We’re sharing key info and resources on what defines a Canadian registered charity.
On the surface, giving charitably seems like a very simple idea. Look a little deeper and there are layers: you could choose to give to a qualified donee, an informal fundraiser, a crowdfunding campaign, or directly to someone in need. You might then wonder where exactly your donations end up when you give.
Gaining an understanding of each of these options can help you better define your own giving journey. When you know where your donation is going and what its impact will be, your giving can feel more meaningful.
When you add money to your Impact Account you’re actually making a donation to the Charitable Impact Foundation, which is a registered charity and public foundation. All gifts at Charitable Impact must go to qualified donees at law, and one of the most common types of qualified donee is a registered charity.
Many donors often ask us “What is a registered charity?”
It’s a fair question since the definition is wrapped up with Canada’s charity and income tax laws. There are a few ways to answer: We will start with the simplest, and work our way deeper into the topic. Take what you need as you follow along!
What is a registered charity?
To start, a registered charity “refers to a charitable organization, public foundation, or private foundation registered with the Canada Revenue Agency” (from the Government of Canada’s own glossary). Each of these 3 charity designations has unique characteristics.
A Canadian registered charity must be established and resident in Canada and it can only operate for charitable purposes (more on that below). Its resources must be devoted to charitable activities.
BONUS FACT: Did you know that registered Canadian amateur athletic associations, the United Nations and its agencies, and registered municipalities are among qualified donees in Canada?
Is a non-profit organization a registered charity?
What is the difference between a registered charity versus a not-for-profit? While they can receive donations, non-profit organizations do not need to meet the same requirements as charities. Non-profit “associations, clubs, or societies” generally operate for the good of society, for recreation, or for any purpose other than for profit. They cannot issue official tax receipts.
What are considered charitable activities?
Charity is defined by the common law, meaning essentially it is based on court precedents instead of written laws called statutes. (If you are interested in learning more about the history and evolution of the definition of charity in Canada, you can read an article co-authored by Josh Vander Vies).
Legally, registered charity organizations must direct their activities towards the 4 following purposes:
- relief of poverty (food banks, soup kitchens, and low-cost housing units)
- advancement of education (colleges, universities, and research institutes)
- advancement of religion (places of worship and missionary organizations)
- purposes beneficial to the community recognized by the case law (animal shelters, hospitals, theatres, and much more).
These 4 charity pillars are longstanding. The last category is likely the most dynamic and expanding. It now includes human rights, animal welfare, protecting the environment, protecting heritage sites, assisting children and families, supporting seniors, promoting racial equality, and more. Find a full list here (Annex A).
There have only been a few broadly applied updates to the laws around charities. One important very recent one was the expansion of advocacy roles for charities. As of January 2019, the federal government removed limitations on what are called “public policy dialogue and development activities” by charities.
Those are activities that can include lobbying for policy updates and advocating for certain laws—as long as they are related to the organization’s charitable activities and are to the benefit of the public interest.
Charities still cannot take a side when it comes to political candidates or parties. Their discussion of policies must focus on those alone, and not on the politicians or parties.
What else does it mean to be a registered charity?
Once approved by Canada’s Revenue Agency (CRA), a registered charity is issued a Registration Number under the Income Tax Act. That means the organization can issue tax receipts for the charitable donations it receives. Charities are exempt from paying income tax themselves.
Registered charity status is inextricably linked to the ability to issue a tax receipt.
“Registered charity status is inextricably linked to the ability to issue a tax receipt,” said our own in-house resource and CHIMP: Charitable Impact Foundation (Canada) Counsel Josh Vander Vies.
Unlike with other types of giving, registered charities are regulated. The CRA conducts audits (approximately 500 to 600 per year, according to most recent estimates) to ensure that charities are complying with their registration requirements.
Charities can be provided with more education to help them fulfil compliance requirements, or they may receive compliance agreements or sanctions. Charity status can also be revoked for cases of serious non-compliance, which can be intentional, harmful, or ongoing.
Registered charities vs. crowdfunding platforms
When you allocate money to charity on Charitable Impact you know that you are giving to a qualified donee. In contrast, crowdfunding campaigns outside of Charitable Impact (on platforms such as GoFundMe, FundRazr, and others) can fund people, organizations, or programs that are not registered with the CRA.
While online crowdfunding platforms can offer more leeway in what you support, there is potentially not the same level of scrutiny on where your donation is being used. This is because, when organizations do not issue tax receipts, there are few restrictions on how donations can be spent.
With a registered charity, you can follow up on your donations through their own annual reports and CRA data to better get to know a charity’s work and impact. Crowdfunding for non-registered organizations does not guarantee the same level of accountability.
Each year, charities are required to complete and submit to the CRA a “T3010 Registered Charity Information Return”. This form provides details about a charity’s structure, expenses, activities, receipts issued, and revenues. Charities are also sometimes subject to charity ratings or reviews by charity watchdog organizations, which can provide donors with more readily available information and transparency.
Giving to a registered charity on Charitable Impact
As you have likely gathered, a key difference with giving through a registered charity is that you receive a tax receipt. These can be claimed towards tax credits, meaning your giving can cost you less. You receive an immediate tax receipt when you add money to your Impact Account. With your account, you can keep track of all your tax receipts in one place.
We often get questions about the timing on tax receipts. To provide more clarity, you receive an immediate tax receipt when you add money to your Impact Account—not when donations are allocated to a charity from your Impact Account.
Accessing a donor-advised fund
Charitable Impact operates as a donor-advised fund (DAF). You have access to your own account to manage your giving, called an Impact Account.
When you add money to your Impact Account you’re actually making a donation to Charitable Impact Foundation, a registered charity and public foundation. This provides donors like you the opportunity to add money to give charitably, and then take the time to decide exactly what to support.
Charitable Impact is the first accessible online DAF in Canada. Opening and using an Impact Account is free, and you can get started by adding $5, $500, or more.
All of Canada’s more than 86K charities are listed on Charitable Impact’s platform. We provide information to donors using data pulled directly from the CRA, such as their annual revenues and expenditures. This data is based on information charities have provided through their annual T3010 forms, see above.
Plus, you can also find more tailored details on charities. Charities can personalize their profiles on our platform to add more about their mission and work. If you are a registered charity, you can find out how to customize your page through our website.
Using our charity search engine you can uncover places to give by location and categories. Our charity categories have been carefully and diligently populated to accurately show organizations working within a select list of areas, including religion and spirituality, outreach and welfare, education and research, community development, youth/children, health, arts and culture, and sports and recreation.
Giving with confidence
Choosing a charity is not easy. It’s part of a personal giving journey that requires asking questions about your own values and what you would like to see as part of a brighter future. We can assist you through our charity search engine; person-to-person support via phone, email, and chat; and philanthropic advisory support (for larger gifts).
With Charitable Impact, while you can take your time to find charities, you can give with the confidence that those who receive your donations are regulated by the CRA.
Reach out to us anytime with questions about your giving. We are here to support. You can email ([email protected]), call (1-877-531-0580), or chat (www.charitableimpact.com).
We hope you find this material useful in learning about giving. However, you should never use this material without first reviewing it with your own lawyer(s) and tax advisor(s) to determine its suitability for your circumstances. This material is not legal, tax, or other professional advice.
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