CRA News, Information, and Events Specific to Registered Charities
No. 1 - April 2010
From the Director General
I am pleased to present the first Charities Connection: CRA News, Information, and Events Specific to Registered Charities.
In March 2010, all charities should have received a copy of What's the Scoop 2010. In that mail-out, we introduced the new concept for our newsletter, which is now called Charities Connection—a new electronic publication to replace the Registered Charities Newsletter.
The Registered Charities Newsletter was published twice a year. With Charities Connection, we are aiming to post a shorter, easier-to-read publication on the Charities and giving website up to ten times a year. Our goal is to provide registered charities with more timely information on technical issues, new guidance or policy changes, new Directorate initiatives, and important reminders for charities. We will send an e-mail to all subscribers to the Charities and giving - What's New electronic mailing list each time we post a new edition of Charities Connection to our website.
Charities Connection will be published on a trial basis and, if successful, will permanently replace the Registered Charities Newsletter format.
If you have questions or comments on this new direction, please send them to email@example.com. Your feedback on the presentation, content, and style is welcome.
Budget 2010 - Changes for charities
On March 4, 2010, the Minister of Finance presented the 2010 federal budget in which he announced a number of measures affecting registered charities. Among these measures was a significant change to the disbursement quota calculation. For more information on the implications of these measures for registered charities, see Budget 2010 - Changes for charities.
Operating within the scope of a charity's objects
A registered charity that undertakes activities that are not charitable, or that fall outside the scope of its charitable objects, is placing its registered status in jeopardy.
An organization's objects (sometimes called purposes) are found in its formal governing documents. They describe and identify the reason(s) for which the organization was created, and what it intends to do. In essence, the objects authorize an organization to carry out certain activities and not others.
For an organization to be registered as a charity with the CRA, it must show that it has been established exclusively for charitable objects; and that it is focused on charitable activities that further those objects. To maintain its registered status on an ongoing basis, a charity must continue to devote its resources (physical, human, and financial) to charitable activities that fall within the scope of the objects for which it was registered.
Through our audit process, we have noticed that some registered charities take on new activities that stray outside the scope of their charitable objects. This could be a result of board member turnover, new needs emerging in a community, or changes in funding priorities.
As the board members and administrators of a registered charity, you should periodically review your charity's governing documents, Notification of Registration letter, and any subsequent letters from the CRA relating to the charity. You should compare the information in these documents with your charity's current programs. You should then ask:
- Has our charity taken on new activities that may be beyond the scope of the objects for which it was originally registered? If you believe the answer is yes, we would recommend that you contact us.
A registered charity that wants to undertake programs and activities that are different from those previously approved in its application for registered status should confirm, for its own benefit as well as that of the CRA, if necessary, that the proposed activities:
- are charitable; and,
- fall within the scope of the charity's objects.
This is especially important if the new activity requires a capital investment or the hiring of additional staff. The Charities Directorate is available to help you with this. To obtain the CRA's confirmation, simply submit a detailed statement that fully describes the activities, how your charity intends to carry them out, and how the activities achieve one of the charitable objects of your charity. Include copies of any promotional material such as brochures, newsletters, and posters the charity will use to advertise the activities. For more information, see Changing a charity's activities.
In some cases, a charity may want to carry out new charitable activities that are not authorized by its current objects. In these circumstances, a charity may need to amend its objects so that it has a legal basis for undertaking the proposed activities.
All new objects must be charitable according to law. By consulting with us before you make changes to your charity's governing documents, your charity could possibly avoid the need to amend its objects a second time. Your charity should provide both its proposed objects and a detailed statement of new activities for our review. The statement of activities should fully describe in detail how the charity intends to accomplish its new objects. For more information, see Changing a charity's purposes.
It is important for a registered charity to operate within the scope of its charitable objects by carrying out charitable activities. If you have any questions about charitable activities or any other questions related to your charity's registration, visit our webpages or give us a call.
Changes to policy-related products
As you are aware, we have many policy-related products on the Charities and giving website. We frequently review the material on the site to make sure that the information is up-to-date and easily accessible.
We have recently completed a review of the Charities Information Letters (CILs) and Charities Employee Speeches (CESs).
The 188 CILs are edited letters the Charities Directorate sends in response to questions from charities and professionals representing charities. The 14 CESs are employee speeches written to elaborate our positions on certain technical issues. The CILs and CESs are usually listed as reference material to the Summary policies or to other webpages.
An extensive review revealed that all the information in the CILs and CESs falls into one of three categories:
- information that already appears in other policy-related products or webpages;
- information that is out-of-date and now incorrect; and
- information that is soon to be replaced.
We also undertook an analysis of how often the CILs and CESs were being accessed by users of the Charities and giving website. As a result of our review, we have determined that the CILs and CESs are no longer necessary and will be removed from our website in May 2010.
Your comments and suggestions on guidance or any other policy-related products are welcome on an ongoing basis. You can submit feedback through our Consultation and feedback on policies and guidance webpage.
Filing a complete information return
Each registered charity must properly complete and submit an annual T3010 information return and financial statement. A complete and accurate information return not only fulfills a charity's filing requirement under the Income Tax Act but also assists potential donors, and helps maintain public confidence in the charitable sector.
The Canada Revenue Agency undertakes audit activities of registered charities to ensure compliance. Results of these audit activities indicate that some charities are not properly completing the annual return. In particular, it has been noted that line 4700, Total revenue, and/or line 5100, Total expenditures, are sometimes left blank, contain numbers that have been incorrectly transposed from financial statements, or simply contain mathematical errors.
In an effort to increase the accuracy of T3010 information, beginning April 1, 2010, charities that improperly complete line 4700 and/or line 5100 will be notified of the error and reminded to properly complete those fields in the future. Unless they are otherwise advised, charities will not be forced to re-file or correct the error. The intent is to encourage more accurate reporting going forward.
As a general rule, remember that if an amount is entered on line 4700, there must be an entry on line 5100. While the focus will be on these specific fields to begin, we will broaden our focus to include additional fields in the future.
National Volunteer Week
National Volunteer Week will take place from April 18 to 24, 2010. It is the largest national celebration of volunteers and their important contribution to the quality of life of all Canadians. For more information, visit http://volunteer.ca/nvw.
- If you have not already done so, subscribe to the Charities and giving electronic mailing list.
- For a list of recent news and updates to our webpages, regularly check What's new.
- We welcome your feedback on our proposed and existing policies and guidance.
- For education on operating a registered charity, check out our Charities Webinars and Charities Information Sessions.
- All CRA charities-related forms and publications are available on our website.
- Do you have questions or comments about this edition of Charities Connection? Send an email to firstname.lastname@example.org
- Contact the Charities Directorate.
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