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 issues:
Purposes don’t reflect activities
The applicant is carrying out activities that are not authorized by its formal purposes. To qualify, an organization must show that it has been established exclusively for charitable purposes and that it is focused on charitable activities that advance these purposes.
Although the purposes in the applicant’s governing documents may be charitable, the applicant has not included activities that will advance these purposes.
For operating charities, unlike say a foundation that only has a gifts to qualified donee purpose, the most important part of the application is providing a detailed statement of charitable activities. Those activities must be within the charitable purposes of the applicant organization.
If you are applying for charitable status and you have certain purposes and you wish to do activities that are outside of those purposes, then you should identify to CRA that you intend to change your purposes. Changes could involve introducing new purposes or broadening the existing ones. Then you would get a different response from CRA. In that case, CRA may require you to make the suggested changes or propose alternative purposes. Once these changes are implemented and the documents are filed with CRA, you will be granted charity status.
Practically, many organizations that have existed for a while as a non-profit and were not set up specifically to be a registered charity will probably not have purposes that are acceptable to CRA. Even currently registered charities that were accepted between 1967 and 2013, when CRA finalized its guidance on purposes, in many cases don’t have exclusively charitable purposes.
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.