Differences between a Canadian registered charity (T3010) and a US 501(c)(3) (Form 990) transparency

August 20, 2017 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News

When it comes to charity regulation Canada and the United States have different rules. In Canada, every year a Canadian registered charity must file a T3010 Registered Charity Information Return. In the US, a 501(c)(3) organization, in some cases, must file a Form 990 Return of Organization Exempt From Income Tax, although not all are required to.

Here are some of the major differences between the Canadian and US charity transparency systems:

1) Universality.  In Canada, essentially every registered charity must file a T3010 no matter how big or small or whether it is religious or not.  In the US religious charities do not need to file a Form 990.   In Canada there are about 32,000 religious charities that file the T3010 of the 86,000 total number of charities.  If we had the US system they would not file at all.     

2) Content.  The T3010 is only 9 pages long, although most charities probably only have to fill in about 4 pages.  The US Form 990 is much longer and more detailed.   Just to illustrate this point, we have selected two Canadian charities that have obtained 501(c)(3) status and have therefore filed both forms.   [By the way, if you are a Canadian registered charity it is almost never a good idea to register as a 501(c)(3).  As well, US organizations cannot become Canadian registered charities and generally create an affiliated organization if they are interested in fundraising and carrying out charitable activities in Canada.]  

Canada Council for the Arts.  T3010    Form 990    Charitydata.ca

"Canada Council for the Arts is Canada's national public arts funder, with a mandate to foster and promote the study and enjoyment of, and the production of works in, the arts. Council champions and invests in artistic excellence through a broad range of grants, services, prizes and payments to professional Canadian artists and arts organizations. Council also raises public awareness and appreciation of the arts through its communications, research and arts promotion activities."

It has revenue of US$157,093,866 and assets of US$275,328,373
 

University of Toronto    T3010    Form 990     Charitydata.ca

"The University of Toronto's vision is to be a leader among the worlds best public universities in its discovery, preservation and sharing of knowledge through its teaching and research and its commitment to excellence and equality."

It has revenue of US$2,210,887,000 and assets of US$6,408,769,000
 

By looking at the two forms you can see the difference for yourself.

3) Accessible electronic data. For over two decades the CRA has been providing electronic copies of almost all the data on the T3010.  The IRS has been releasing some of the Form 990s to Guidestar, a website that focuses on reporting on US non-profits, who places the PDFs on their site.  However until about a year ago the IRS did not release the electronic information.  I understand that now the IRS has released Form 990 that have been filed electronically - which is about 73% of the filers (with probably 40-50% not filing as they are religious charities).  Unfortunately, the data released by the IRS is not user friendly and a number of academics are working hard to try to clean up the data and make it accessible.   The CRA data is very easy to use and we have created the website charitydata.ca to display it more clearly and allow it to be searched and filtered with greater ease.  If  all you care about is looking at one charity then the US system of releasing PDFs is fine and you can download recent 990s from the Guidestar website. However, if you want to look at every Canadian charity and their revenue or their foreign activities you can do a search in 3 minutes to see those results.  For example see https://www.charitydata.ca/search/

4) Complexity.  I like the information on the Form 990 - but hell it is a complicated form!   I don't envy my US colleagues who work on it.   The T3010 by comparison is a cake walk. 

5) Consequences for late filing.   In Canada if you are late in filing your T3010 by about 4-6 months you will be revoked for failing to file.  This tends to mean that Canadian charities file their T3010 either on time or shortly thereafter keeping the system relatively up to date.  In the US, and only recently, the IRS can revoke a 501(c)(3) if it is more than three years late in filing a Form 990.  This delay in the US can have very unfortunate results in that some organizations are in arrears by a number of years.

6) Regulatory Burden of Transparency.   The T3010 is a relatively simple form, while the Form 990 is not.  US charities in general will spend a lot more time filling in the 990 than Canadian charities will spend on the T3010.   However, the regulatory burden for US charities is not just a matter of filing the 990 vs. the T3010.   US charities that fundraise across the US also have to do state filings in many different states.  You can check out the Hurwit & Associates’ Nonprofit Law Resource Library which is a handy resource on the many states that have filing requirements, which are in addition to the IRS requirements.  Luckily in Canada, most Canadian charities in terms of charity filing requirements must only file the T3010 and have very limited provincial government filing obligations.  

7) Third party websites.  In both countries third party groups are using the T3010 and 990 information.   However, I have not seen a US website which is comparable to our charitydata.ca website - perhaps in a year or two someone will develop one with the US data.  

With all the differences between the T3010 and the Form 990 one thing is very similar - charities on both sides of the border have not been taking the forms as seriously as they should.  However, with far greater public scrutiny now on charities, the forms are being more carefully and thoughtfully completed.  This will give donors, funders and other stakeholders a better idea of particular charities and the charity sector in general.   

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

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.

mark@blumbergs.ca
416.361.1982
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