The Canadian federal government announced disbursement quota reform.  For many charities this will have no real impact - they were handily satisfying their disbursement quota requirements and for those that were not (except in extreme cases) CRA was not doing anything with the DQ.  As one obsever noted “No more 80/20 ordinary gift. No more enduring property, including 10 year gifts. No more specified gifts. No more intercharity transfer rules based on original DQ designation. Just a simple obligation to use the equivalent of 3.5% based on previous 24 month market average for charitable purposes. ... The 3.5% obligation doesn’t kick in for charitable organizations until there is $100k in assets, while for foundations it stays at $25k.”  I guess no more need for 10 year gifts or 5 year gifts.  We will probably have a revised T3010 at some point to reflect these changes and one can expect with the simpler formula that in the future CRA will more vigourously enforce the DQ provisions as this will be easier to understand.  There is no cost associated with this change and a number of other proposals to increase tax incentives from some organizations were not included in the budget, which makes sense in light of the difficult fiscal situation in addition to other reasons.

The CRA has just announced that “The Charities Directorate is now displaying T3010 returns for revoked charities, and detail pages for annulled charities in the Charities Listings.”

This letter from CRA is a reminder that when leaving funds to a registered charity under a will the drafting is important.

In International Pentecostal Ministry Fellowship of Toronto v. The Queen (FCA) located at http://decisions.fca-caf.gc.ca/en/2010/2010fca51/2010fca51.html the Federal Court of Appeal confirmed CRA’s jurisdiction over Canadian charities registered under the Income Tax Act (Canada).  In quite a strongly worded statement the decision states “We have not been persuaded that there is any merit to the Appellant’s argument that the provisions of the ITA dealing with the registration and deregistration of charities are an unconstitutional infringement on provincial legislative authority. In our view, these provisions relate, in their pith and substance, to federal taxation, and accordingly they are intra vires the Parliament of Canada under subsection 91 (3) of the Constitution Act, 1867. Both the advantages of registration and the drawbacks of revocation relate solely to the tax treatment of charities and their donors. They do not impermissibly affect the affairs of charities in any other way, nor do they impede provinces from otherwise regulating charities.”  The court also rejected the charity’s argument that CRA by going to revocation did not follow its own guidance.  The court noted that CRA’s “decision falls squarely within the range of acceptable outcomes.” and that “it was reasonably open to the Minister to find the breaches sufficiently serious as to warrant revocation.”  This is important victory for charities and CRA in that it makes it clear that CRA can remove the charitable status of a sufficiently non-compliant charity. The public in Canada expects CRA as a regulator to regulate and sometimes that means removing the registered charitable status of groups that do not comply with the basic requirements of being a charity.  I would also commend the Federal Court of Appeal for the length of decision.  When a charity is making an argument that lacks “any merit” you don’t need a 20 page decision and a couple pages will do.

Just finished help organize the Being Good at Doing Good Conference organized by the Charity Law Information Program (CLIP) and supported by the Charities Directorate of the Canada Revenue Agency through its Charities Partnership and Outreach Program.  Thank you to CRA and Mackenzie Financial for sponsoring.  Thank you to all the CLIP and Capacity Builders staff who worked so hard on this project.  Also thanks go to all the speakers, especially those that came from afar,

Here are some archived webinars that the Charity Law Information Program (CLIP) and Blumbergs are beta testing.  Try them out and let us know if there are problems.  Please e-mail .(JavaScript must be enabled to view this email address) with any comments. CLIP is supported by a contribution from the Charities Directorate of the Canada Revenue Agency. 

CRA provides their answer in this piece from the APFF 2009 Conference.

Here is the Toronto Charity Law Information Program Conference brochure

Here is a free archived webinar entitled “Top Ethical Issues for Canadian Charities”.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=505027&rKey=4ccd7037d565a5d1&act=pb

Here is a free archived webinar entitled “Cooperation and Mergers in the Canadian Charitable Sector”. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=624477&rKey=bb493098d9d816c9&act=pb

Here is a free archived webinar entitled “Working in Difficult Areas: 16 Steps to Avoiding Direct or Indirect Involvement with Terrorism” with charity lawyer Mark Blumberg.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=506162&rKey=030166e88da95ab7&act=pb

Here is a free archived webinar entitled “Avoiding Extreme Misuse of Charitable Assets: Fraud, Money Laundering, and Terrorism” with charity lawyer Mark Blumberg. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=440632&rKey=dabdc720d228c0e6&act=pb

Here is a free archived webinar entitled “Foreign Activities: An In-Depth Review of Legal Issues” https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=336577&rKey=4724562b329b659a&act=pb

Here is a free archived webinar entitled “Ethical Issues and Foreign Activities” with charity lawyer Mark Blumberg.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=595442&rKey=2c43133114600d23&act=pb

Here is a free archived webinar entitled “How to Read a Charity’s Financial Statement” with Eric Plato, CMA. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=594467&rKey=3c0bfefcfc6c0c08&act=pb

Here is a free archived webinar entitled “Dealing with a Canada Revenue Agency Audit”. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=547947&rKey=c91388f375f36729&act=pb

Here is a free archived webinar entitled “Low Cost Fundraising - Legal Issues with Third Party Events and Bequests”. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=547307&rKey=d508eba7a71f3dbc&act=pb

Here is a free archived webinar entitled “Practical Advice on Maintaining Adequate Books and Records” with Eric Plato, CMA.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=597002&rKey=c6620d6d25fd8462&act=pb

Here is a free archived webinar entitled “CRA’s New Fundraising Guidance: What Does It Mean?” https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=440027&rKey=482cc2c6dcf99042&act=pb

Here is an archived webinar entitled “Business Activities and Earned Income by Canadian Charities” with charity lawyer Mark Blumberg. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=559052&rKey=9947b9c3dc70b510&act=pb

Here is an archived webinar entitled “Allowable Charitable Activities and Non-Charitable Activities” by charity lawyer Mark Blumberg https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=556857&rKey=ba363d7271522385&act=pb

Here is an archived webinar entitled “Receipting for Canadian Charities: To Issue or Not to Issue an Official Donation Receipt” with charity lawyer Mark Blumberg. https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=581177&rKey=1f03a97ff473446d&act=pb

Here is a free archived webinar entitled “Legal Issues for Canadian Charities: Beyond the Top 10” with charity lawyer Mark Blumberg https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=560427&rKey=eb2b26271716b465&act=pb

Here is a free archived webinar entitled “Top 10 Canada Revenue Agency Compliance Issues for Charities” with charity lawyer Mark Blumberg.  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=347957&rKey=b0409024f1fe1f72&act=pb

Here is an archived webinar entitled “Basic Internal Financial Controls for Canadian Registered Charities” https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=387717&act=pb&rKey=cbfd36b7be66045d

Here is an archived webinar entitled “Tour of the Canada Revenue Agency Charity Directorate and Various Charity Law Resources on the Web” with Mark Blumberg, a Toronto based charity lawyer.
https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=548647&rKey=c0ce81cdd52ef188&act=pb

Here is an archived webinar entitled “Risk Management for Canadian Charities”  https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=388027&rKey=1314cbfa89fddcf3&act=pb

Here is a free webinar entitled “Governance 101 for Canadian Charities and Their Boards of Directors” from the Charity Law Information Program (CLIP) https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=505717&rKey=3a1e71ab5ca2421f&act=pb

It is not well known but the Federal and Provincial governments work collaboratively on charity regulation in Canada “to develop mutually beneficial public awareness and education products and projects.”.  Here is a little piece which illustrates some of the collaboration. 

If you are trying to understand the disbursement quota for Canadian charities then you may find this CRA page on the disbursement quota calculation helpful.  Here is the link http://www.cra-arc.gc.ca/tx/chrts/prtng/spndng/clclb-eng.html

[the archived recording of the webinar Haiti - Legal and Ethical Issues for Canadian charities is now available at https://ocsa.webex.com/ocsa/lsr.php?AT=pb&SP=TC&rID=619547&rKey=680663606ebf9a91&act=pb (It is approx 1h and 10 min)]  We are also beta testing some other webinars at: http://www.globalphilanthropy.ca/index.php/blog/comments/webinars_on_canadian_charity_law_-_charity_law_information_program_clip_by_/

OCIC, myself and Capacity Builders will be organizing a free one hour webinar entitled “Haiti - Legal and Ethical Issues for Canadian charities responding to the earthquake”  As we are all aware with the earthquake in Haiti, Canadians have responded quickly and donated generously.  Canadian charities have received record contributions to help with the disaster in Haiti.  Many of the charities raising funds for Haiti have never operated in Haiti and/or been involved in disaster assistance. We have learned from past disaster responses in post-conflict areas that good intentions and money are not enough.  Join charity lawyer Mark Blumberg (editor of http://www.globalphilanthropy.ca) as he highlights some of the top legal and ethical challenges facing Canadian registered charities operating in Haiti.  From Income Tax Act rules to ethical dilemmas it is important that charities are aware of these and other issues.  For all Capacity Builder Webinars you can see https://ocsa.webex.com/mw0306l/mywebex/default.do?siteurl=ocsa

It may take a while to know the full story but so far the headlines are “Baptist group accused of child-trafficking in Haiti ” http://www.theglobeandmail.com/news/world/haiti/baptist-group-accused-of-child-trafficking-in-haiti/article1450829/ or “Haiti ‘orphans’ case: Misunderstanding or kidnap?” from the BBC.

Here is a reminder from the Charities Directorate of CRA that one registered charity should not issue an official donation receipt to another registered charity.  So for example if a foundation gives another registered charity funds the recipient charity does not provide an official donation receipt.

Here is the schedule for Being Good at Doing Good:  Safeguarding Yourself and your Charity in a Complex World.  There is an amazing line up of speakers. CLIP_Conference_Schedule.pdf    Check out the topics and speakers and register while you can at http://www.capacitybuilders.ca/clip/conference/index.php for the early bird rate for this CLIP conference.  Here is a flyer if you want to circulate to your charities, their boards, volunteers and staff.  Flyer for Being Good at Doing Good

For information on the conference see: http://www.capacitybuilders.ca/clip/conference/index.php  The conference is sponsored by the Canada Revenue Agency and I am helping Capacity Builders organize this charity conference.

The Canadian Government recently announced that they will be lifting the cap of $50 million for matching funds. 

Earthquake in Haiti:  Québec Announces That Donations Made by February 28, 2010 Will Be Deductible in 2009

Here are some suggestions for donating to a Canadian charity in a disaster such as we recently saw in Haiti.

Here is a press release from the law firm Scarfone Hawkins LLP on this case.  The defendants are Rochester Financial Limited, Promittere Capital Group Inc., Promittere Asset Management Ltd., Banyan Tree Foundation and national law firm Fraser Milner Casgrain LLP.  Here is the Scarfone Hawkins LLP press release dated Jan 21 2010.  Here is a copy of the Reasons for Decision of Justice Lax dated January 19 2010

To help with Haiti Relief the Charities Directorate of the Canada Revenue Agency will temporarily be working on weekends “Note: As a temporary measure, the Charities Directorate is providing additional telephone service for donors and charities who want information about donations toward earthquake relief in Haiti. The telephone service is now extended to weekends, from 9 a.m. to 5 p.m. Eastern Time.”  This is an excellent idea and will be helpful to many Canadians.  http://www.cra-arc.gc.ca/whtsnw/tms/rthqk-haiti-eng.html

Recently a US Report on major embezzlements by Marquet International was released.  The report covers only one type of fraud namely embezzlement or the misappropriation of resources by an employee or agent of an organization for his or her own purposes.  What is interesting is first the high number of non-profits who suffer from embezzlements.  “Non-profit and religious organizations accounted for more than 11 percent of all the incidents, consistent with our 2008 findings.”

Here is some useful information from the Canadian Department of Foreign Affairs on why it is better to donate cash rather than goods during a disaster.

The Haiti Earthquake shows quite vividly how difficult and complicated international charitable activities can be.  From logistical issues to security, careful planning, preparation and having the requisite experience and people on the ground are important.  At an upcoming conference in Toronto called Being Good at Doing Good (http://www.capacitybuilders.ca/clip/conference/index.php), supported by the Canada Revenue Agency, there will be extensive discussion of how charities must be careful to maximize their organization’s effectiveness and prevent your resources from being misused both locally and internationally.  There will be a number of excellent speakers and topics on the difficulties and requirements for international operations and some of them will incorporate updates and lessons learned from Haiti.

Keep the lines and internet sites busy.  Donate to reputable, experienced, knowledgeable Canadian aid organizations that already have operations in Haiti such as the members of the Humanitarian Coalition (http://www.thehumanitariancoalition.ca/) or Doctors Without Borders Canada (http://www.msf.ca/)  Here is an article on the outpouring of support by Canadian donors.

Here is a CBC article on how scammers and cyber criminals are trying to exploit the generosity of people. Save yourself the disappointment and embarrassment and if you are interested in helping people in Haiti donate to an experienced Canadian aid organization that has operations in Haiti such as the members of the Humanitarian Coalition (http://www.thehumanitariancoalition.ca/)  or Doctors Without Borders Canada (http://www.msf.ca/)

Here is some information from CIDA with respect to their Haiti donation matching program
http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/JOS-114172324-U9P

One release is a caution encouraging Canadians to be an informed donor and see part of the CRA website on being an informed donor.  The other is a reminder that in a disaster the urge by some to set up a new organization may not be the best course of action may be to donate or help “existing qualified donees (e.g., other registered charities) that have the experience, resources, and infrastructures already in place to respond rapidly and effectively in such locations.”  http://www.cra-arc.gc.ca/whtsnw/tms/rthqk-haiti-eng.html  I very much agree with such advice. 

There are many different ways that you can help.  One way is to make a donation to the Humanitarian Coalition.  The Humanitarian Coalition is comprised of CARE Canada, Oxfam Canada, Oxfam-Québec and Save the Children Canada.  These four agencies are working together to address the devastation caused by the earthquake.  http://www.thehumanitariancoalition.ca/

The CRA put out a Tax Alert today - they identified that in the last fiscal year (2008-2009) they had “reassessed over 20,000 individuals who had participated in at least 1 of 20 unacceptable tax shelter gifting arrangements.”  Also they noted in the Tax Alert that when they prosecuted for fraud or tax evasion “Convictions were obtained in 98% of the cases prosecuted.”  If you have been bamboozled by a charity gifting tax shelter promoter consider making a voluntary disclosure under the VDP. 

I will be speaking on “Ensuring Good Board Governance and Basic Legal Compliance for a Canadian Foundation” at the 7th Annual Foundation, Endowment & Not For Profit Investment Summit organized by the Strategy Institute http://www.strategyinstitute.com/021710_feni7/Foundation_2010.pdf

As of 2009 Canadian charities need to file the T3010B form for year ends after January 1, 2009.  For almost all charities they have no more use for the T3010A.  CRA has removed the old T3010A form because so many charities were mistakenly filing the t3010A when in fact they should be filing the T3010B Anyway there are reasons that one may want to look at a T3010A including if you are making application for reregistration and you are required to complete the T3010A or you are wondering about the CRA database and what number aligns with what question.  Anyway CRA has done a good job hiding the form to keep it away from you those who might mistakenly use it.  Here is a copy of the T3010A if you require http://www.cra-arc.gc.ca/formspubs/prioryear/t3010a/README.html

The preliminary schedule for Being Good at Doing Good:  Safeguarding Yourself and your Charity in a Complex World was released today http://www.capacitybuilders.ca/clip/conference/documents/PreliminarySchedule.pdf  Check out the topics and speakers and register while you can for this CLIP conference.

The Charities Directorate of the Canada Revenue Agency has put an open call for people to comment on existing policies and guidance of the Charities Directorate.  For a number of years the CRA engaged in extensive consultation with the sector and this is a continuation of that effort. 

Through the Charity Law Information Program I will be delivering over 30 online webinars over the next two months. They are priced at $25 per webinar. The webinars are listed at http://www.capacitybuilders.ca/clip  Here is a coupon code xq42k that allows you to register for free for any webinar as long as the registration takes place before February 1, 2010.  http://www.capacitybuilders.ca/clip/clip.php

The CRA has updated its guide P113 Gifts and Income Tax for 2009.  For the document see http://www.cra-arc.gc.ca/E/pub/tg/p113/README.html  This document will be of interest to donors, their professional advisors and charities.

My CanadianCharity channel on Twitter is growing rapidly.  I have 117 people following me (and most are not even family)  You can access it at http://twitter.com/canadiancharity  It covers legal, ethical and practical issues with charities in Canada.  A great way to keep up to date if you have a Twitter account.  Some other ways of keeping up to date are to join CRA’s mailing list at http://www.cra-arc.gc.ca/esrvc-srvce/mllst/sbscrbchrts-eng.html  (it takes exactly 4.5 seconds).  You can also join the Blumbergs Charity Law mailing list at http://www.globalphilanthropy.ca/index.php/pages/subscribe/  for monthly updates.  It takes about 10 seconds to sign up - well worth the investment of time! [I now have 145 followers on Twitter as Jan 18, 2010]

In 2009 I attended the Interaction Forum held in Washington, D.C.  The Interaction Forum is the largest gathering of US and international NGOS involved with international development.  I met some very interesting people and learned quite a lot.  One of the important themes of the conference is that security is increasingly important concern for charities doing international operations – security for your employees, expat workers, national staff and beneficiaries.  To summarize, for those who do not want to read more than one paragraph - aid organizations who don’t not take security seriously probably should be getting out of the humanitarian aid area.  Your employees will not want to work for you, funders will not want to fund you and you may be unnecessarily endangering the lives of national staff and beneficiaries.  I was reminded of this a couple of weeks ago when I reviewed a large CIDA draft contribution agreement - what was interesting was that in project conducted in a moderately dangerous country about 1/4 of the contribution agreement related to security and safety. 

In Newsletter 33, CRA identified various registered charities that have had their registered charity status revoked for involvement in tax shelter gifting arrangements.

The CRA noted in Newsletter 33 that they are accepting comments on their new Guidance CPS-028.

The CRA has updated its publication “Donations to Prescribed Universities Outside Canada”  http://www.cra-arc.gc.ca/E/pub/tg/rc191/rc191-09e.pdf 

CRA Income Tax Technical News No. 41 was released December 23, 2009 and discusses rulings (opinions) on proposed legislative amendments, the definition of “Tax Shelter” – Subsection 237.1(1) and donation of flow-through shares – subparagraph 38(a.1)(i), subsection 248(35) through (41) and section 237.1

I am helping organize the CLIP conference Being Good at Doing Good: Safeguarding Yourself and Your Charity in a Complex World Feb. 22-23, 2010 in Toronto.. It promises to be a very exciting and affordable two day conference with many interesting speakers from around the world providing thoughts on governance, ethics, financial management, internal controls and foreign activities for Canadian charities. Here is a partial list of speakers that was just posted http://www.capacitybuilders.ca/clip/documents/SpeakerListing_Dec15.pdf and if you want to register you can go to http://www.capacitybuilders.ca/clip/clip-news.php  For updates see http://www.capacitybuilders.ca/clip/conference/index.php 

Here is a copy of a report on terrorist financing entitled Financial Action Task Force Report on Terrorist Financing

From the basic to the indepth there are numerous resources on the web that can help Canadian charities avoid money laundering and terrorism.

Here is an interesting report from the Financial Action Task Force (FATF) on COMBATING THE ABUSE OF NON-PROFIT ORGANISATIONS International Best Practices from 2002.  It highlights the importance of transparency in non-profit sectors and financial management in thwarting abuse of charities.