Here are a number of trends or compliance suggestions for charities over the next six months:

  • If you are an Ontario corporation under the Ontario Corporations Act (OCA) (which is now 113 years old) – seriously consider transferring your organization’s corporate act from the OCA to the Federal Canada Not-for-profit Corporations Act (CNCA).  Here is more information on moving from the OCA to CNCA.  In the pre-COVID world, things were changing quickly but now even more so.  Being constrained by narrow objects and outdated corporate statutes that take months for any change could really reduce the impact of a charity.  If you are under the CNCA you can make changes in 1 day that would take about 4-6 months under the Ontario system.   We still have no indication from the Ontario government of when the new Ontario act (ONCA) will come into force but the Ontario government just circulated some draft regulations for comments so in theory, that means the Ontario government is trying to bring in ONCA January 1, 2021 or July 1, 2021.  Just a guess.
  • Are you confused about what charities can or cannot do?   If you have some downtime use it wisely.   Learn about compliance for Canadian registered charities – both operating charities and foundations.  We have 2 separate full-day events.  Don’t miss out.      We also have 12 online courses you might want to take advantage of.
  • If your objects are not broad enough. consider seeking permission from the CRA to have them expanded.  This is particularly the case for groups who don’t have objects that allow them to deal with COVID-related work.  It is also is the case for any organization that does not have a ‘gifts to registered charity’ or ‘gifts to qualified donee’ object, which can be vital in certain circumstances.  Many groups have not been able to carry out particular activities or even accept funds because of their narrow objects.
  • CRA’s number 1 compliance concern is receipting.  Even though you are sure that your charity issues perfect receipts I am 89% sure that that is not the case.   CRA finds on audits of charities that 89% of those charities audited are not issuing receipts correctly.  We have a whole directory on receipting, a free Receipting Kit and a 3-hour online course on receipting that you might find helpful.
  • If you are publicly fundraising and those funds are for restricted purposes be very careful about how you fundraise.  Ensure that you have secondary purposes in case too much or too little is raised or you cannot conduct the activity you wish to conduct.
  • Make sure your gift agreements are appropriate and have the necessary clauses, especially those dealing with amendments, and that those gift agreements align with your gift acceptance policy.
  • Please, please, please don’t create any more perpetual endowments.   They can kill the flexibility needed to have an impact and they can create perpetual frustration for donors, beneficiaries and others.    If you want to have a long-term fund and disburse only the minimum amount required by the disbursement quota – that is one thing – but to entrench a perpetual endowment can really devalue the impact of the funds.  If your advisors are suggesting a perpetual foundation you definitely need a second opinion.
  • Collaboration and mergers will be on the upswing over the next year or two.  These can make a lot of sense and our online course Mergers of Canadian Non-Profits and Charities and Dealing with Uncertain Times may be helpful in that regard, save you lots of money and reduce wasted time, energy and attention.
  • A Canadian registered charity is a special purpose vehicle that has many restrictions.  It is great for doing certain things but not others.  Many charities should really consider the benefits of having a “group” with one or more registered charities, non-profits and/or for-profits to have maximum flexibility and impact.  In some cases, the costs are very minor and the benefits are huge.  We have an online course entitled Multiple Corporate Structures for Canadian For-Profits, Non-Profits and Charities to Enhance Flexibility + Impact.
  • Most Canadian charities can conduct their activities in three ways, but many are only aware of two of them.  Most charities know about making gifts to other registered charities or by carrying out their own activities using their own staff and/or volunteers.  However, there is a third and very important method available – a Canadian registered charity can hire a group that is not a Canadian charity, such as a for-profit or non-profit in Canada or elsewhere (they are called intermediaries), to carry out certain charitable activities of the charity.  With COVID and the need to be more flexible, many charities are learning about this third method and we have recently put up a number of resources to help charities understand this flexibility in Canada and outside of Canada.
  • Digital transformation in the charity sector over the last few months has been amazing – so many organizations that previously had no one working from home switched to operating remotely very quickly.  It certainly does not work with many tasks, but there are so many opportunities for charities to make a greater impact using technology.  However, for this to happen, it requires the right attitude (I see lots of that today amongst staff and volunteers) and funders, donors or supporters who are prepared to fund and assist with this evolution.  This is a window to make changes that may not be open for a very long time.
  • Fundraising is as important today as it was pre-COVID – while some donors have been hit hard, and may not be able to contribute, there are also some (and they often are not upfront about it) who have made a lot during the last few months or who have tremendous financial resources.  In addition, many people are financially about the same – perhaps they have saved some money from not eating out or travelling – and they may have a greater appreciation for the importance of the work of charities.  Whether it is email, regular mail, or social media, if your organization needs resources to deal with your issues, whether COVID related or not, you should continue fundraising.  Carefully crafted and sensitive fundraising messages should be just fine.  The only caveat is that if you have significant reserves you should not be fundraising unless you have a publicly accessible reserve fund policy. If you are interested in regulatory issues relating to fundraising see CRA’s guidance Fundraising by registered charities.
  • Many donors and funders are looking beyond the ‘usual suspects’ of charities they typically support.   While you have time, try to improve your transparency which is largely your website, social media and T3010 filing. CRA has provided an extension for charities to file their T3010 annual form to December 31, 2020 and, as we always recommend, take the time to ensure that it is accurate.  For some charities, it may be advantageous to get on the CRA MyBA system to file your T3010 and another advantage is the many other changes that can be made using the MyBA system. With larger charities, we often suggest that your legal counsel, who is familiar with the T3010, review your T3010 prior to filing.
  • HR practices are important.   This has been a struggle for the charity sector over the last few decades and will definitely require continued attention.  Not only do HR expenses account for most of the expenses of registered charities, but many people will have additional mental health and other challenges as a result of COVID and the quarantine.
  • While some are exhausted, there are many volunteers and staff in the charity sector who have more freedom and time right now than they typically do.  Take this opportunity to catch up on compliance issues if you can.   Certainly, when you are back to your hectic “normal” pace you may not have these same opportunities.