CRA has recently released a new guidance called “Canadian Registered Charities Carrying out Activities Outside Canada”.  Although the name suggests “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 Canadian registered charity status then the same rules apply as to a Canadian registered 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:

  1. registered charities that conduct foreign activities;
  2. registered charities that work with intermediaries in Canada that are not qualified donees; [update – you can see CRA’s new guidance or policy CRA’s new Guidance “Using an Intermediary to Carry out a Charity’s Activities within Canada”
  3. professional advisors, such as lawyers, accountants, who advise charities.

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 is a copy on my website.

Other resources on foreign activities that I have prepared that may be of interest:

In 2011 CRA released a guidance entitled “Using an Intermediary to Carry out a Charity’s Activities within Canada”    It is very similar to the foreign activity guidance except it deals with Canadian charities dealing with non-qualified donees in Canada.