CRA has just released a new guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”. This guidance covers the rules for when a Canadian registered charity provides resources to a group in Canada that is not another registered charity or qualified donee. So if a registered charity provides funds to a non-profit in the community that is not a registered charity it needs to ensure that it complies with this guidance. This guidance is very similar to the CRA Guidance “Canadian Registered Charities Carrying Out Activities Outside Canada” ( http://bit.ly/ybUGAB) which deals with foreign activities.
How does this guidance differ from the foreign activity guidance?
Some of the elements relating to foreign activities have been removed such as “Can charities carry out activities outside Canada?”, “Do charities have to follow the local laws of countries they operate in?” and some of the risk management paragraphs. The main difference is that the examples given are Canadian examples and not involving foreign activities.
The guidance takes a somewhat narrower view of the transfer of capital property from a registered charity to a non-qualified donee - probably because the logistical problems of a Canadian charity owning foreign property are greater than a Canadian charity owning Canadian property. Also keep in mind that while a foreign charity cannot meet the Canadian residency requirement a Canadian organization always has the option of applying for charitable status. Furthermore, one can always discuss with CRA the options.
“If a charity intends to build or buy capital property in partnership with an intermediary, the charity must retain ownership of its share of this property. In exceptional cases where it is impossible for the charity to retain ownership of its share of the property, the charity should consult with the CRA to consider the available options.”
Here is CRA’s new Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”
Here is a large font version of the Canada Revenue Agency Guidance on Using an Intermediary to Carry out a Charitys Activities WITHIN Canada
As the CRA Guidance dealing with intermediaries is similar to its guidance on foreign activities you might find some of these resources on foreign activities helpful http://bit.ly/ybUGAB
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.