There is an interesting class action lawsuit in the US against a large church. It involves a number of different matters, including claims questioning the promises made by the church that they provided 15% of their funds for overseas work. With the weak IRS in the US, donors and members are resorting to class action lawsuits to get the accountability they seek.
The lesson for Canadian charities is that in addition to thinking about CRA compliance, if you say you are doing one thing and you do something else, you could have a class action lawsuit. Charities should think about what their websites and social media portray, plus the accuracy and completeness of financial statements and T3010 filings.
Religious institutions sometimes have valuable assets such as real estate. Often, their financial statements and T3010 filings don’t reflect the true fair market value of those assets. Some religious institutions that are not transparent and/or have poor compliance practices make a promising and deep-pocketed target for plaintiffs. Some religious institutions operate almost exclusively on the basis of trust and find out too late that that trust was misplaced and there can be consequences.
There are a number of these types of lawsuits in the US, and it will be interesting to see if we have more of them in Canada. These allegations have not been proven in court, and we await the outcome of the process.