada Corporations Act. It will be called the Canada Not-for-profit Corporations Act (NFPC).
The Canada Revenue Agency has recently been sending out a new form letter to some applicants for charitable registration which appear to have foreign activities requesting they provide greater detail in terms of the foreign activities. Here is a copy of a sample letter from CRA. The letter is worth reading and I would emphasize the importance of providing sufficient detail of the proposed foreign activity as well as a draft agreement for any structured arrangements.
The law firm of Scarfone Hawkins LLP in Hamilton has recently brought a class action lawsuit against a number of parties for their involvement with the Banyan Tree Foundation including the law firm of Fraser Milner Casgrain. It will be interesting to see how this case turns out. I predict that there will be other cases against other law firms that have been involved with preparing opinion letters for transactions that CRA considers to be “shams”. The allegations in the statement of claim have yet to be proved in court.
I often read commentators talking about the ‘increased burden’ placed by Canada Revenue Agency on Canadian charities operating abroad or the ‘increasingly complicated’ administrative rules. I then scratch my head and wonder what increased burden and what increased rules? The CRA has not modified RC4106 since 2000 (almost 8 years) and since the publication of that document the CRA has in fact provided greater leeway to registered Canadian charities in operating abroad for example charities that are umbrella organizations. The CRA has also provided clarifications in newsletters on various issues that they have been asked about. The CRA has also made far greater efforts to educate charities about compliance issues for Canadian charities operating abroad including through a recent educational partnership with certain charities.
Here is my article which discusses the Consultation on Proposed Policy on Fundraising by Canadian Registered Charities (RC4456-e).
Here is a link to http://www.cra-arc.gc.ca/tax/charities/consultations/fundraising-e.html which is the CRA’s “Consultation on proposed policy on fundraising by Registered Charities.” This is a 6 page document and apparently there will be another document forthcoming that is about 40 pages in length that will add to the overview document.
Here is a copy of a presentation on April 1, 2008 by Neil Cochrane and Peter Broder of the Charities Directorate of the Canada Revenue Agency to the Ontario Bar Association entitled CRA Fundraising Policy Overview.
CRA has prepared two publications namely Donations by Canadians to Prescribed Universities Outside Canada (RC191-07) and Information for Educational Institutions Outside Canada (RC190-07). These recent publications will be of interest to foreign universities interested in fundraising in Canada and Canadian students studying at certain prescribed foreign universities.
Essentially Canadian individuals and trusts may in certain cases claim a non-refundable tax credit when they donate to certain “prescribed” universities outside Canada. As well corporations may be able to deduct a donation to these “prescribed” universities. The list of prescribed universities is located in Schedule VIII of the Canadian Income Tax Regulations under the Canadian Income Tax Act.
Links to the documents at the CRA website are Donations by Canadians to Prescribed Universities Outside Canada (RC191-07) and Information for Educational Institutions Outside Canada (RC190-07).
Every year the Canadian Council for International Co-operation hosts a discussion forum and this year it was on the Paris Declaration and aid effectiveness. There are some interesting notes on equitable North/South CSO relations at http://ccic.ca/e/docs/002_aid_2008-02_roundtable_6.pdf As well Brian Tomlinson of the Canadian Council for International Co-operation delivered a speech a few month ago entitled “North / South CSO relations - A Northern Perspective” at http://ccic.ca/e/docs/002_aid_2007-08_harnosand_speech.pdf
“Under a Microscope –Transactions that Draw the Attention of the CRA” is a really useful discussion of issues relating to donations and receipting - a problem area for many Canadian registered charities. It was a presentation delivered by Blaine Langdon of the Charities Directorate of the Canada Revenue Agency.
Here is a presentation by Blaine Langdon, Senior Policy Officer, of the Charities Directorate of the Canada Revenue Agency entitled
Regulation of Charitable Giving in Canada –An Update
The CRA recently posted their top ten list of why applications for charitable status will not be successful. It was placed in a Consultation document entitled “Charitable Work and Ethnocultural Groups - Information on registering as a charity “. As an aside the last time I saw a study on the difference between applications for charitable status that were accepted by CRA and those that were rejected the most important factor correlating with acceptance was use of a lawyer. Although one does not need to use a lawyer, the process is anything but straightforward. If one is going to use a lawyer it is important to use a lawyer who is knowledgeable about charity law and especially important if you plan on conducting activities outside of Canada that the lawyer be familiar with CRA requirements for Canadian charities operating abroad. Just one little example they cite for denying an application “The application does not include any copy of an agreement with representatives who are supposed to help the organization to carry out its activities outside Canada.” CRA expects when one files an application that references foreign activities to be carried out under a structured arrangement (agency, joint venture, cooperative partnership, contractor) that in fact the agreement be attached. This comes as a surprise to some including experienced practitioners. Also they don’t mean some nice looking agreement - they mean an agreement that complies with ALL the requirements in RC4106. Some may see this as harsh - however, if an organization takes shortcuts and does not have the resources and advisors to put in an appropriate application for charitable status it is not difficult to imagine that some of those same people may take shortcuts later when the charity is operating.
David Baines, a columnist for the Vancouver Sun, has written a number of articles critical of the Canadian registered charity Givemeaning which describes itself as “an online fundraising site emphasizing creative fundraising ideas and other unique forms of charity donation.”. The articles and discussion cover issues such as public trust, appropriate compensation for employees of a “start-up” charity, media/marketing/hype and charities, appropriateness of high overhead, CRA oversight of the area, financial transactions between charities, what is charitable, foreign operations of a Canadian charity, appropriate transparency and accountability.
Although the law, governance and ethics are closely intertwined there is little written about ethics of Canadian charities operating abroad. Here are some links that may be of assistance to Canadian charities that operate outside of Canada to understand some of the ethical issues that they may have to deal with.
This European Foundation Centre and the Council on Foundations guide on Disaster Grantmaking sets out principles of good disaster management for charities, foundations and corporations.
Here are some handy resources and links for Canadian Charities conducting activities outside of Canada.
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.