Yes there are restrictions on how a Canadian registered charity can use its resources.
In CRA’s Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada” it notes:
“3. Are there restrictions on how a charity can use its resources?
The Income Tax Act allows a charity to operate in only two ways:
• carry out its own charitable activities
• make gifts to qualified donees
3.1. What are charitable activities?
Charitable activities are those that further a purpose recognized as charitable under common law, such as providing housing to the homeless, scholarships to students, or medical care to the sick.
Apart from making gifts to qualified donees, the Income Tax Act requires a charity to devote all its resources to charitable activities carried on by the organization itself.
This requirement is referred to as the own activities test.
A charity’s resources include all physical, financial, and material resources (for example – buildings, money, or donated goods), intellectual property, and its staff.”
For more information on the CRA Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada” (Reference number CG-004) see:
https://www.canadiancharitylaw.ca/index.php/blog/category/using_intermediaries_in_canada/ or
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/ntrmdry-eng.html
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