I don’t know if you know this, but many of the largest charities in Canada are set up under the Canada Not-for-profit Corporations Act (“CNCA”). Under the CNCA, if the non-profit corporation receives over $10,000 of public money, then it needs to file its financial statements with Corporations Canada. The filing can be done on the Online Filing System, and it takes about 5 minutes to upload the PDF.
Some of the largest charities in Canada are not filing their financial statements as legally required.
I would strongly recommend that if you see a charity that is a CNCA soliciting corporation and it has not filed its financial statements with Corporations Canada, that you either alert them to the deficiency if you really care about the charity, or simply do not donate to the charity and move on to another charity.
I recently saw a charity that did not file its financial statements with Corporations Canada for over 10 years. In those financial statements over the last 5 years, it said that CRA had sent a notification of revocation to the charity. In some cases, the actual process of revoking charitable status by publishing the revocation in the Canada Gazette process can take many years. Because the financial statements were not filed with Corporations Canada, the public did not have access to that information.
If you knew that CRA was about to revoke a charity, would you donate to it? If the answer is you don’t care, then don’t worry. If the answer is that you might have more questions or would think twice about donating, then it is really important that you check whether these organizations have filed their financial statements.
Unfortunately, in a separate matter, CRA redacted the relevant paragraph in the financial statements they provided to the public, which is a discussion for another day.
There are, in my view, only two reasons that an organization that is a CNCA solicitor corporation is not filing its financial statements. The first is that they are not aware of the obligation. I would suggest that for a small organization with $100,000 or $200,000 in revenue, that is perhaps understandable. Less understandable for an organization with $20 million or $100 million in revenue who is spending $60 million or $80 million on staff costs. Shouldn’t at least one of those staff members care about basic non-profit compliance. The second reason that a CNCA corporation is not filing their financial statement is they know that they need to file it, but they’ve made a deliberate decision not to file the financial statements because they don’t want the public to see certain content. This was apparently the case when Hockey Canada did not file their financial statements, and a judge looked into the matter and concluded they had deliberately decided not to file those financial statements. There are many donors to Hockey Canada and its affiliates who might not have donated if they had known about some of the inappropriate conduct that was going on within that organization.
It takes about two minutes to search up a CNCA corporation, and if you’re too lazy to do that, then don’t complain when you find out that the charity that you’ve given lots of your money to is ultimately revoked and potentially hasn’t been doing things appropriately for the last decade.
Here is the link to Corporations Canada website corporate search page:
https://ised-isde.canada.ca/cc/lgcy/fdrlCrpSrch.html?locale=en_CA
So, for example, if you type in World Vision Canada, you will see that they have filed their financial statements from 2013 -2023. This does not mean they are necessarily an amazing charity, but at least when it comes to filing these financial statements, which are legally required to be filed, they are spending the 5 minutes and filing them every year!
There’s no question that with the secrecy provisions of the Income Tax Act, which unfortunately protects bad charities in Canada, donating to charity in Canada is definitely a buyer-beware situation. It’s just a matter of how much of a sucker you want to be. I will leave it to you to decide that. Of course, it would be better if we did not have to do as much due diligence and CRA was quicker at auditing and sanctioning highly problematic charities. You can see my submission to the Finance Committee on transparency and accountability. We have been making similar submissions for about a decade with only minor impact.
There are many simple things that a donor or funder can do to improve their due diligence. This is just one of many examples, and it only takes a couple of minutes.