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Canadian Charity Law List

May 2020

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Blumberg Segal LLP Update for Clients and Friends – May 29, 2020

The COVID-19 pandemic continues to affect the non-profit and charity sector.  Some organizations have been completely shut down, some have suspended programs, some have changed their mode of operations to deal with the COVID-19 pandemic, others have seen a huge influx of funds from generous donors, government assistance or a combination thereof.

 

We have had the privilege of working on some very interesting and transformative projects over the past 9 weeks.  We are fortunate that we can do this work remotely from home.

We are also very pleased to have two new online full-day programs in July: one dealing with running a charitable organization and another dealing with running private and public foundations.  See below in the newsletter for details.  I often hear that there are not in-depth and practical programs for charities who just want to understand compliance issues and how to deal with them – these will be helpful for many groups and there are some good early bird specials for those who wish to take advantage of them.

 

There have been many surprises over the last 9 weeks including the following:

  • While we expected that many of the routine tasks such as charity applications, corporate changes (including moving from the OCA to CNCA), and some projects like by-law changes to slow down or end, they have continued – some groups have had more time to devote to these types of issues.
  • Many clients are more highly motivated to make changes now than in the past – especially in areas such as expanding objects or increasing flexibility by having multiple corporations.   We often heard pre-COVID that the ability to quickly make corporate changes was not important: ‘It does not matter if we are under the OCA or CNCA – the OCA may take 6 months to change your objects and the CNCA only 1 day – but we have not changed our objects in 20 years so when we do it does not matter if it takes another 6 months’.  Now with COVID, those same groups would like the flexibility to make changes more quickly.
  • Whole areas such as government funding for COVID, foundations increasing payouts and finding new partners, have resulted in a flurry of activity within the charitable sector.

 

Here are a number of general suggestions for strategic ideas for charities to consider over the next few 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.   We still have no indication from the Ontario government of when the new Ontario act (ONCA) will come into force (and I am afraid to ask).  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 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.
  • 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.
  • 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 weeks 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 weeks 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 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.

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Fundamentals of Running a Canadian Charitable Organization/Operating Charity 2020

There are almost 86,000 Canadian registered charities.  About 74,500 are “charitable organizations” that conduct their own activities whether by using volunteers, employees or intermediaries that are not charities.  Some charitable organizations even make gifts to other charities.

The COVID-19 pandemic has had a huge impact on the charity sector – including some charities having to shut down, others seeing large increases in revenue and many needing to change the way they operate.  For many charities what was fine last year is not at all adequate this year.

This program will focus on compliance issues with an emphasis on those specifically relevant to charitable organizations that are registered charities in Canada.

It is vital that directors and staff of charitable organizations understand their legal obligations to avoid problems such as compliance agreements, penalties, revocation, and directors and officers becoming ineligible individuals.

There are limited-time early bird specials for those who are interested.  If you register and are unable to attend you can still access the recording for 30 days after the event.

[If you are involved in running a private or public foundation you might find this other event more helpful]

This course has never been offered before and we hope that it will provide very good value for Canadian operating charities.

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Fundamentals of Running a Private or Public Foundation in Canada 2020

Private and Public Foundations are an important part of the Canadian charity sector. With the COVID-19 pandemic, there have been increasing demands on them to show flexibility and to ramp up giving.   There will probably be increased scrutiny of foundations over the next few months.

This program will focus on compliance issues with an emphasis on those specifically relevant to running a private or public foundation that is a registered charity in Canada.  While some foundations give out a small amount each year – others are giving hundreds of millions.  Large gifts might have been $10-20 million a few years ago but are now $100 million and over.

There are over 10,000 foundations (5800 private and 5000 public) and CRA is increasingly auditing them as CRA prioritizes higher risk registered charities with higher assets and expenditures for audits.  It is vital that directors and staff of foundation understand their legal obligations to avoid problems such as compliance agreements, penalties, revocation, and directors and officers becoming ineligible individuals.

[If you are involved in running an operating charity you might find this other event more helpful]

This course was originally offered in September 2019 and it is being offered for the first time online here.

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Canada Emergency Wage Subsidy (CEWS) extended till August 29 and includes more groups

The Canadian Department of Finance announced today some changes to the Canada Emergency Wage Subsidy. Probably most important is an extension of the wage subsidy until August 29, 2020, and the inclusion of the following groups:

  • private schools;
  • certain indigenous government-owned businesses;
  • Registered Canadian Amateur Athletic Associations (RCAAAs);
  • Registered Journalism Organizations (of which none are yet registered); or
  • Non-public Educational and Training Institutions.

Here is the Backgrounder from the Department of Finance.


Federal government proposal to increase time limits under various Federal acts including CNCA

The Federal government has prepared “Draft Legislative Proposals Regarding Time Limits and Other Periods in Circumstances Due to COVID-19“.   These proposals cover a number of different acts and provide extensions.   For charities and non-profits, for example, it affects the Canada Not-for-profit Corporations Act (“CNCA”).

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COVID-19 and AGMs for Federal non-profit corporations under the Canada Not-for-profit Corporations Act (“CNCA”) - UPDATED

The COVID-19 crisis is forcing some non-profit organizations and registered charities to rethink the timing and manner of conducting their annual general meeting of members (AGM).  Every organization is different, and a one-size-fits-all approach does not apply. For those who wish to request an extension of the six-month timeframe for holding AGM’s and also a requirement to provide financial statements to members at least 21 days ahead of the AGM, Corporations Canada has just implemented a streamlined process that can be used to request an extension.  Here is our updated article COVID-19 and AGMs for Federal non-profit corporations under the Canada Not-for-profit Corporations Act (“CNCA”)- May 13, 2020 which reflects the new process for requesting the AGM and financial disclosure extensions.

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Blumbergs' COVID-19 FAQs for Registered Charities and Non-profits

We will have updated our COVID-19 FAQs section on our CanadianCharityLaw.ca website. The FAQ section will deal with common issues affecting Canadian registered charities and non-profit corporations during the COVID-19 pandemic.

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CRA notice on charity applications – yes CRA is processing charity applications

CRA has been processing charity applications during the COVID pandemic – even when they were “shut down”.   This recent CRA notice advises charities that if they have a deadline to respond to on a charity application that the deadline will be extended (makes good sense) and that charity applications will not be closed just because there is no response.  Keep in mind that this is a dual-edged sword – if you take longer to respond to CRA’s requests your charity application will also take longer.  It also discusses other aspects fo the notice for charity applications.

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New Course on Canadian Charities Working with Non-Charities in Canada

We have just prepared a new course on Canadian Charities Working with Non-Charities in Canada.  Here is information on the new course and how to register.

There has been a lot of misinformation around the ability of Canadian charities to work with non-charities in Canada during the COVID-19 crisis. This course explains the rules for working with non-charities, even in times of crisis such as these.

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Canadian Charities Working with Non-Charities in Canada - A Very Simplified View of the Process

In this brief note, we try to suggest ten steps for a simplified contractor arrangement between a Canadian charity and a group in Canada that is not a charity (the “Intermediary”) implementing a project for the Canadian charity in Canada.  Often it makes more sense for a Canadian charity to hire another group in Canada to implement a project that may not be a registered charity, rather than the charity making a gift to another registered charity or qualified donee or the charity using its own employees or volunteers to conduct the activity.

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Guidance from Charity Commission "Manage financial difficulties in your charity caused by coronavirus"

Here is some really good guidance from the Charity Commission of England and Wales to assist charities deal with financial difficulties.

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The Canada Emergency Wage Subsidy (CEWS) and its application to Charities and Non-profits

The Canadian Government is providing a generous wage subsidy for businesses, registered charities and non-profits in Canada.  The subsidy would be effective retroactive to March 15, 2020. This subsidy provides for up 75% of the employee’s normal wage to a maximum of $847.00 per week or 75% of the wage, whichever is less.  This note will discuss the wage subsidy, how it works, who it benefits, who it misses and long term concerns with government support of the charity sector.

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COVID-19 and AGMs for Ontario non-profit corporation under the Ontario Corporations Act (“OCA”)

The COVID-19 crisis is forcing some non-profit organizations and registered charities to rethink the timing and manner of conducting their annual general meeting of members (AGM). Every organization is different, and a one-size-fits-all approach does not apply.   We are assisting organizations with numerous challenges in dealing with COVID-19 and if your organization requires assistance let us know.  As the situation is evolving on an almost daily basis, we may update this article.

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Ontario government notice on electronic signatures and electronic under the Ontario Corporations Act

The Ontario government has put out detailed requirements in a notice dealing with new methods of filing under the Alternative Filing Methods for Business Act, 2020.   This will affect about 50,000 Ontario non-profit corporations under the Ontario Corporations Act and allow for electronic signatures and electronic filings of documents.   Here is the notice.

For many Ontario corporations under the Ontario Corporations Act, they should probably consider moving to Federal jurisdiction under the CNCA.  We have a number of articles discussing this issue.

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Webinar on Accessing Digital Services for Charities - April 14, 2020- recorded

Registered charities can access online services through what we affectionately call the CHAMP system but CRA now refers to as “Digital Services for Charities through the MyBA portal”. While registered charities may not have previously accessed this system, which launched June 2019, now may be a good time to look into the new system. The Canadian Charity Law Association has hosted a webinar on how to register and use these digital services on Tuesday, April 14 and the link to the recorded webinar is accessible here.  Your non-profit or charity will not be able to access the wage subsidy unless it has an account on the CRA MyBA system.

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Special purpose fundraising for COVID-19 – be careful what you ask for!

Many groups are doing special purpose fundraising for COVID-19 in which they are specifically soliciting or accepting for COVID-19 related programs.  Charities have to be careful of a number of issues when fundraising for a specific purpose.

After having worked with many groups in different types of disasters, the challenge is not only when you are fundraising you want to be successful in bringing in large amounts of money or gifts-in-kind but you also wish to be effective in spending those funds or distributing those gifts-in-kind.

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Blumbergs' Canadian Charity Legal Checklist for Working with Intermediaries in Canada

Here is our Blumbergs’ Canadian Charity Legal Checklist for Working with Intermediaries in Canada 2020. It will be of help to Canadian registered charities that work with/hire non-charities such as businesses, non-profits or individuals to carry out work for the registered charity.

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What is a Qualified donee under the Income Tax Act Canada in 2020? How many are there?

A qualified donee is an organization that can issue official donation receipts for gifts it receives from individuals and corporations. It can also receive gifts from registered charities. Here is a list of the different categories of qualified donees.

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CharityData.ca has been updated - check it out! More information on Canadian registered charities

We do regular updates of the portal CharityData.ca. Recently we just added more T3010 data including updated partial 2019 data and all of 2018 data.  We are now using 2018 data for searches and there are about 84,000 charities on the system.  So when you search the site, it is using as the base year charities listed in 2018.  The 2019 partial data reflects about 31,000 charities that were available in March 2020 before the CRA Charities Directorate had to shut down due to the COVID-19 pandemic.

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CRA’s Charities Listing vs. Blumbergs’ Charity Data 2020

With changes in May 2019 in which CRA removed about 10 years of public information from the Charities Listing, the differences between the CRA’s Charities Listing and the Blumbergs’ CharityData.ca portal have grown. This article will try to show you some of the major differences between the two databases and why depending on what you want to do you might need to access both of them.

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The Privacy Commissioner Releases tips for videoconferencing and privacy

The Office of the Privacy Commissioner of Canada has recently released some tips for ensuring that you protect your organization’s privacy, as well as the privacy of those you meet with. While we are still practicing social distancing, it is a good idea to read and follow these tips for any internal or external virtual meetings.

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CRA

CRA Charities Directorate announces extension of T3010 filing deadlines until December 31, 2020 in response to COVID-19

The CRA announced on March 20 that registered charities filing deadline for the T3010 that were or will be due from March 18, 2020, till December 31, 2020, will only be due on December 31, 2020. This will be a welcome relief for many registered charities in Canada. As well, this will be a relief to many accountants who need to do audits of charities that would have to be completed prior to the completion of the financial statements and filing of the T3010. This will reduce some of the stress on registered charities who may not even have access to their offices because they are working from home etc.

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How do I know if a group is an agency of the Canadian Federal Gov. and therefore a qualified donee?

This note discusses whether a group is an agency of the Canadian Federal Government and therefore a qualified donee?

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Upcoming Events and Programs:

Blumbergs’ online courses on certain charity law issues;

Fundamentals of Running a Canadian Charitable Organization/Operating Charity 2020;

Fundamentals of Running a Private or Public Foundation in Canada 2020;

Upcoming Canadian Charity Law Association webinars.


Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

mark@blumbergs.ca
416.361.1982