Many Canadian registered charities work with groups in Canada that are not registered charities. This could include Canadian non-profits or for-profits. This Canadian Charities Working with Non-Charities in Canada: An Intro Course discusses when it is appropriate for a Canadian registered charity to provide to a non-charity in Canada certain resources (such as cash or equipment) and what systems need to be in place to make that happen. This course will be delivered by charity lawyer, Mark Blumberg.
Canadian charities are special in a number of ways. They have significant tax advantages over other entities – both by not paying income tax and by issuing very valuable official donation receipts. If someone could donate to a registered charity and then just put the money back in their pocket or that of their for-profit company, in effect, no one would pay taxes in Canada, and our country would not have the funds to pay for any social programs and services.
So it is important that we have rules, and we do have rules that CRA enforces.
Canadian charities can only carry out charitable activities in 4 ways
1) on gifts to other registered charities and qualified donees
2) on ‘own activities’ using volunteers and/or employees
3) on own activities using intermediaries (non-qualified donees) (with a structured arrangement/direction and control)
4) by using a grant to grantee qualifying disbursement (which are new rules from 2022)
This course is focused largely on the third way of operating, namely, a Canadian charity hiring an intermediary to undertake certain activities for the Canadian charity. These groups could be individuals, non-profits or for-profits. Under these rules, charities can work with almost any organization. We will touch on the new grant-to-grantee rules, but we will identify that there are many drawbacks of the new rules in addition to a lack of clarity on many points. So, for almost all Canadian charities wanting to work with non-qualified donees in Canada, at the moment, the older direction and control rules make more sense for both the charity and the non-charitable partner.
The direction and control rules are one way that the Federal government, the CRA and the courts ensure that funds in registered charities are spent appropriately.
If a registered charity does not follow the rules, the charity can be audited by CRA, and this can result in suspensions, penalties, and revocation of charitable status, not to mention reputational problems for those involved in the charity.
Some of the issues discussed include:
- Ideas for doing good in Canada that are outside of the charity system
- Some basic legal considerations for charities
- Why would a Canadian charity want to work with a non-charity?
- An overview of the Income Tax Act (Canada) regulatory framework governing thousands of Canadian charities working with non-charities.
- The distinction between qualified donees and non-qualified donees
- A discussion of CRA’s Guidance on “Using an Intermediary to Carry out a Charity’s Activities within Canada”
- Direction and control over resources
- Avoiding being a “conduit”
- The necessary “measures of control” that a Canadian charity must have when working with non-charities.
- A discussion of CRA’s Guidance “Registered charities making grants to non-qualified donees” and the various concerns with the 2022 rules
- Types of permissible relationships for Canadian charities working with non-charities
This course Canadian Charities Working with Non-Charities in Canada Course will be of interest to staff at non-profits and charities responsible for compliance issues especially program and finance staff and professional fundraisers, professional advisors such as lawyers and accountants who advise charities on fundraising and program implementation involving non-charities, board members of Canadian charities that want to understand an important way for their charity to strategically enhance services they provide and philanthropists who want to understand the regulatory requirements of Canadian charities that work with non-charities.