Non-profits and charities that fundraise in Alberta and are well-informed of their obligations probably received a bit of a surprise when they applied for registration under the Alberta Charitable Fundraising Act this year. The previously brief, relatively painless registration process now requires that each person with signing authority for the organization obtain a criminal background check from their local police department and submit it as part of the application. Below we discuss what this Act is, who needs to comply, and why the new burdensome requirement.
What is the Alberta Charitable Fundraising Act and does my organization need to register for it?
The Alberta Charitable Fundraising Act requires any organization that asks for contributions to be used for a charitable purpose or for a charitable organization to register in Alberta if: 1) It uses a fundraising business; 2) it intends to raise more than $25,000 in the financial year from solicitations from people in Alberta; or 3) it raised more than $25,000 from people in Alberta (even without intending to specifically solicit from Alberta residents).
The requirement applies to any party that meets the registration criteria, regardless of whether they are incorporated, unincorporated, a registered charity, a non-profit, or even a for-profit. There is an exception to the requirement for those asking for contributions only from their members or immediate families, or those asking only for goods, or those raising funds through raffles, pull tickets, bingos, or casinos.
It is important to note that under the broad definition of a “charitable organization” under the Act, even large, international for-profit corporations could fall within the definition. For example, if Tim Hortons or McDonalds raises over $25,000 in Alberta by putting collection jars at the cash register asking for donations to a cause, they would technically be required to register and comply with the Act.
Registering under the Act informs the government of Alberta of the organization and its activities in Alberta. The Act sets standards regarding permissible solicitation, maintaining records, and financial statements for organizations that fall within its jurisdiction.
If your organization solicits donations for any charitable purpose and it takes in over $25,000 from Alberta residents, it should register, even if it was not specifically targeting Albertans. This means that even an organization based in an entirely different province should in theory be going through their list of donations and tallying up how much money was raised from Alberta donors. In practice, many charitable organizations operating in Alberta (and especially in other provinces) are unaware of these requirements.
This type of fundraising registration requirement is quite common in the US, but Alberta is the only province that has this system. In the US some charities that are fundraising across the US need to register in over 35 states which is very time consuming and costly. In Canada, we are fortunate that a national charity has far less burdensome requirements, but as Canadians we like to complain so it is hard to admit it!
Why the new burdensome registration requirement?
Organizations that meet these donation thresholds and go to register under the Act will be surprised to find that in addition to providing a straightforward application form, a $60 registration fee, and providing a copy of the solicitation materials, the organization also needs to submit a criminal record check or police information check for each individual that has signing authority for the organization. This involves the person contacting the policing organization serving the jurisdiction of the individual’s primary residence, and often involves a fee and occasionally, fingerprinting. The results of the check must include local and national records, and must include charges and convictions. It is worth noting that people with signing authority over organizations that are applying to be registered charities (which can issue official donation receipts – quite an important responsibility) are not even required to provide criminal background checks.
Of course, this is an extremely onerous requirement for directors/officers who are often already very busy. Organizations that have previously registered under the Act will also notice it is a recent requirement. So why is the Alberta government suddenly requiring criminal background checks in order to register? Evidently the Alberta government always conducted criminal background checks of people with signing authority over registering charitable organizations, but in the past, they conducted the checks themselves. About a year ago, the RCMP took away the Alberta government’s ability to run these checks themselves, thereby passing the burden onto the applicants.
Do I really need to register under the Act? What will happen if I don’t?
There are legal issues relating to registration, but from a reputational perspective, anyone can search the Alberta Charitable Fundraising registry, and therefore, it is easy to determine non-compliance if they are aware that your organization has raised more than $25,000 from individuals in Alberta. Here is a link to search the registry.
With the new administrative headache these criminal checks bring to the registration process, many groups are asking what will happen if they simply don’t register under the Act. Technically, a violation of the Act (which includes failing to register) could face penalties up to a $100,000 fine and up to two years imprisonment. However, in practice, we are not aware of the extent to which the Government of Alberta is going after groups that have not registered.
If your charity requires assistance with fundraising regulations, including the Alberta Charitable Fundraising Act, you can contact our law firm to retain us in the matter.