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:
Public Benefit – Restricted beneficiaries
The courts in Vancouver Society of Immigrant and Visible Minority Women v MNR, [1999] 1 SCR 10., have held that a fundamental principle of charity law is that all organizations that want to be registered as a charity under the Act must make sure their purposes are directed toward the benefit of the public. Public benefit involves two requirements:
- a measurable benefit must be given
- the benefit must be provided to a sufficient section of the public
An organization generally cannot limit its beneficiaries to members of a group with a specific characteristic such as gender, language, religion or race. The public benefit requirement does not prevent an organization from providing services to members of those groups; however, individuals that could otherwise benefit from or participate in the organization’s activities cannot be denied access because they do not have that specific characteristic,
If such a restriction exists, the organization must show that its activities, or the context around which its activities are carried out, justifies this restriction. As well, the restriction must be relevant to achieving the organization’s charitable purpose or purposes. Otherwise, the organization may not meet the public benefit requirement and may not qualify for charitable registration..” For more information on meeting the public benefit requirement, go to canada.ca/charities-giving, select “Registering for charitable or other qualified donee status” then, “Policies and guidance” and see Guidance “Guidelines for Registering a Charity: Meeting the Public Benefit Test, CPS-024”
If you set up an organization with a purpose or activities that are restricted solely to helping Syrian refugees, the CRA would likely not be prepared to register the charity. You might wonder why. Your organization could be set up to help refugees, but why are you limiting it to Syrian refugees? If you are helping Syrian refugees in Lebanon, why not be prepared to help other refugees in Lebanon at the same time? Is there something completely unique about Syrian refugees that means it is justifiable to just help them to the exclusion of other refugees? For example, do they speak a language that no other refugees speak? Do they have needs that no other refugees have? So if you had a purpose of helping refugees, but you decide that you are going to focus on one project in Turkey in a village in which all the refugees are Syrian, that would probably be acceptable and but if your purpose is only to help Syrian refugees, that would not be acceptable for a registered charity.
If you will have an old age home for people from Norway and the personal support workers will all speak Norwegian, then it may be acceptable that the beneficiaries are restricted to only people who speak Norwegian. This is the sort of detail that CRA considers when they are reviewing a charity application.
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.