There will be another Being Good at Doing Good conference on February 13 and 14, 2012 organized by the Charity Law Information Program - you don’t want to miss this conference.  We will have some of the top experts from Canada, the US and the UK on governance, financial management and compliance.  Here is the registration page: http://www.clipconference.wildapricot.org/  The conference is “Doing Good” at registrations with over 185 people signed up so far.

The Toronto Star has been doing a number of articles on a Canadian registered charity named “ORNGE” which provides air ambulance services in Ontario.  In this article Kevin Donovan, investigative reporter for the Toronto Star, is discussing amounts of legal fees paid by ORNGE and the services provided.

Here is a list of the Largest Gifts from Canadian Charities to other Qualified Donees - 2010.  You might find this interesting.

CRA will be shortly releasing their much anticipated revised Guidance on Fundraising.  Join charity lawyer Mark Blumberg as he presents a webinar on behalf of the Charity Law Information Program entitled “CRA’s New Fundraising Guidance” on Friday, February 10, 2012 at 1PM EST for approximately 1 hour.

Here is a copy of my submission to the Submission to the House of Commons Standing Committee on Finance on Motion 559 dealing with transparency. 

Here is the Blumbergs’ Canadian Charity Law List - January 2012

For a number of years CRA has been aggressively targeting charities that are involved with abusive tax shelter schemes or in serious non-compliance with their legal obligations under the Income Tax Act. In some cases CRA puts out a news release but that only provides a small amount of detail as to the concerns of the regulator.  Anyone can request from CRA copies of letters sent by the Charities Directorate to a charity which provide a lot more detailed information.  Here are copies of news releases and more importantly in some cases the letters from CRA to the charity.

StatsCan recently published some statistics on charitable giving.  They noted “Canadian taxfilers reported making charitable donations of just under $8.3 billion in 2010, up 6.5% from 2009. At the same time, the number of donors increased 2.2% to just over 5.7 million. Data are based on income tax returns filed for 2010.”  That is a bit of a good news story and shows that many Canadians who have jobs feels quite lucky and are generally digging into their pockets more.  What is interesting and not discussed by StatsCan is that Canadian charities according to their T3010 filings issued about $13 billion in donation receipts.  Why then almost a 5 billion dollars difference between the T3010 filings and the personal income tax returns?  Many Canadians gave under $200 and did not claim any amount on their return. Some donations came from corporations and not personal taxfilers.  Also maybe some who gave over $200 did not keep their receipts or did not think it was important to file them. Perhaps the tax benefits of donating to registered charities are less important to some than to others.

There are a couple of interesting websites which allow much easier searching of information from the T3010 databases.  One is CharityFocus.ca (discussed at http://www.globalphilanthropy.ca/index.php/blog/comments/charity_focus_from_imagine_canada_-_a_helpful_tool_to_analyze_canadian_char/ ).  Another interesting website is http://www.opencharity.ca  Opencharity.ca allows for visitors to search not only by charity name but also directors name. 

Alice Holt, the Head of Legal Services for the London office of the Charity Commission of England and Wales will be speaking at CLIP “Being Good at Doing Good” Conference in Toronto, which is being held February 13 and 14.  We are delighted to have Alice join us.

Imagine Canada will be officially launching its Charity Focus website soon.  You can review the website at http://www.charityfocus.ca/

The CRA has published Charity Connection No. 11 on the 2011 Federal Budget.  The publication highlights some of the major changes for registered charities, RCAAAs and other qualified donees.  There will be more information on certain other budgetary provisions in the near future such as the “ineligible individual” provisions..

Ontario tax litigator, Natalie Worsfold, has an interesting blog called “Trouble with Taxes”.  She has a page on the GLGI gifting arrangement.  Of particular note is the lengthy PDF of court documents. 

The CRA has revoked for cause “Word of Christ Ministry” and “Hope Church of God Deliverance Ministries” for involvement in promoted charity schemes. 

On January 23, 2012 the National Post published an article entitled “Judge OKs suit against charity tax ‘scheme’” by Joseph Brean which discusses a class action lawsuit against various parties relating to the “Donations for Canada Gift Program”.

On February 9, 2012 I will be delivering a webinar entitled “Successfully funding First Nations communities in Canada in compliance with CRA guidance” along with The Circle on Philanthropy and Aboriginal Peoples in Canada, Canadian Environmental Grantmakers’ Network and the Charity Law Information Program.  For more information or to register see the link below.

The first class action lawsuit involving what CRA terms an “abusive charity gifting tax scheme” has settled at a Settlement and Class Counsel Fee Approval Hearing that was held on January 17, 2012 in Toronto.  The material for that hearing is on the Scarfone Hawkins website and is quite interesting reading providing lots of interesting details about the scheme.  Here is announcement from the Plaintiff’s lawyers Scarfone Hawkins LLP.

Ken Berger, the President & Chief Executive Officer, of the US charity watch dog group Charity Navigator will speaking at the CLIP conference “Being Good at Doing Good” on the subject of “The Battle for Transparency in the Non-Profit Sector”. 

Lois G. Lerner, the Director of the Exempt Organizations Division of the Internal Revenue Service will be speaking at the Charity Law Information Program (CLIP) Conference “Being Good at Doing Good” in Toronto, which is taking place on February 13 and 14th. http://www.clipconference.wildapricot.org/  As head of the Exempt Organizations Division she is responsible for the regulation of US charities or exempt organizations including registration, education, and compliance.  She will be giving two presentations - one focusing on why regulators care about governance and the second on top compliance issues for US charities.  We will also have speakers from the CRA and Charity Commission of England and Wales and other experts in charity governance, financial controls and compliance. 

The Toronto Star’s Investigative Reporter Kevin Donovan, who frequently covers the charitable sector, will be presenting at the Charity Law Information Program (CLIP) conference “Being Good at Doing Good”.  Increasingly the media has been focusing on charities and certain hot button issues.  Those involved with charity governance, financial management and communications will find his comments very useful. 

There has been a little political firestorm last week over US foundations funding of certain Canadian environmental charities.  So how much revenue actually comes to Canada from foreign countries including the US?  The answer seems to be about $831 million.  That is from Line 4575 “Total revenue received from all sources outside Canada”.  If you are interested in who got what then read on.

On December 21, 2011 the Department of Finance announced a consultation on “updating Canada’s regime for combating money laundering and terrorist financing.”  They also put out a consultation paper, “Strengthening Canada’s Anti-Money Laundering and Anti‑Terrorist Financing Regime,” which contains a number of proposals, a couple of which relate to charities.  The deadline for submitting comments is March 1, 2012.  The two proposals relating to charities are pretty minor - first for the Canada Border Services Agency (CBSA) to share information with CRA Charities Directorate on seizure reports when they seize forfeited currency.  Second, the Financial Transactions Reports Analysis Centre of Canada (“Fintrac”) already provides disclosure to CRA but such disclosure may be more proactive.  These recommendations will facilitate the Charities Directorate having greater awareness of potential money laundering or terrorist activities that could potentially involve charities. 

In a Globe and Mail article entitled “Foes of Northern Gateway pipeline fear revocation of charitable status” there is a discussion of recent issues raised about foreign funding on Canadian charities and political activities of Canadian charities.

There are 24 Registered National Arts Services Organization (RNASO) in Canada.

Here are some upcoming Charity Law Information Program (CLIP) seminars which I will be presenting across Canada.  The format will be a morning discussing the 2011 Budget provisions for charities, some information on the new Federal Canada Not-for-profit Corporations Act, and a detailed discussion of fundraising regulations in Canada.  The afternoon will focus on The Dos and Don’ts of Charitable Receipting. 

Here are copies of the letters from the Charities Directorate of the CRA to the Canadian Foundation for Tamil Refugee Rehabilitation.

The Charity Law Information Program (CLIP) has just released the Receipting Kit for Canadian Registered Charities.  The kit is 25 pages long and provides an overview of what a registered charity needs to generally know about receipting.  As well, there is an attachment which is about 115 pages long with CRA guidance on receipting and even a CRA auditor checklist on receipting.

Here is a copy of a recent presentation on CRA’s Foreign Activity Guidance.

The CRA has revised its Pamphlet “Gifts and Income Tax P113(E) Rev. 11” to reflect recent budget changes including reducing the incentives for packaged flow through donation schemes and other provisions from the 2011 Federal Budget.

There are a few hundred foreign universities (ie. universities outside of Canada) that can issue Canadian official donation receipts and are therefore “qualified donees” similar to registered charities.  The list of these universities was hidden on page 1550 of a regulation to the Income Tax Act.  Now the list will be more easy to access on the Charities Directorate website.

The CRA will be preparing a list of “Municipal and public bodies performing a function of government in Canada”.  These “Municipal and public bodies performing a function of government in Canada” are qualified donees and can issue official donation receipts for gifts to them.  CRA has noted on their website:  “As a result of Budget 2011, municipal and public bodies performing a function of government in Canada must apply to be added to a list maintained by the CRA to become or continue to be qualified donees.  We are currently developing the process by which these bodies must apply. Meanwhile, municipal and public bodies performing a function of government continue to be qualified donees until the application process is finalized. At that time, these bodies will have to apply to maintain this status.”  As new information becomes available we will post it on our website.

Canadian municipalities can issue official donation receipts similar to registered charities.  Sometimes it is not clear whether a group is considered to be a municipality.  In the past you would have to call CRA or write to them to verify whether a township, town, county, etc. was a municipality.  As a result of changes in the 2011 Federal Budget, CRA was allowed to release a list of municipalities.  The list is prepared by province.  Currently the municipalities are all listed as of 2012-01-01.  If a municipality is involved with inappropriate conduct like issuing incorrect receipts they can be suspended or delisted.  Municipalities need to be careful about how they issue receipts. 

The CRA has released a list of RCAAAs revoked for various reasons including for cause, failure to file their annual return, or voluntary revocation.

The CRA has published a list of registered Canadian amateur athletic associations (RCAAAs).  Very interesting to see the names of RCAAAs and also those that were deregistered over the last few years.  There are currently about 119 RCAAAs.  CRA was only allowed to publish this list after changes introduced in the 2011 Federal budget to increase transparency in the charity/qualified donee sector.

The 2011 Federal Budget received Royal Assent on December 16, 2011.  There were a number of changes that affect charities, RCAAAs and other types of qualified donees that were in the budget.

Here is a great piece by Katherine Van Kooy in the Calgary Herald entitled ‘Charity rankings often don’t tell the full story’.  Katherine van Kooy is the president and CEO of the Calgary Chamber of Voluntary Organizations (CCVO).

Here is the CRA’s Annual Report to Parliament for 2010-2011.  It is 173 pages long.  There are a number of references to charities which I have reproduced below. 

Scarfone Hawkins LLP has announced that a there is a settlement of the Banyan Tree class action lawsuit, subject to court approval.  On their website they state: “Settlement of Action This action has been settled.  The settlement is subject to court approval. A court approval hearing will take place on January 17, 2012, at 10:00 a.m. at 361 University Avenue, Toronto, Ontario.  The settlement agreement and distribution plan will be published here prior to the hearing date.”  This was the first class action lawsuit brought in the area of the “abusive charity gifting tax schemes”.  On the Scarfone Hawkins website there is a lot of interesting detail and background including an FAQ.

It is the time of year that many are thinking about and giving to charity.  The Federal government sent out a press release stating “We encourage Canadians to donate generously but also to do their homework to ensure that the funds they donate will be put to good use.”  I cannot emphasize enough the importance of avoiding charity schemes or investments that promise you tax savings greater than the amount of your investment and also doing your due diligence on the charity that you are donating to.  You might find a new micro-site I am working on helpful - http://www.smartgiving.ca 

Here is a list of Canadian registered charities revoked over the last five years by CRA for cause. 

In Sarsonas v. The Queen, 2011 TCC 559 (December 8, 2011) Sheridan J. delivers a decision on a claim by Mr. Sarsonas that he donated thousands of dollars to charity.  Sheridan J. describes in detail a scheme in which some tax preparers prepared false receipts for their clients and were paid 10% of the face value of the receipts.  Sarsonas lost at the Tax Court.  One may think that this sort of receipting is an isolated event however according to CRA over 100,000 Canadians have submitted false receipts and another 175,000 Canadian haves been involved in abusive charity gifting tax schemes. 

The CRA just put out a press release entitled “The Canada Revenue Agency revokes the charitable status of the Canadian Foundation for Tamil Refugee Rehabilitation”.

Here are the CRA’s “Program areas and field codes” for the T3010 Registered Charity Information Return and the TF725 Registered Charity Basic Information Sheet (BIS).  These codes are needed when you are completing the T3010.  As well they are useful if you are searching T3010 data to fine tune the areas of charitable work.

The new Canada Not-for-profit Corporations Act (CNCA) is in force as of October 17, 2011.  Industry Canada has placed hundreds of pages of information on the new act on their website in over 70 different documents.  We have tried to accumulate the information in one PDF document which is now over 400 pages For up to date information check the Industry Canada website.  We have also included for registered charities information from the Charities Directorate of CRA.  This document may be helpful because it is easier to save a PDF to your computer or laptop especially if you will not have internet connectivity.  Furthermore, one can word search (usually Control F) for words through the document.  This document is not comprehensive and in the future we may update it.

Charity Central, based in Edmonton, has released a series of resources entitled Road to Accountability to help Canadian charities deal with the issues of accountability and transparency. 

David Baines of the Vancouver Sun just wrote an article dealing with the VIA Project entitled “Ontario company pitching controversial charitable donation scheme in Victoria:  Canada Revenue Agency has disallowed similar ‘buy low, donate high’ schemes”

The CRA has just released another letter on the issue of whether a non-profit that is not a registered charity qualifies as a non-profit as opposed to being a for-profit taxable entity.  This letter covers “Does a Hall Charities Association meet the requirements of paragraph 149(1)(l) of the Act?”
CRA concludes that it might or might not depending on the facts and that more information is required to make such a determination.

I recently gave a presentation to the Law Society of Upper Canada’s 14th Annual Estate and Trust Summit providing the Charity Law Update.

Today the Toronto Star posted an article entitled “Audit of charities encounters resistance”.  I think that it is very important that there be transparency about charities and I have written quite a bit on the subject.  Charities must be transparent with various stakeholders because such transparency is important in informing stakeholders of the work of the charity, and maintaining public trust and confidence in the charitable sector.  However, I have a number of concerns with some of the statements and quotes in the article and also the article fails to broach many important issues and complexities with transparency in the charitable sector.

The Toronto Star has written about a Canadian charity named HEDAC in an article entitled “Toronto charity goes from zero to $60M in a year”

Another Canadian charity has been revoked involvement with “abusive charity gifting tax shelters”.  [Update] Here is a copy of various letters from CRA to The Malvern Rouge Valley Youth Services.

The CRA has just released its Consultation on Proposed Guidance on Arts Organizations and Charitable Registration under the Income Tax Act. 

The CRA released on November 1 a bulletin on the new Canada Not-for-Profit Corporations Act (CNCA).

Here is a copy of the Regulatory Impact Analysis Statement for the Canada Not-for-profit Corporations Act (CNCA).

The CRA has placed some new web pages about the CNCA on its website.  Here is the relevant link: http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/nfpc/menu-eng.html

The official version of the regulations under the Canada Not-for-profit Corporations Act will not be available until the next edition of the Canada Gazette Part II and should be on the Justice Canada website within a few weeks thereafter.  Here is an unofficial version that you can obtain from Industry Canada and as the Act has come into force today it is probably a good idea for practitioners to have a copy of them.

Here is a copy of the Blumbergs Canadian Charity Law List - October 2011.  To sign up and receive monthly updates go to http://www.canadiancharitylaw.ca/index.php/pages/subscribe/

The long awaited Canada Not-for-profit Corporations Act will come into force on October 17, 2011.  Until October 16 the current legislation (the Canada Corporations Act) can be used for incorporation but as of October 17, 2011 only the new Federal Not-for-profit Corporations Act (CNCA) can be used for incorporation.  Therefore it is best if you have signed documents to either get them in immediately or you will have to use the new forms under the new CNCA.  If you use the old act you will have 3 years to move to the new act.  Under the old CCA corporations will still for a few years be able to amend by-laws, of corporations, obtain supplementary letters patent, file an annual summary or surrender the corporations charter.  At Blumbergs we will be busy helping organizations incorporate under the new CNCA and also transition/continue from the old act to the new act.  While one does not require legal assistance with incorporation or transition for many organizations that are charities or have more complicated governance structures they may find legal assistance helpful. 

In 2009 the CRA released a draft “Consultation on Proposed Guidance on Advancement of Religion as a charitable purpose” which has some examples in Appendix A of objects and activities that could be used for “advancement of religion” applications.

I am working through the Charity Law Information Program of Capacity Builders to prepare a “Receipting Kit” which is a 25 page explanation of how charities should receipt.  It also includes an appendix with CRA policies or guidances on receipting that is about 120 pages long.  Together it will be a “Receipting Suitcase”. I don’t expect people to read the 120 pages of CRA policies and guidance but it is good for searching through to find references to “auctions” etc.

The Charities Directorate has recently released information obtained from the T3010 Registered Charity Information Return.  It paints an interesting portrait of the charitable sector. 

In 2009, according to the CRA and its T3010 data, Canadian charities spent 2.9 billion outside of Canada.

I will be presenting at the Pillar Nonprofit Network and Foundation Western Foundation Investment Forum 2011.  Here is a copy of the agenda.

Imagine Canada is looking for peer reviewers for its new Standards Program.  “Are you interested in collaborating with a team of qualified colleagues to evaluate the practices of charities and nonprofits against a new set of Canada-wide shared standards? As a member of the Peer Review Committee you will have a hand in shaping the peer review process as we pilot the new Standards Program that was designed by the sector for the sector. For details on how to apply please see the Call for Peer Reviewers”

Here is an interesting report involving a UK charity with many lessons that can be learned by Canadian charities.  The UK charity raised money for the Tsunami in 2004 and the Pakistan earthquake in 2005.  In 2006 there were allegations in the media that the UK charity was involved with supporting terrorism.  Charity Commission of UK and Wales spent a number of year investigating.  “The Inquiry concluded that from the information examined, there was no evidence to indicate that the trustees diverted charitable funds for unlawful or non-charitable purposes. However, the Commission concluded that the trustees were unable to satisfactorily verify the end use of charitable funds in both Indonesia and Pakistan. It found that the measures taken to control, monitor and document the use of charitable funds by third parties overseas were insufficient. This prevented the charity’s trustees from being able to demonstrate that those funds had been used legitimately and in furtherance of the charity’s purposes.”  “The report provides various lessons for the wider charity sector which trustees are encouraged to read. The lessons include the steps which trustees should take to put safeguards in place to mitigate the risk of charitable funds being used unlawfully. This is particularly important for charities working overseas and potentially working through partners. The report provides important advice on trustee responsibilities in financial management and the supervision of overseas activities, and the importance of charities having effective governance where all trustees are aware of their responsibilities in terms of setting polices, decision making, and ensuring the charity is run in line with its governing document and general law.”