CRA has just released a new guidance called “Canadian Registered Charities Carrying out Activities Outside Canada”. Although the name indicates “foreign activities” this document deals with a lot more than foreign activities. It covers the relationship between a Canadian charity and any non-qualified donee, whether in Canada or abroad. If a Canadian charity has dealing with, for example, a non-profit that does not have charitable status then the same rules apply as a Canadian charity dealing with a foreign entity. Essentially, almost all organizations outside of Canada are non-qualified donees. If you are going to transfer resources to them you need to maintain “direction and control” over those resources. This document helps a Canadian charity understand what is required for direction and control. Failure to maintain direction and control can result in a 105% penalty of the amount transferred and/or revocation of charitable status.
Who should be reading and understanding the guidance? The main groups are:
Here is a bigger font PDF version of the guidance “Canadian Registered Charities Carrying out Activities Outside Canada”. This is easier to read, download, highlight and comment on.
For those that are interested here is a sample contractor agreement for a Canadian registered charity conducting foreign activities I prepared it for the Capacity Builders Charity Law Information Program (CLIP) and it is listed under “Resources”.
As well, here are some other resources on foreign activities that I have prepared that may be of interest:
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.