Here is a copy of my presentation Global Philanthropy: Canadians and Canadian Charities and Foreign Activities that I delivered to the Estate Planning Council of Toronto.
The problem of abusive charitable tax shelters using the developing world as a marketing tool continues. It just goes to show the importance of dealing with credible and legitimate charities if you want to make the world a better place.
The CRA has reminded charitable organizations (not foundations) that these charitable organizations will beginning in 2009 have to in addition to other disbursement quota requirements need to spend 3.5% of the value of all of their property the charity has that is not used directly in charitable activities or administration.
Although charities are greater than 10% of our economy in a federal election the charitable sector gets between 0 and 0.01 of the attention. We spend a lot of time talking about sweaters. In this blog I ask a few rhetorical questions (as no one is actually going to respond!) about some public policy issues involving charities.
In the September Newsletter we discuss the CRA Fundraising Consultation, provide my article on Canadian Charities and Foreign Activities which appeared in The Philanthropist, review rules for lobbying and political activities by Canadian charities, and provide a link to the CRA Report on Small and Rural Charities in Canada.
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
The bad economic times, the war in Iraq and increasingly worsening socio-economic situation in the US is having some Democrats and Republicans wonder whether the structure and tax incentives for the charitable sector is working. Will Canada follow the lead and ask tough questions?
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.
The Global Philanthropy Forum is presented by the World Affairs Council of Northern California. The 2008 title was “Human Security, Human Rights and the Shared Responsibility to Protect:
A conversation between elders and emerging leaders”. They had some excellent speakers but best of all you can see most of this gathering on their website at:
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).
Here is Your Guide to Charitable Giving and Estate Planning produced by the CAGP Greater Toronto Roundtable 2008. It was inserted in the Globe and Mail. I have a couple of articles in this edition.
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.
Here is a copy of the Blumbergs Canadian Charity Law List - May 2008 with articles on subjects such as the Burma Cyclone and Sanctions, Flow-Through Share donations schemes, risk management and volunteers, planned giving in a global world, the Banyan Tree Foundation etc
A recent report entitled “The Commitment to Development Index for Africa: How Much do the Richest Countries Help the Poorest Continent? is well worth reading. As we know Canada has a good reputation in terms of helping developing countries. The numbers in this report show in fact that Canada is below average amongst the 21 wealthiest nations in helping reduce poverty in Africa. If mediocrity is your goal - Canada is succeeding. This report discusses not only foreign aid but also trade, investment, and migration policies, as well as other factors such as commitments to the environment, to security, and to technology.
I am just back from the 2008 AGM of the Canadian Council for International Co-operation. It was awe inspiring to see some of the wonderful work being done by Canadian charities in the international development realm. Not only was this a celebration of CCIC’s 40th anniversary but it was also a celebration of a very important legislative victory in the realm of international development.
The Canadian Federal Budget, delivered in March 2007, provided an additional tax incentive to Canadian pharmaceutical companies to provide drugs to certain Canadian registered charities as long as the drugs will be used outside of Canada.
Alliance Magazine has a summary of this UK article on Who Gives for Overseas Development? at http://www.alliancemagazine.org/online/html/aodec07d.html This article may be of interest to professional fundraisers who work on international development and humanitarian aid. It may or may not be useful to understanding Canadian donors. For the rest of us it appears that a large number of people give to overseas causes - but those who are better educated, women, and better off financially tend to give more.
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.
This interesting book provides lots of insights into grantmaking in Africa.
How much charitable giving actually supports the most needy?
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.
I am going to read “Making a Difference in Africa: Advice from Experienced Grantmakers” by Rob Buchanan and Jayne Booker. If I have time I will be looking at “Taking Philanthropy Seriously: Beyond Noble Intentions to Responsible Giving” edited by William Damon and Susan Verducci.
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.