CRA discusses Federal/Provincial/Territorial Network of Charity Regulators in a new page. I’m very pleased that this page has been set up and it provides greater transparency on the regulation of charities in Canada. The Network has been around since 2004, so it’s good that there is a greater focus on its works.

The Charity sector has revenue of around $300 billion a year. It has over 2 1/2 million employees and is over 10% of the country‘s GDP. It is important that there is regulation of the sector as some groups or individuals will take advantage of charities if given the opportunity. We see a lot of that at the moment.

Practically, CRA is the de facto regulator of charities in Canada. However, there are areas of clearly exclusive provincial jurisdiction such as cy pres applications that are clearly under provincial jurisdiction and that affect charities. There are also areas where there may be overlapping jurisdiction. CRA is focussed on the ITA and “registered charities” whereas the provinces are more focused on common law and fiduciary duties of directors/trustees and property rights.

Fundamentally, the provincial governments have not been that interested in the regulation of charities. I think that none of the provincial governments, for example, really were interested when the Senate was studying charities. While some argue that it would be better if 10 provinces and three territories became more active in regulation, it is my view, that that would be a race to the bottom with national charities having to comply with the province that has the most onerous requirements. In other words, with CRA being the de facto regulator and limited provincial involvement, it’s actually good for reducing red-tape and minimizing duplicative regulation of charities. We have lucked out in that way. In the US, you have the IRS and about 40 state attorney generals who are interested in the work of charities. That results in a lot of duplicative filings and variations in requirements in different states.

That being said, there are some areas that CRA is not comfortable or may not be able to regulate such as “cy pres” applications (to vary gifts that are impossible) and quite clearly the provinces could do some good work trying to improve the cy pres system. So, it is good that the Federal government and the provinces regularly discuss the regulation of charities. Also, if the provincial governments would put some real resources into going after charity scams that would be nice – but so far have not really seen much interest on the provincial level on that.

It is interesting to note which of the federal agencies are included in this committee. CRA is there – no surprise as it is the regulator of “registered charities.”  Finance is there – also not a surprise as they make the laws governing “registered charities.” Corporations Canada is there – which is nice as they maintain the Canada Not-for-profit Corporations Act (“CNCA”). Corporations Canada is part of Innovation, Science and Economic Development Canada which also deals with anti-spam legislation (CASL). Then there are also reps from the provinces and territories.

Who is not at the table. Most interesting is Employment and Social Development Canada (ESDC) is not at the table. There are some who have advocated that the charity sector needs a home in government and the Liberals in their response to the Senate Special Committee on the Charitable Sector have 14 references to ESDC and the Liberals note:

“The Government supports the creation of a single window into government for the charitable sector (Recommendation 22). ESDC currently leads the Government’s approach to the charitable and non-profit sector. The volunteer sector is supported through a number of channels, including ESDC’s administration of Canada’s Volunteer Award, the Social Development Partnerships Program which makes strategic investments to the voluntary sector, as well the $350 million Emergency Community Support Fund to help community organizations serve vulnerable Canadians during the COVID-19 pandemic. While ISED and other departments and agencies, including the CRA, the department of Canadian Heritage, and Finance Canada play important roles in supporting the sector to ensure a coordinated Government approach, ESDC may also be well situated in light of its programming’s central focus on the charitable and non-profit sector. ESDC could leverage its current work on the Social Innovation and Social Finance Strategy to engage stakeholders in order to better understand expectations on the role and mandate of a centralized secretariat.”

By the way, ESDC is the government department that wanted to give $943 million to WE Charity and thought that WE Charity was the only charity that could do the CSSG program. So, I certainly have some questions about the idea of a home in government or “single window into government.” I have even more questions if the lead is going to ESDC. But, it’s interesting to note that they are not at this table and therefore probably oblivious to many of the regulatory issues that charities face.

In an ideal world, we might even have municipalities at the table. Although municipalities are just creatures of the provincial government and don’t directly regulate charities, they indirectly regulate many of them through funding agreements and requirements. In my experience, most municipalities know little about the regulation of charities and therefore the municipal requirements are often inappropriate or duplicative, etc.

In summary, unlike the ACCS which is a waste of time and taxpayers’ money and seems very biased toward large foundations and their needs, I am glad that the Federal/Provincial/Territorial Network of Charity Regulators meets and that there is now a place on the CRA website to put up information about the Network.

Here is the content of the page on the Network that recently went up: