Blumbergs Professional Corporation is involved with many charity applications each year. In this series, CRA Charity Application Graveyard, we aim to provide groups considering charitable status applications with insights into common issues the CRA encounters, based on our analysis of access to information documents, CRA letters, and the CRA’s Charities and Giving website. These reasons given in the Charity Application Graveyard are not presented in order of importance.
CRA identifies the following issue:
Promotion of the arts
Organizations that carry out arts activities may be eligible for charitable registration if all their activities further charitable purposes. Exhibiting, presenting, or performing artistic works are activities that may further a charitable purpose under the fourth category of charitable purposes, (other purposes beneficial to the community), by advancing the public’s appreciation of the arts.
Activities that advance the public’s appreciation of the arts must satisfy two criteria: art form and style and artistic merit.
Art form means the field or medium in which an artist works (such as music, theatre, or visual arts), while style refers to the various disciplines or methods of expression within an art form (such as jazz, comedy theatre, or photography). To meet the art form and style criterion, an organization must show a common or widespread acceptance of the form and style of art within the Canadian arts community.
Artistic merit means the quality of an artistic exhibition, presentation, or performance. Once an organization has established common or widespread acceptance of an art form and style, it must be able to show that the quality of its exhibitions, presentations, or performances is high enough to be considered charitable under common law.
Also, to be charitable, arts activities must be carried out in a way that ensures any resulting private benefit to the artists is incidental, meaning that it is necessary, reasonable, and proportionate to the public benefit that is delivered. If a private benefit is more than incidental, an organization can face sanctions or have its charitable registration revoked. A private benefit could occur if, for example, an art gallery exclusively displays the artwork of a particular artist, therefore serving as a way of promoting only that artist’s work.
For more information, see Guidance Arts Activities and Charitable Registration, CG-018, by going to canada.ca/charities-giving, then clicking on “Registering for charitable or other qualified donee status,” followed by “Policies and guidance.”
Not everything is charitable, and sometimes, for some groups, depending on what they want to accomplish and what their sources of revenue are, it may not even be desirable to be a registered charity. One thing is clear – CRA spends a lot of time and resources reviewing charity applications, and unless your application meets all of the charity law requirements under the Income Tax Act and common law, they will not be able to register your organization as a charity.
If you require assistance with your charity application, you may be able to retain our law firm, and you can contact us here. It is best to contact us before establishing the entity and making an application to CRA, as this will minimize costs, changes and delays.