The CRA has revoked its first two registered charities in over a year.  Actually, over 13 months not one charity has been revoked.  Some think that if the CRA is not revoking any charities that is a good news story.  But almost anyone in the charity sector knows that with 86,000 charities there are a few bad apples in the bunch.  These few bad apples cause immeasurable harm to the sector and the beneficiaries that depend on charities.  So forget the notion spread by some that the Charities Directorate is out to get Canadian charities and revoke them.  Some may even think that the CRA has black helicopters on standby.  If that was the case CRA is performing really badly.  Two charities revoked as a result of audit in over a year!

In reality, there are rules that registered charities need to comply with. CRA certainly does not require charities to be perfect but if there is a significant problem with a charity, the charity does not want to become compliant, then CRA has little choice but to revoke their status.  You can read more about the whole process on the CRA Charities and Giving website.

The charities that were revoked are THE CANADIAN DON’T DO DRUGS SOCIETY, TORONTO, ONT. and ARK ANGEL FOUNDATION, TORONTO, ONT.  Here is a link to the Gazette.  As this happened today CRA has not even updated their database to reflect that the two charities are revoked.  In some cases, CRA will list some vague reasons on their database as to why the charities were revoked but anyone from the public can request copies from CRA of the actual revocation letters which often give lengthy reasons for the revocations.

We happen to know something about the second charity because the Toronto Star actually had an editorial in 2015 on the Ark Angel Foundation and related charities.   In the 2019 Federal Court of Appeal decision on Ark Angel Foundation v. Canada (National Revenue), 2019 FCA 21 (CanLII), the FCA would not overturn the CRA revocation. Now on December 5, 2020 the CRA publishes the notice in the Gazette.   Seems like an awfully long time to revoke a charity – but others think that the process should involve additional steps and therefore would take longer!

Unfortunately, in over 5 years since The Star published that editorial calling for more transparency, there is now less transparency about Canadian registered charities. Even the WE Charity scandal has not resulted in an appreciation by some of the dangers of inadequate transparency.

Those who wish to abuse charities, and their very well compensated advisors, seem to want even less transparency and accountability for charities and are trying to chip away at existing charity regulation.   The charity sector, perhaps without knowing it, is at a crossroads and has to decide whether it wants generous tax incentives for donations to charities and vigorous rules to prevent misuse of that incentive.  Or we can follow other countries that have more liberal rules but provide little or far less tax incentives.