Other acceptable activities permitted within certain limits

• Business activities
• Social activities
• Fundraising activities
• Limited partnership interests

Business activities

A charitable organization or public foundation established for exclusively charitable purposes may engage in related business activities that accomplish or promote those purposes. The fact that a business activity produces income for the charity does not make it a related business activity. The term related business means a business that is either:

• linked and subordinate to the charity's charitable purpose(s) (for example, a hospital parking lot)
• unrelated to the charity's purpose(s) but run substantially (90%) by volunteers (for example, weekly bingos)

A private foundation may not engage in any business activities.

For more information on business activities, see Policy Statement CPS-019, What is a Related Business?

Social activities

As a rule, social activities are not charitable at law. However, a registered charity that is established for exclusively charitable purposes can devote some of its resources to social activities as long as the activities are either:

• held to raise funds for its charitable purposes and are not so frequent to be considered as a primary purpose themselves
• incidental to the charity's charitable purposes. Generally, a registered charity should not devote more than 10% of its resources (funds, personnel, and property) to social activities

A registered charity that engages in frequent social activities is putting its registered status in jeopardy for failing to devote its resources to charitable activities.

Fundraising activities

The CRA accepts that registered charities may incur costs in their efforts to raise funds for their charitable work. However, our expectation is that these expenses will be reasonable.

Fundraising is not a charitable activity. A registered charity can raise funds to support its charitable purposes, but:

• if the fundraising activity becomes the primary emphasis of the charity, then it is not operating for exclusively charitable purposes
• if a substantial portion of the charity's revenues is devoted to the fundraising activity, it is not considered to be devoting its resources to charitable activities

Spending excessive amounts on fundraising could also result in the charity not meeting its disbursement quota (spending requirement).

A registered charity that engages in fundraising as a primary activity, or that devotes a substantial portion of its revenue to fundraising activities, is putting its registered status in jeopardy.

For more information on fundraising activities, see Guidance CG-013, Fundraising by registered charities.

Lotteries, bingos, charity casinos, etc.

Charities may choose to raise funds through lotteries, bingos, and charity casinos. However, in addition to following the guidelines above, registered charities should contact the relevant provincial, territorial, and municipal government departments before engaging in these activities, to obtain any necessary permissions, permits, or licenses.

Limited partnership interests

For limited partnership interests acquired after April 20, 2015, a registered charity may invest in limited partnerships without being considered to be carrying on a business solely because of that holding, as long as it meets all of the following conditions:

• The charity must be a limited partner of the partnership.
• The charity, together with all non-arm’s length entities, holds 20% or less of the fair market value of all interests in the partnership.
• The charity deals at arm’s length with each general partner of the partnership.

A registered charity with partnership holdings other than what is described above would be considered to be carrying on the business of the partnership. Depending on the nature of the partnership’s activities and the arrangement, this could result in the registered charity not meeting the requirements for registration under the Income Tax Act.

Related links

• Fundraising activities by registered charities 

References

• Summary policy CSP-R05, Related business
• Summary policy CSP-S05, Social activities
• Policy commentary CPC-002, Related business and public foundations