In order for a Canadian registered charity to conduct foreign activities the foreign activities must be the  “Own Activities” of the registered charity and unless the foreign group is a qualified donee then the Canadian registered charity needs to maintain “direction and control”

The Charities Directorate of the Canada Revenue Agency has guidance on Canadian registered charities conducting foreign activities.

The guidance is called CG-002 Canadian registered charities carrying out activities outside Canada

Here is a summary of the major requirements for direction and control:

Canadian charities are required to have mechanisms that ensure that the following measures of direction and control are in place when any resources are transferred from a Canadian charity to an intermediary (such as a foreign charity, NGO, or for profit business):

1) Due Diligence – the intermediary must have the skill, knowledge staff and equipment to carry out the charitable activities and, in addition to such capacity, there must be a strong expectation that the intermediary will use the Canadian charity's resources as agreed to.

2) Written Agreement – there must be a written agreement with the intermediary with the necessary elements required by the Charities Directorate guidance and the terms of such agreement must be implemented or revised with mutual written consent as necessary.

3) Detailed Description of Distinct Activities – the written agreement must contain a clear, complete, and detailed description of the activity that the intermediary will conduct.  Such activity must be a separate and distinct activity of the Canadian charity.

4) Monitoring and Supervision – there must be appropriate monitoring and supervision of the activity by the Canadian charity.

5) Ongoing Involvement – there must be ongoing communication between the Canadian charity and the intermediary and any significant changes to the detailed description of activities must be mutually agreed upon.

6) Separate Funds – the intermediary must arrange to keep the charity’s funds separate from its own, ideally by having a separate bank account but if that is not possible then such segregation of funds must be reflected in the accounting system of the intermediary.

7) Separate Books and Records – the intermediary must ensure that it keeps necessary books and records for the Canadian charity's separate activities.

8) Periodic Payments – The Canadian charity must make periodic transfers of resources, based on demonstrated performance.

9) Books and Records in Canada – Copies of the books and records of the intermediary must be provided to the Canadian charity on a pre-determined basis or the Canadian charity must have access electronically to such books and records and the Canadian charity can make copies of such documents to be held at the office in Canada to meet the Canadian requirement that there needs to be adequate books and records in Canada.  Books and records will include either original source documents or copies of such source documents.

Direction and control does not apply when the Canadian charity is providing resources to “qualified donees” under the Income Tax Act (Canada), which are generally Canadian registered charities, certain foreign prescribed universities and the United Nations and its agencies.

The requirements of direction and control are in addition to any other requirements that may be imposed on the Canadian charity by its own corporate documents, corporate law, fiduciary and trust duties, foreign laws and donors or funders.

Also here is a recent article we wrote on foreign activities by Canadian charities and here is our directory on international philanthropy from Canada.