Purposes; Activities; Training; Grants and loans - Segment 2
Welcome to Purposes, Activities, Training, Grants and Loans, part of the Community Economic Development Activities and Charitable Registration (Guidance CG-014) webinar.
Purposes that can be furthered by CED activities
Now, we'll go through the major sections of the new CED policy as it is currently laid out.
As I mentioned earlier, Community Economic Development is not a purpose in and of itself, however, CED activities may further other charitable purposes.
The following are three examples of purposes that can be furthered by CED activities:
- relieving poverty by relieving unemployment of the poor;
- advancing education by providing employment-related training; and
- benefiting the community in a way the law regards as charitable by;
- relieving unemployment of individuals who are or are facing unemployment and in need of assistance;
- relieving conditions associated with disability; and
- relieving socio-economic conditions in areas of social and economic deprivation.
Although we've outlined a number of specific purposes in the guideline, this does not mean that these are the only purposes that can be furthered by CED activities; however, they are the most likely ones.
Activities that relieve unemployment
Because there isn't one single charitable purpose related to Community Economic Development, yet many different activities, we grouped similar activities into six categories.
The first category discussed is: Activities that relieve unemployment.
The guidance offer examples of numerous activities, such as:
- providing employment-related training;
- providing career counselling; and
- providing referral services to appropriate agencies for assistance.
The key point that we want to emphasize for this category is that the eligible beneficiaries must be:
- individuals who are unemployed or facing a real prospect of imminent unemployment; and
- shown to need assistance.
What we mean is that the charity must be able to show that the people it is helping do not have the necessary skills or resources to find employment on their own.
Helping individuals who are underemployed to get new jobs can be a charitable activity when it can be shown to further a charitable purpose, such as relieving poverty or relieving conditions associated with disability.
For example, for a purpose that relieves poverty, the eligible beneficiaries must be poor.
We have identified three different types.
a) Employability training – for example, help individuals develop the necessary skills to prepare for employment, such as English or French as a second language, as well as life skills such as time management and interpersonal relations.
b) Entrepreneurial training - such as how to start a business (for example: preparing business plans, how to obtain financing, proper bookkeeping, prepare financial statements and reports, how to proceed with marketing and government regulations).
As well, there is:
c) On-the-job training – provide training to help individuals in acquiring vocational or work skill that will enhance their employability. Now we are talking about training and not offering employment or supply an employer with staff. The aim and result of the program must be to provide training and not jobs.
To be acceptable, the programs should emphasize on the following key points:
- employment-related training must not be limited to a specific employer (exceptions are possible in areas of social and economic deprivation); otherwise, it is likely that an unacceptable private benefit is being conferred : and
- on-the-job training has certain characteristics that, if lacking, will indicate an unrelated business.
These include, for example:
- instructions provided to complement the on-the-job training (before or during the on-the-job component);
- the participants are employed for a limited period of time;
- the charity offers a job placement service to help graduates of the program find work in the labour force;
- the proportion of workers from the beneficiary group in relation to the total number of employees is 70% or higher, but alternate ratios may be justifiable if considerable supervision is required; and
- the focus of the activity must be to further a charitable purpose, not to generate revenue.
Grants and loans to eligible beneficiaries
The third category includes grants and loans to eligible beneficiaries. There are two types discussed in the guidance:
Individual Development Accounts, or IDAs, which are savings accounts that are used only for a specific goal.
The charity provides matching funds at a predetermined ratio (for example the charity will offer $2 for each $1 the individual will save). This is to help the eligible beneficiaries develop savings over a specific period. The individual then uses the amount saved for the agreed upon goal such as tuition or the purchase of tools.
Loans or loan guarantees could include loans for start-up businesses, as well as funds for tuition or tools.
We've outlined the expectation for these types of activities.
First, the charity must have a policy or policies that outlines criteria and parameters, such as:
- the criteria for determining who is an eligible beneficiary of an IDA;
- how the amount of the IDA is determined;
- the acceptable uses for its IDAs; and
- when eligibility ceases based on predetermined criteria (for example, the recipient has finished school or has purchased equipment and is now employed and therefore no longer meets the predetermined poverty criteria).
Second, the charity may grant only the amount needed to achieve the charitable purpose. If more is granted, it could be considered an undue private benefit.
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