The short answer is no.
To answer this question we first look to Registered Charity Newsletter No. 20 from the Charities Directorate of CRA to answer this question. Newsletter No. 20 advises:
“Board of directors
Q. Does the requirement that a charity be resident in Canada require that a majority of its board of directors be Canadian residents for income tax purposes?
A. Section 248(1) of the Income Tax Act requires that a registered charity reside in Canada, and that it be created or established in Canada. However, how the rules concerning residency apply differs according to the way the charity has been structured. For example, whether it is incorporated or governed by a legal document that creates a trust or by a constitution, and whether it is “a branch, section, parish, congregation or other division of an organization”. The residency requirement for charities and some other rules, notably those dealing with charities having to keep books and records in Canada or with restricting fund transfers to qualified donees only, suggest that registered charities ought to have a significant Canadian presence. However, in the case of corporations, the general provisions of the Income Tax Act concerning corporate residency (ss 250(4)) deem any corporation (charitable or not) to be residing in Canada simply if it was incorporated in Canada. If there is no incorporation, the requirements can be different. For example, in general, a trust is resident in the country where the majority of its trustees are resident. However, an unincorporated association is a “person” for the purposes of the Income Tax Act, and would likely be resident where its central management and control resides.”
Therefore, if the charity will be a Canadian or Ontario corporation then it will be deemed that such corporation (charitable or not) is residing in Canada simply because it was incorporated in Canada.
In addition to Newsletter No. 20, the Canada Not-for-profit Corporations Act which governs federal non-share capital corporations, and the Ontario Corporations Act which governs Ontario non-share capital corporations, do not have a Canadian residency requirement for directors. Therefore in theory all Canadian and Ontario non-profits could have all non-resident Canadian directors.
The rules are different for trusts. A trust is resident in the country where the majority of its trustees are resident. Therefore a majority of the trust’s trustee’s need to be resident in Canada. With unincorporated associations they will likely be resident where its central management and control resides. Generally, trusts or unincorporated associations are not used in conducting international philanthropic activities.
That being said, although there is no legal requirement that Canadian charities have resident Canadian directors, it will be more difficult to show when applying for charitable status, or after the charity has received charitable status, that the Canadian charity is maintaining “direction and control” over its foreign activities if a majority of its directors are not resident in Canada.
Absolutely yes. And many thousands of charities do so.
The Income Tax Act (Canada) allows charities to conduct their charitable purposes by: 1) giving money or assets to another “qualified donee” (see below); or 2) by conducting their “own activities” (at home or abroad). There is no ‘third option’. A Canadian charity cannot just transfer or grant money to a foreign NGO or charity. In general, the same notion applies to operations within Canada. A Canadian charity cannot just give or transfer funds to another Canadian organization that is not a qualified donee (e.g., a registered charity).
Transfers to Another Qualified Donee
Qualified donees are organizations that can, under the Income Tax Act (Canada), issue official donation receipts for gifts that individuals or corporations make to them.
Qualified donees include:
A Canadian charity can transfer funds or assets to another qualified donee. For example, a Canadian charitable organization with no experience in foreign operations that wishes to aid people in Darfur may decide to support Doctors Without Borders Canada, a Canadian qualified donee. There is no need from a CRA point of view to have an agreement between the donor charity and Doctors Without Borders Canada. If the donor charity wishes to restrict the gift to Darfur, then it may wish to have a direction or agreement to that effect. Similarly, if a donor requested that his or her donation to a community foundation (qualified donee) should be applied toward dealing with the issue of AIDS in sub-Saharan Africa, the foundation could transfer the funds to the Stephen Lewis Foundation or Canadian Crossroads International, both qualified donees, without the need for an agreement or monitoring. For many Canadian charities that do not have experience in direct charitable activities outside of Canada, a donation to another qualified donee is the simplest and safest way to have a global impact.
“Own Activities” and Intermediaries
Foreign charities and NGOs are rarely qualified donees. Therefore, as a general rule, a Canadian charity cannot transfer funds or assets to them except in furtherance of the Canadian charity’s “own activities” in a structured arrangement, as discussed below.
There are a number of different structured arrangements through which a Canadian charity can operate abroad, including: 1) Canadian employees or volunteers of the Canadian charity directly working abroad; 2) Agency Agreements with an Agent; 3) Contractor Agreements; 4) Joint Venture Agreements/Joint Ministry Agreements; and 5) Cooperative Partnership Agreements.
Yes. Canadian charities can conduct their “Own Activities” through using foreign intermediaries. However, foreign charities and NGOs are rarely qualified donees. Therefore, as a general rule, a Canadian charity cannot transfer funds or assets to them except in furtherance of the Canadian charity’s “own activities” in a structured arrangement, as discussed below.
There are a number of different structured arrangements through which a Canadian charity can operate abroad, including: 1) Canadian employees or volunteers of the Canadian charity directly working abroad; 2) Agency Agreements with an Agent; 3) Contractor Agreements; 4) Joint Venture Agreements/Joint Ministry Agreements; and 5) Cooperative Participant Agreements.
Summary of Structured Arrangements
The simple way to conceive of the five structured arrangements is as follows:
You can learn more about foreign activities and Canadian charity by looking at our directory on foreign activities.
Does the Public Guardian and Trustee (PGT) in Ontario with respect to Ontario charities have a different view on restrictions on which qualified donees an Ontario based charity can gift their funds to as compared to the Charities Directorate of the CRA?
Yes. The PGT in Ontario, unlike the other PGTs, is quite involved with regulation of charities, whether they are registered with CRA or not.
There are differences between a ‘qualified donee’, which is defined under the Income Tax Act and a charity in Ontario, which is defined under the common law. The definition of a qualified donee encompasses organizations that are not considered charities under the laws of Ontario. And, in Ontario, charities exist that are not qualified donees simply because the charity has not registered with CRA. For example many small organizations have charitable objects and carry on exclusively charitable work but have not registered with the CRA.
Under the Income Tax Act, a qualified donee includes:
Numbers 1, 3, 5, and 9 would qualify as charities in Ontario for the purposes of receiving gifts from other Ontario charities. Any organization falling into one of the other categories would need to be evaluated by the Ontario based charity to ensure that it falls within the common law definition of charity per Vancouver Society case [Vancouver Society of Immigrant and Visible Minority Women v.Canada (Minister of National Revenue - M.N.R.),  1 S.C.R. 10, at paragraphs 38 - 41.]- i.e., objects that are exclusively charitable and for the benefit of an appreciable section of the population. The most common example of a qualified donee that is not a charity is an amateur athletic association and it would not be acceptable for an Ontario based non-profit to simply grant funds to such amateur athletic association.
According to the CRA here are some common mistakes made by Canadian charities when they complete the T3010. I have put my comments in brackets and I have added below a few of my favourites omissions or mistakes.
“Avoiding common mistakes when filing the T3010A return Mistakes can cause various problems such as processing delays, missing returns, and incorrect disbursement quota calculations. Below is a list of common mistakes made when filing the T3010A Registered Charity Information Return:
- the return is mailed to an address other than the Charities Directorate; [ahem. But how does CRA know?]
- the return is filed on the wrong form (see Filing the information return);
- the financial statements are not attached; [Interestingly even if the T3010 has a nil return - a new charity, no activities, no funds received or spent, nothing in the bank they still require the financial statement]
- the financial statements do not have the same fiscal period ending as the T3010A return;
- the Registered Charity Basic Information sheet is not attached;
- fundraising activities instead of charitable activities are described in Section C2;
- lines 4500 to 4650 do not add up to the amount on line 4700;
- lines 4800 to 4920 do not add up to the amount on line 4950;
- there is no entry on line 5000 for charitable program expenditures;
- lines 5000 to 5040 do not add up to the amount on line 4950;
- the amount on line 5050 does not agree with the total amount of gifts on Form T1236, Qualified Donees Worksheet;
- there are entries on lines 5500 to 5520 when the charity has not been granted permission to accumulate funds;
- there are no entries on lines 5900 and 5910 when required;
- Section G has been completed when the charity is not a foundation;
- Director/Trustee dates of birth are missing on Form T1235, Directors/Trustees Worksheet;
- Directors/Trustees arm’s length status is missing on Form T1235;
- Directors/Trustees postal codes are missing on Form T1235;
- Qualified Donees’ BN/Registration numbers are missing on Form T1236;
- the Certification area in Section H is not signed. “
My favourite errors have to be what people put in the field for operations outside of Canada. It is supposed to be countries or regions outside of Canada but sometimes you get “Quebec”, Toronto or the name of some missionary in the field etc. Another little pet peeve is when an operating charity does not fill in the activities or new activities or uses the same description year after year even though their operations have changed. Keep in mind that with many charities if the description of activities is not filled in and they don’t have a website it may be very hard to know anything about the charity. Another concern that I will reserve for larger charities occurs when the posted T3010 information is missing a few zeros. It is either the charity or CRA’s fault that the information is correct but larger charities should check that CRA has the correct information or their T3010 will be misleading and will look wonky. I don’t expect smaller charities to do much more than file the form and hopefully on time. In the past these sort of mistakes were not really picked up by anyone. Now that services exist such as CharityCan that allow users to prepare reports with 5 years T3010 information side by side the mistakes will become more noticeable. Unfortunately the T3010 numbers are the only available financial information that is collected from all charities and therefore despite the lack of precision of the categories and the reliability of the numbers for some who are moved by or impressed with numbers they have little to go on other than the T3010 figures.
The CRA list is posted here
Yes. There are a number of different regulators of charities. If a charity is a registered charity with the Charities Directorate of the Canada Revenue Agency, which is part of the federal government, then that registered charity is subject to the rules and regulations of the Income Tax Act that apply to registered charities. CRA regulates organizations by determining which of them can have registered charity status, by revoking registered charity status of charities that do not comply with the rules and spot auditing charities to check compliance. CRA educates charities about their obligations, including filing an annual return, restrictions on political and business activities and other matters. As well the Canadian Department of Finance is responsible for the Income Tax Act and its regulations and amendments to the Act. If there is a dispute between the CRA and a charity then it may go to court in which case the courts determine the outcome.
As well charities that operate in a particular province are subject to the jurisdiction of the public guardian and trustee of that province. Ontario is the only public guardian and trustee that is active in regulating charitable activities.
Other government departments are also involved with regulating charities. For example if charity is incorporated it is subject to the rules of the incorporating statute. Therefore an Ontario non-profit corporation must look in part to the Ontario Corporations Act. Different types of charities are subject to sectoral regulation - for example universities, hospitals, daycares etc.
Charities do a lot of great work. But with 86,000 of them and a few hundred bad apples amongst the lot there will be times that you will be disappointed with a charity. When you have a concern about a charity, or a charity does something wrong, here are some ideas about how you can complain.
If you have a complaint about a registered Canadian charity the first thing to do is to discuss the complaint with the charity. In the vast majority of cases, registered charities are responsible and respond to queries and concerns. The charity may have a very legitimate reason for their action or there may have been a misunderstanding etc. As well sometimes charities make mistakes just like people or businesses - it is inevitable. Before proceeding to another level it is a good idea to discuss the complaint with someone who knows a lot about charities - whether it be a person working for a different charity or your own professional advisor etc. Having an independent voice to discuss the complaint can be helpful.
Next if you have not achieved a satisfactory response see whether the charity is a member of an organization that has a code of conduct and whether the actions of the charity may contravene such code of conduct. In some cases the codes of conduct or codes of ethics also provide for a mechanism for complaining about the particular conduct to another body eg. Imagine Canada, CAGP, AFP, etc.
Another way to complain about charities is to contact the media. Send a note to a reporter interested in charities and who has written about charities. You may wish to read some of the articles by Kevin Donovan of the Toronto Star or David Baines of the Vancouver Sun. No disrespect to umbrella organizations or charity regulators but charities are far more concerned about these two people than all the others combined.
If you wish to complain about the conduct of a Canadian registered charity then you can also call the Charities Directorate of CRA. Alternatively you can e-mail your complaint to CRA. See the CRA website. Unfortunately, registered charities are treated like individuals and they are accorded lots of privacy rights - does not make much sense to me but CRA will not be able to tell you if they are investigating a charity because of someone else’s complaint, whether because you have complained they are investigating a charity etc. But complaining to the CRA is almost always a last resort.
As the regulation of registered charities is both a provincial and federal responsibility, your provincial public guardian and trustee, or equivalent, may also be prepared to act on a complaint.
There are many sources of information on the legal and ethical issues facing Canadian charities that operate abroad. Some of them include:
If you are concerned about your charity and foreign activities you might wish to contact Blumbergs to retain us to assist with your issue.
One does not require a lawyer to set up a charity in Canada but many people find it helpful to navigate the process and obtain strategic and other advice about the process. It costs money to hire a charity lawyer to help set up a non-profit or charity but in this note I will argue that it is a worthwhile expense. The views that I am expressing in this note are obviously not impartial – lawyers benefit from their clients paying legal fees. However, it is true that lawyers also benefit probably more from fixing mistakes made by others in the setup and application process.
With most organizations the vast majority of legal fees during their first five years of existence are spent in the first year. This is a onetime capital expense. It is part of the cost of setting up a charity properly and obtaining registered charity status, which makes fundraising easier and is part of establishing the identity and reputation of the organization. If an organization is not prepared to spend say $5,000-$15,000.00 to pay for legal fees properly set up a charity properly (it depends on the type of charity) they may have to spend a lot more to fix the mistakes they have made.
Documents prepared will be reviewed by numerous entities who each are concerned about their own issues. In the example of a federally incorporated charity - Corporations Canada, the Charities Directorate of CRA, your bank, partners, prospective donors or funders - will all review one or more of the documents you create in the first few months. It is very easy to produce a document or fill in an application, but more difficult to produce one that is reflective of what you are trying to accomplish, satisfactory to a regulator or stakeholder and not appearing amateurish to a funder.
Also keep in mind that to properly run a legally compliant, transparent and accountable charity is expensive and the legal expenses are the least of it. You need audited financial statements in most cases – and that is every year. Such audited financial statements can cost thousands of dollars per year. You need computers and equipment. Websites costs money. You can try to do everything with volunteers but eventually if successful be looking at hiring staff and contractors. Staff and contractors cost money.
The cost of setting up a charity can be born by a number of people – it does not have to be one person paying the whole cost. The charity that is being set up can also pay its legal fees. Many of my clients have a sponsor, whether individual or business, who is prepared to take the leap to promote the project and to be one of the founders. If you do not have anyone who is prepared to help raise a few thousand dollars to get things up and running you should question how successful your fundraising is going to be in the future. If a person lends money to the charity to pay for set up costs and forgives the loans after the charity has received charitable status then the charity may be able to issue an official donation receipt for the value of the loan - this reduces the after tax cost of the loan/contribution.
“We have a wonderful cause and can you help us set up the non-profit for free?” No. Lawyers have to pay for their overheads including salaries of associates and support staff, memberships in professional organizations, etc. Just like you would not ask a taxi driver for a ride without paying or expect a life insurance agent to provide you with insurance for free, or a bank to provide a mortgage for free, a charity lawyer who works in the non-profit and charity area charges for their time.
If you are interested in reducing the amount of legal fees you pay you may wish to read my article on How can Canadian charities or Non-profits obtain cost effective and useful legal services from a lawyer.
Furthermore, you might find my article Should We Establish a Canadian Charity and If So Then How? useful reading before ever approaching a lawyer.
The charity sector is a very important part of the Canadian economy and delivers vital services. Establishing a charity should be done with serious thought and proper legal advice. Unfortunately, many charity applications put in to the CRA contain errors or issues and it is not surprising that majority of such applications are not accepted by CRA.
Books and records for Canadian charities operating abroad should generally be either English or French and kept in Canada. From the CRA point of view, books and records are required to be able to substantiate the qualification of the Canadian charity for registration and to permit verification of donations. As well, in terms of foreign activities, the books and records show how the charity’s funds and resources are used, show that the charity is actively involved with the activity, and assist in the accurate completion of the T3010.
RC4106 requires charities to keep records of the regular direction that the charity provides to the foreign intermediary, to monitor the structured arrangements, and to obtain “reasonable reports on the progress of its projects and programs.” What is reasonable in one circumstance may be different in another. These reports should be supported by backup evidence such as copies of written agreements, deeds, financial statements, invoices, photos, minutes of meetings, and any other materials that reflect the charity’s ongoing participation and that show how the charity’s funds are used. The frequency of reporting will depend on the agreement, but CRA suggests that progress reports should be received before sending payments by installment and that many charities have these reports filed quarterly.
In RC4106, CRA makes specific suggestions for recordkeeping with respect to Agents, Contractors, Joint Ventures, Cooperative Partnerships, and CIDA projects.
RC4106 suggests for agency relationships: “Copies of these books and records should be forwarded regularly to the charity, and the originals should be available for inspection at the place where they are being kept by the agent.” With fax, scanning, and e-mail, it is ever easier for agents to provide copies of all necessary documents.
RC4106 suggests for contractors: “As with agency agreements, a Canadian charity that employs contractors should obtain regular progress reports. The charity should also obtain a final complete report on the work that has been done on behalf of the charity, along with documentary evidence, such as invoices, receipts, and photographs, that the project has been completed. The reports should also show the amounts received from the charity and the expenses incurred.”
RC4106 provides: “In the case of joint ventures, the Canadian charity should ensure it regularly receives a copy of the full and complete financial information relating to the entire venture or program, along with other documentation that will enable the charity to demonstrate that it has devoted its resources to its own charitable activity.”
RC4106 provides: “A Canadian charity involved in co-operative partnerships should maintain adequate records relating to its particular share of the program. It should also have available sufficient documentation to establish that the program as a whole is charitable and to show how the charity’s contribution fits into the overall undertaking.”
CRA’s publication IC78-10R4 also has further details. If a charity needs to request books and records prior to an audit, instead of receiving information on a regular basis, then it will be more difficult to demonstrate to CRA that the charity is monitoring its own activities.
In terms of records retention, charities are required to keep duplicates of receipts for at least two (2) years from the end of the calendar year in which the donations were made. Most other documents need to be kept for six (6) years from the end of a fiscal year. Some other records must be retained in perpetuity or until two (2) years after the charity is no longer a charity, such as “ten-year gifts,” minutes of meetings, and all governing documents, such as letters patent.
Failure to keep adequate books and records is a ground for revocation. As well, without adequate books and records, a charity will have a difficult time monitoring the intermediaries’ activities and convincing a sophisticated or observant donor that the funds donated to the charity were properly spent. If in doubt, it is better to keep more information rather than less.
In order for a Canadian registered charity to conduct foreign activities the foreign activities must be the “Own Activities” of the registered charity and unless the foreign group is a qualified donee then the Canadian registered charity needs to maintain “direction and control”
The Charities Directorate of the Canada Revenue Agency has guidance on Canadian registered charities conducting foreign activities.
The guidance is called CG-002 Canadian registered charities carrying out activities outside Canada.
Here is a summary of the major requirements for direction and control:
Canadian charities are required to have mechanisms that ensure that the following measures of direction and control are in place when any resources are transferred from a Canadian charity to an intermediary (such as a foreign charity, NGO, or for profit business):
1) Due Diligence – the intermediary must have the skill, knowledge staff and equipment to carry out the charitable activities and, in addition to such capacity, there must be a strong expectation that the intermediary will use the Canadian charity's resources as agreed to.
2) Written Agreement – there must be a written agreement with the intermediary with the necessary elements required by the Charities Directorate guidance and the terms of such agreement must be implemented or revised with mutual written consent as necessary.
3) Detailed Description of Distinct Activities – the written agreement must contain a clear, complete, and detailed description of the activity that the intermediary will conduct. Such activity must be a separate and distinct activity of the Canadian charity.
4) Monitoring and Supervision – there must be appropriate monitoring and supervision of the activity by the Canadian charity.
5) Ongoing Involvement – there must be ongoing communication between the Canadian charity and the intermediary and any significant changes to the detailed description of activities must be mutually agreed upon.
6) Separate Funds – the intermediary must arrange to keep the charity’s funds separate from its own, ideally by having a separate bank account but if that is not possible then such segregation of funds must be reflected in the accounting system of the intermediary.
7) Separate Books and Records – the intermediary must ensure that it keeps necessary books and records for the Canadian charity's separate activities.
8) Periodic Payments – The Canadian charity must make periodic transfers of resources, based on demonstrated performance.
9) Books and Records in Canada - Copies of the books and records of the intermediary must be provided to the Canadian charity on a pre-determined basis or the Canadian charity must have access electronically to such books and records and the Canadian charity can make copies of such documents to be held at the office in Canada to meet the Canadian requirement that there needs to be adequate books and records in Canada. Books and records will include either original source documents or copies of such source documents.
Direction and control does not apply when the Canadian charity is providing resources to "qualified donees" under the Income Tax Act (Canada), which are generally Canadian registered charities, certain foreign prescribed universities and the United Nations and its agencies.
The requirements of direction and control are in addition to any other requirements that may be imposed on the Canadian charity by its own corporate documents, corporate law, fiduciary and trust duties, foreign laws and donors or funders.
Also here is a recent article we wrote on foreign activities by Canadian charities and here is our directory on international philanthropy from Canada.
Your charity may one day receive a letter from CRA or a call announcing that CRA would like to do a Books and Records Review of your charity. Although the letter may state something to the effect of “Please note that this review is not an audit, but review of the records to ensure they meet the requirements of subsection 230(2) of the Income Tax Act. As we would like to examine the current books and records, we request you to make available all the books and records, minutes of meetings, and any additional information that may be needed in connection with the above charitable registration.”
For most charities, they should treat a books and records review in a similar way to an audit. After all if the books and records review does not turn out well you will probably have an audit. Here is some information specifically on the books and records review process but you also may wish to review my article on CRA audits.
By way of background in 2001, the CRA also introduced a new ‘visibility outreach initiative’ known as the “Books and Records Review”. These reviews are on-site visits to review a taxpayer or charity’s books and records, to ensure that they are adequate. The visits are directed primarily at new businesses or new charities or sectors of particular industries where the adequacy of the books and records was noted as a concern in previous audits.
A books and records review is a separate non-audit activity that is part of CRA’s ‘balanced’ approach to increase compliance.
According to the CRA they visit the charity’s premises to:
An auditor from the CRA will meet with the charity to review the books and records to make sure they are adequate for Income Tax Act, Goods and Services Tax, and Harmonized Sales Tax purposes. With the aid of a questionnaire, the CRA representative will gather general business information and review some of the accounting transactions.
According to CRA the objectives of such a review are:
The CRA representative performing this review will assist the charity in understanding what is required to maintain adequate books and records. Some of the benefits of this initiative are:
That being said a Books and Records Review is important in that if deficiencies are found it can lead to a further audit and other consequences.
Charities should treat a books and record review seriously and in a similar vein to an audit.
Canadian Registered charity - A Canadian registered charity means a charitable organization, public foundation, or private foundation that was established in Canada and is resident in Canada. It is operated for charitable purposes and must devote its resources to charitable activities. A registered charity has received a Registration Number from the Canada Revenue Agency and is exempt from paying tax on its revenue. It can issue official donation receipts for gifts that it receives. It can also receive "gifts" from other registered charities. It is similar to the U.S. concept of a qualified donee. The main regulator of registered charities is the Charities Directorate of the CRA.
For more information see: www.canadiancharitylaw.ca
If you wish to establish a registered charity you might wish to contact Blumbergs to retain us to assist with the process.
If a charity is a corporation, it should ensure that its objects allow for particular that the charity wants to undertake before embarking on such activities abroad. The Letters Patent/Articles of Incorporation contain the objects of the corporation. A charity wants to avoid operating outside the scope of its objects; otherwise, such actions would be outside the charity’s legal authority (ultra vires). The consequences of acting ultra vires can result in the actions undertaken or decisions made being null and void, the revocation of charitable status, and, potentially, personal liability for the directors of such a charity.
Examples of appropriate object clauses can be found in the Ontario Not-For-Profit Incorporator’s Handbook at the Ontario Public Guardian and Trustee website or CRA has recently released some model objects on their website.
Some pre-approved clauses in the international sphere include: “To relieve poverty in developing nations by providing food and other basic supplies to persons in need”; ”To improve the quality of drinking water in developing nations by constructing wells and water treatment, irrigation and sewage treatment systems”; or “To advance and teach the religious tenets, doctrines, observances and culture associated with the (specify faith or religion) faith.” An example of an object clause that would require modification in order to allow foreign operations is “To establish and maintain a hospital in Mississauga, Ontario.”
A ‘standard’ foundation clause might have the following wording: “To receive and maintain a fund or funds and to apply all or part of the principal and income therefrom, from time to time, to charitable organizations that are also registered charities under the Income Tax Act (Canada).” This clause allows for the transfer of funds to Canadian registered charities but would not allow a foundation to carry out directly work abroad or have an agreement with a non-qualified donee to transfer funds.
The type of objects that are defined as charitable fall into one of four categories accepted by CRA and by the courts, namely to relieve poverty, advance education, advance religion, or benefit the community as a whole. In addition to fitting under one or more of the four categories, the charity must also be established for the benefit of the public or a sufficiently large segment of the public. CRA will examine issues such as whether the benefit is tangible, whether the beneficiaries are either the public-at-large or a sufficiently large segment of the public, and whether there are benefits to private individuals except under certain limited conditions.
If the objects of the corporation are too broad and could include non-charitable activities or could have significant private benefit, then the corporation may not be successful in obtaining registered charity status, as discussed below in the Travel Just case. On the other hand, if the objects are too narrow, the charity will have trouble conducting effectively its activities.
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.