The Charities Directorate of CRA has released draft guidance for “Registered charities making grants to non-qualified donees“. (PDF) The CRA is requesting public feedback on the guidance by January 31, 2023. This guidance relates to the Federal Budget 2022 and the introduction of the new term “qualifying disbursements”. We will have further comments on this over the next few weeks. We have been working with clients over the last few months to understand how the new qualifying disbursement rules will apply to their activities.
Very importantly, there is a discussion of directed donations and acting as a conduit – the new rules under the Federal budget relating to “gifts” that are conditional (expressly or implicitly) on the funds going to a non-qualified donee will have some significant implications for some Canadian charities working with non-qualified donees, whether under the new rules or even the other direction and control rules. This will affect both operating charities but also foundations who grant to operating charities as well as individual or corporate donors.
Here is the note from CRA:
New draft guidance – Grants to non-qualified donees
The new draft guidance for registered charities making grants to non-qualified donees is available and open for public feedback!
On June 23, 2022, the Government of Canada passed legislation to allow registered Canadian charities to provide grants to non-qualified donees. The new rules make it easier for registered charities to work with non-charities in Canada and abroad.
The Charities Directorate has been working hard to develop new guidance in response to this legislation. Now, we’re pleased to share a draft of the guidance on our website at Registered charities making grants to non‑qualified donees.
Your input is valuable and helps us ensure the guidance is as reasonable, clear, and accessible as possible. We encourage you to provide your feedback by visiting our public feedback page and ask that you kindly provide your comments by January 31, 2023.
And of course, our client service team is here to support you. If you have questions, please call us at 1-800-267-2384. Our representatives are standing by to help you Monday through Friday, 9 am to 5 pm, local time.
Sincerely,
Sharmila Khare
Director General
Charities Directorate
Canada Revenue Agency