Yes. Canadian charities can conduct their “Own Activities” by using foreign intermediaries. However, foreign charities and NGOs are rarely qualified donees. Therefore, as a general rule, a Canadian charity cannot transfer funds or assets to them except in furtherance of the Canadian charity’s “own activities” in a structured arrangement, as discussed below.
There are a number of different structured arrangements through which a Canadian charity can operate abroad (in addition Canadian employees or volunteers of the Canadian charity can work outside of Canada: 1) Contractor Agreements; 2) Agency Agreements with an Agent; 3) Joint Venture Agreements/Joint Ministry Agreements, and 4) Cooperative Participant Agreements.
Summary of Structured Arrangements
The simple way to conceive of the five structured arrangements is as follows:
- If a Canadian charity is sending employees or volunteers outside of Canada and no funds are being transferred to any foreign organization, then a volunteer agreement or employment agreement would probably be used between the Canadian charity and the employee/volunteer.
- If a Canadian charity is paying for 100% of the money for a charitable project (of the Canadian charity) being carried out abroad by a foreign NGO that is not a qualified donee, then the agreement generally would be a contractor agreement, although some older agreements are agency agreements.
- If a Canadian charity and a foreign organization that is not a qualified donee are contributing money to a project and putting that money together in a joint account (“pooling resources”), then it will probably be a joint venture agreement.
- If a Canadian charity and a foreign organization that is not a qualified donee are contributing different resources to the project, i.e., money, material, staff, equipment, etc., then it may be a cooperative participant agreement.
You can learn more about foreign activities and Canadian charity by looking at our directory on foreign activities.