In 2012 I had suggested certain additional questions be added to the T3010. There are many groups actively opposing any greater transparency in the sector and so it is disappointing but not shocking that there is today less transparency in the T3010 than a decade ago.

If you have suggestions for questions to be added to the T3010 let me know. I am definitely cognizant that organizations have limited capacity for completing a more complex T3010 form. One day CRA will look at revising the T3010. Here are some suggestions for additional questions that they may want to ask.

In looking at the US form 990 or UK filing requirements it is clear that those countries require a large amount of disclosures on various issues not well covered by the Canadian required disclosure.  Many of the UK or US disclosure would be far more useful or interesting to Canadian donors and charity stakeholders.  In other words, if one is truly interested in a transparent sector there is other useful information that either CRA could require or charities themselves should provide publicly.  I would like CRA to be empowered by Finance under the Income Tax Act to publicly disclose the names of all charities involved with schemes that the CRA considers abusive charity gifting tax shelters, and not only find out after the charity has lost charitable status that it was used in this way.  For example, with one scheme promoters and others funnelled $168,000,000 ($168 million) through a charity and after CRA conducted an audit over a number of years it appears that only $2,000 went to charitable activities.  I think donors have the right to know when CRA has any serious concerns with a charity and it will take Finance amending the Income Tax Act to allow for such disclosure.  About 10 years ago CRA did something which was very helpful – they started to keep the T3010 forms of revoked charities on the internet.  Before that once a charity was revoked all the information disappeared from the database.

Some of these questions could be asked of larger charities only such as those over 1 million or ten million.  Some could be in an optional schedule that charities could complete if they wish to.   It is easier to answer a question on one form once a year, rather than 50 times being asked the same question by funders and donors.

Here are some examples of questions or topics:

  1. I would like charities to have to disclose as in the UK what public benefit their charity provided in the year.  Here is a model Trustees’ Annual Report http://www.charity-commission.gov.uk/Library/investigations/sorp/pdfs/araidpb.pdf which gives one some idea of what the UK expects charities to disclose.  All UK charities need to make a Public benefit statement i.e.  “A statement confirming whether the charity trustees have complied with their duty to have due regard to the guidance on public benefit published by the Commission in exercising their powers or duties.”
  2. Some other UK requirements are listed below and worth discussing: http://www.charity-commission.gov.uk/publications/cc15b.asp   “The Annual Report should provide the reader with an understanding of how the charity is constituted, its organisational structure and how its trustees are appointed and trained and assist the reader to understand how the charity’s decision-making processes work. The level of detail provided may well depend on the size and complexity of the charity and be proportionate to the needs of the report’s readers.”
  3. “The methods adopted for the recruitment and appointment of new trustees, including details of any constitutional provisions relating to appointments, for example, election to post. Where any other person or body external to the charity is entitled to appoint one or more of the trustees this should be explained together with the name of that person or body (subject to section 1 above if permission not to disclose has been obtained).”
  4. “Policy on reserves stating the level of reserves held and why they are held. Where material funds have been designated, the reserves policy statement should quantify and explain the purposes of these designations, and where set aside for future expenditure, the likely timing of the expenditure. Where no reserves policy is in place, a statement should be made to that effect.  Where any fund is materially in deficit, the circumstances giving rise to the deficit and details of the steps being taken to eliminate the deficit.”

 

With some bigger charities the following seems useful:

“The names and addresses of any other relevant organisations or persons. This should include the names and addresses of those acting as bankers, solicitors, auditor (or independent examiner) and investment or other principal advisers.”

“Where the charity is part of a wider network (eg charities affiliated within an umbrella group), then any impact this has on the charity’s operating policies should be explained.”

“The relationships between the charity and related parties, including its subsidiaries, and with any other charities and organisations with which it co-operates in pursuit of its charitable objectives.”

“A statement confirming that the major risks to which the charity is exposed, as identified by the trustees, have been reviewed, and systems or procedures have been established to manage those risks.”

“Where a charity uses volunteers to a significant extent in its charitable or income-generating activities, this should be noted. Unpaid voluntary contributions are not included in the SoFA, because of the difficulties in attributing a monetary value to them, but it is important that readers of the report are able to understand the role and contribution of volunteers. The information may therefore explain the activities with which volunteers help, quantify their contribution in terms of hours or paid staff equivalents, and may present an indicative value of their contribution.”

“Where significant fundraising activities are undertaken, details of the performance achieved against fundraising objectives set, commenting on any material expenditure which might enhance future income generation, and explaining the effect on the current period’s fundraising return.”

 

Some interesting US Form 990 requirements (you can see the form at http://www.irs.gov/pub/irs-pdf/f990.pdf and the 79 page instruction booklet at http://www.irs.gov/pub/irs-pdf/i990.pdf) are:

“Did any officer, director, trustee, or key employee have a family relationship or a business relationship with any other officer, director, trustee, or key employee?”

“Did the organization become aware during the year of a material diversion of the organization’s assets?”

“Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?”

“Did the organization maintain any donor advised funds or any similar funds or accounts where donors have the right to provide advice on the distribution or investment of ammounts in such funds or accounts?”

 

I will update this note based on feedback from others.  It may not be possible to include all of these topics or questions but even if some are included it is better than nothing.

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