How can Canadian charities transfer funds or resources to non-charities or non-qualified donees to carry out charitable activities in Canada?

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Many Canadian registered charities work with groups in Canada that are not registered charities. This Canadian Charities Working with Non-Charities in Canada Course discusses when it is appropriate for a Canadian registered charity to provide to a non-charity in Canada certain resources (such as cash or equipment) and what systems need to be in place to make that happen.

Canadian charities are special in a number of ways. They have significant tax advantages over other entities – both by not paying income tax and also issuing very valuable official donation receipts. If someone could donate to a charity and then just put the money back in their pocket in effect no one would pay taxes in Canada and our country not have the funds to pay for any social programs and services.

Canadian charities can only carry out charitable activities in 3 ways

1) on gifts to other registered charities and qualified donees

2) on own activities using volunteers and/or employees

3) on own activities using intermediaries (non-qualified donees) (with a structured arrangement/direction and control)

This presentation is focused exclusively on the third way of operating. Canadian charities hiring other groups in Canada as “intermediaries” and transferring resources to them to carry out certain charitable programs.These groups could be individuals, non-profits or for-profits. Under these rules charities can work with almost any organization.

The direction and control rules are one way that the Federal government, the CRA and the courts ensure that funds in registered charities are only spent on charitable activities.

If you don’t follow the rules you can be audited by CRA and this can result in suspensions, penalties and revocation of charitable status.

Some of the issues discussed include:

  • Ideas for doing good in Canada that are outside of the charity system
  • Some basic legal considerations for charities
  • Why would a Canadian charity want to work with a non-charity?
  • An overview of the Income Tax Act (Canada) regulatory framework governing thousands of Canadian charities working with non-charities.
  • The distinction between qualified donees and non-qualified donees
  • A discussion of CRA’s “Guidance on Using an Intermediary to Carry out a Charity’s Activities within Canada”
  • Direction and control over resources
  • Avoiding being a “conduit”
  • Types of permissible relationships for Canadian charities working with non-charities
  • The necessary “measures of control” that a Canadian charity must have when working with non-charities.

This course Canadian Charities Working with Non-Charities in Canada Course will be of interest to staff at non-profits and charities responsible for compliance issues especially program and finance staff and professional fundraisers, professional advisors such as lawyers and accountants who advise charities on fundraising and program implementation involving non-charities, board members of Canadian charities that want to understand an important way for their charity to strategically enhance services they provide and philanthropists who want to understand the regulatory requirements of Canadian charities that work with non-charities.