Top Ten Compliance Issues for Canadian Registered Charities - - PowerPoint PPT Presentation

Top Ten Compliance Issues for Canadian Registered Charities

Presentation to the Sustainability Network December 7, 2017 Mark Blumberg (mark@blumbergs.ca) Blumberg Segal LLP

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Blumberg Segal LLP

 Blumberg Segal LLP is a law firm based in Toronto, Ontario  Mark Blumberg is a partner at Blumbergs who focuses on non-profit

and charity law

 Assists charities from across Canada with Canadian and international

• perations and foreign charities fundraising in Canada

www.canadiancharitylaw.ca and www.globalphilanthropy.ca

 Free Canadian Charity Law Newsletter. Sign up at:

http://www.canadiancharitylaw.ca/index/php/pages/subscribe

 (416) 361 – 1982 or 1-866-961-1982  mark@blumbergs.ca  www.twitter.com/canadiancharity

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Introduction

 Legal information not legal advice  Views expressed are my own  Questions at end  Logistics and timing

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Charity Law Basics

 Registered charities are regulated by Charities Directorate of the

Canada Revenue Agency (CRA)

 Registered charities fall under both federal and provincial jurisdiction  Non-profits and charities are both tax exempt  Income Tax Act – concept of “registered charity” can issue “official

donation receipt” with income tax savings for donor

 Benefits and restrictions on registered charities

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Variety of Charities

 Every charity is different:

̶ Objects ̶ Areas of charitable work ̶ Risk tolerance ̶ Public profile ̶ Donors and level of government support ̶ Independent vs. affiliated ̶ Resources ̶ Values and knowledge ̶ Local vs. international activities

Top Legal Compliance Concerns for Canadian Registered Charities

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• 1. Failure to File T3010

 Canadian registered charities must file their T3010 Registered Charity

Information Return every year.

 Within six months of the end of the charity’s fiscal period.  Form is mailed with labels to charity – also can download form from:

http://www.cra-arc.gc.ca/chrts-gvng/chrts/prtng/rtrn/flngb-eng.html

 See www.charitydata.ca for T3010 information.

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Why File T3010

 Legally required  Only uniform way to compare Canadian charities  Advertisement for charity  Important for transparency of charity  Only beginning of transparency (website, annual report, newsletters, e-

mail lists, etc.)

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Consequences for Failing to File

 Revocation of charitable status within months  Cannot issue receipts  Lose benefits of registered status  Revocation tax if not re-registered within 1 year  May not be able to reregister  $500 penalty

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• 2. Mistakes with T3010

 T3010 must be the correct form, accurate and complete including

schedules and financial statements otherwise may be returned or considered incomplete.

 Lots of help on internet with T3010  CRA has fillable T3010, also www.charitydata.ca  2012 Budget – CRA can suspend charity for incomplete T3010

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Problems with T3010

 Using wrong form  Not providing all information  Not providing accurate information  Not providing all schedules  Not providing financial statements  Not providing date of birth of directors

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Form T3010 Checklist

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• 3. Incorrect Receipts

 Charities are required to issue correct receipts  Some receipts:

̶ Lack required information ̶ Have mistakes ̶ Include improper fair market value (FMV)

 Checkout the Blumbergs “Receipting Kit”

http://www.globalphilanthropy.ca/images/uploads/Blumbergs_Receipting_Kit_by_Mark_Blumberg.pdf

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Why Receipt?

 Can offset federal and provincial income tax

̶ Exact amount depends on which province, which marginal bracket a person

is in that year and the type of property (e.g. appreciated marketable securities).

 Can carry forward for next five years.  Can donate up to 75% of your net income each year.

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Does a Charity Have to Issue Receipts?

 No.  But make donors aware of policies (minimum donations, when receipts

will or will not be issued, gift acceptance policies, etc.).

 Individuals require “official donation receipt” to reduce personal

income tax when they file their personal return each year so let them know if no receipt will be issued.

 If in doubt, DON’T RECEIPT.

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Mandatory Elements of Receipts

 For gifts of cash: (Regulation 3501 of the Income Tax Act)

̶ A statement that it is an official receipt for income tax purposes ̶ The name and address of the charity as on file with the CRA ̶ The charity’s registration number ̶ The serial number of the receipt ̶ The place or locality where the receipt was issued ̶ The day or year the donation was received

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Mandatory Elements of Receipts (continued)

̶ The day on which the receipt was issued if it differs from the day of

donation

̶ The full name and address of the donor ̶ The amount of the gift ̶ The value and description of any advantage received by the donor (under

proposed legislation)

̶ The signature of an individual authorized by the charity to acknowledge

donations, and

̶ The name and Web site address of the Canadian Revenue Agency

(http://www.cra.gc.ca/charities)

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Mandatory Elements for Gifts in Kind

 For non-cash gifts (gifts in kind), these additional elements:

̶ The day on which the donation was received (if not already indicated) ̶ A brief description of the property transferred to the charity ̶ The name and address of the appraiser (if property was appraised), and ̶ In place of the amount of the gift mentioned above, the deemed fair

market value of the property (under proposed legislation)

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Sample Official Donation Receipts

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 CRA has sample templates for official donation receipts

̶ http://www.cra-arc.gc.ca/chrts-gvng/chrts/pbs/rcpts-eng.html

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• 4. Acting Outside Legal Objects

 Charities in Canada have legal objects in their founding documents (eg.

Letters Patent, Trust deed etc).

 Charities must not act outside of these legal objects.

̶ Are objects up to date, relevant and broad enough? ̶ If your charity is acting outside its objects then charity should either cease

such activities or consider expanding objects

̶ New corporate acts such as CNCA give some corporations good opportunity

to make changes.

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Check Your Articles/Letters Patent

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Changing your Objects

 Registered charities should ask CRA for pre-approval

̶ can take months and CRA will require both objects and detailed description

• f activities for CRA to review

̶ be careful and precise with objects otherwise may be considered vague or

broad and not charitable

 How to Draft Purposes for Charitable Registration (Guidance CG-019)

̶ http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/drftprpss-eng.html

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• 5. Corporate Changes

 What is your non-profit?

̶ Ontario Corporations Act (OCA) ̶ Canada Not-for-profit Corporations Act (CNCA) ̶ Other provincially incorporated non-profit ̶ Trust ̶ Unincorporated association ̶ Other – e.g. Foreign entity

 Certain new corporate law changes can result in dissolution of your

corporation and loss of charity status

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Canada Not-for-profit Corporations Act (CNCA)

 Replaced the Canada Corporations Act (CCA)  You must have made the continuance by now or you would have been

dissolved

 Have you notified CRA of the changes?

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The Not-for-Profit Corporations Act, 2010 (Ontario) “ONCA”

 The Ontario Not-for-Profit Corporations Act, 2010 (ONCA) received

Royal Assent on October 25, 2010.

 There has been a significant delay of the implementation of ONCA -

• riginally supposed to be in force January 1, 2013.

 Recent changes to OCA and ONCA  Ontario Government say they will provide at least 2 years’ notice

before ONCA is proclaimed.

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Transition Options for OCA Corporations

1.

Do nothing now

̶ wait for ONCA to come into force

2.

Make changes under OCA, then later ONCA

3.

OCA corporations can continue (transfer) to the CNCA

̶

available now

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• 6. Gifts to Non-Qualified Donees

 Charities conduct activities in two ways:

• 1. By gifting to “qualified donees”; or
• 2. By carrying on its own charitable activities through
• its own employees and volunteers; or
• intermediaries who are not qualified donees (in Canada or abroad).

 Charities need “direction and control” over funds and resources if

working with non-qualified donees.

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Canadian Registered Charity

“Own Activities” [Direction and Control] Qualified Donee, eg. Canadian registered charity, UN, prescribed university, Canadian municipality, etc. Employee / Volunteer Intermediary – agency, JV, partner, contractor

Structured Arrangement - Written agreement, etc. Gift to qualified donee

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Canadian Charity World Divided in Two

 Qualified donees – can issue official donation receipts for Income Tax

purposes

 Non-Qualified donees – cannot issue official donation receipts

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List of Qualified Donees

 If in doubt check CRA’s listings, call or write CRA, or treat organization

as a non-qualified donee.

 Qualified donees include:

̶ a registered charity (including a registered national arts service

• rganization);
• http://www.cra-arc.gc.ca/chrts-gvng/chrts/menu-eng.html

̶ a registered Canadian amateur athletic association;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/RCAAA-ACESA-lst-

eng.html

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List of Qualified Donees (continued)

̶ a listed housing corporation resident in Canada constituted exclusively to

provide low-cost housing for the aged;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/lwcsthsng-lst-eng.html

̶ a listed Canadian municipality;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/menu-eng.html

̶ a listed municipal or public body performing a function of government in

Canada;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/mncplpblcbds-lst-

eng.html

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List of Qualified Donees (continued)

̶ a listed university outside Canada that is prescribed to be a university, the

student body of which ordinarily includes students from Canada;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/prscrbdnvrsts-lst-

eng.html

̶ a listed charitable organization outside Canada to which Her Majesty in

right of Canada has made a gift;

• http://www.cra-arc.gc.ca/chrts-gvng/qlfd-dns/qd-lstngs/gftsfrmhrmjsty-lst-

eng.html

̶ Her Majesty in right of Canada or a province; and ̶ the United Nations and its agencies. GlobalPhilanthropy.ca

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What is a Non-qualified Donee

 All organizations other than qualified donees  They cannot issue official donation receipts  Examples include:

̶ Foreign charities ̶ Canadian non-profits with no charitable status ̶ Businesses ̶ Bono, Obama, Angelina Jolie

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Gifts to Non-Qualified Donees

 Charities cannot gift to a non-qualified donee (such as Canadian non-

profit or foreign charity).

 Charities cannot be “conduit”.  (Gifts to non-qualified donees = 105% penalty on the amount of the

gift and second infraction 110% penalty and greater chance of revocation).

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CRA’s Guidance

 Guidance on Canadian Registered Charities Carrying Out Activities

Outside Canada http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/tsd-cnd-eng.html

 Using an Intermediary to Carry out a Charity's Activities within

Canada http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cgd/ntrmdry-eng.html

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“Own Activities” or “Direction And Control”

 When not working with qualified donee or own staff need to have:

1.

Due Diligence of Intermediary (investigate)

2.

Written Agreement

3.

Detailed Description of Activities

4.

Separate Activities and Funds

5.

Monitoring and Supervision

6.

Ongoing Instruction for Changes

7.

Periodic Transfers

8.

Books and Records showing above

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• 7. Fundraising Costs and Practice

 Fundraising is important for charities but it is not a charitable activity  Lots of media and donor concern about fundraising costs and practices  CRA Guidance on Fundraising recently updated

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CRA Fundraising Guidance

 Consultation draft in 2008  Published guidance on June 11, 2009  Revised guidance in April 2012 (“Guidance”)

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Organization of Guidance

 Fundraising by Registered Charities  A. Introduction  B. Summary  C. Application and jurisdiction  D. What is fundraising?  E. Definitions  F. When is fundraising not acceptable?  G. Evaluating a charity's fundraising  H. Factors that may influence the CRA’s evaluation of a charity’s

fundraising

 Appendix A – Examples of fundraising activities  Appendix B – Allocating fundraising expenditures  Appendix C – Best practices  Appendix D – Questions and answers  Footnotes

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Summary - Unacceptable Fundraising

 Fundraising is acceptable provided that is not:

̶ a purpose of the charity (a collateral, non-charitable purpose); ̶ delivering a more than incidental private benefit (a benefit that is not

necessary, reasonable, or proportionate in relation to the resulting public benefit);

̶ illegal or contrary to public policy; ̶ deceptive; or ̶ an unrelated business.

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Summary – Indicators and Factors

 “6. When evaluating a charity’s fundraising activities, the CRA will

consider a range of indicators and factors, including the following:

̶ Resources devoted to fundraising relative to resources devoted to

charitable programs;

̶ Fundraising without an identifiable use or need for the proceeds; ̶ The charity’s fundraising expenses to fundraising revenue ratio;

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Summary – Indicators and Factors (continued)

̶ Inappropriate purchasing or staffing practices, including:

• purchases of fundraising merchandise or services that do not increase

fundraising revenue;

• paying more than fair market value for fundraising merchandise or services; and
• sole source or not-at-arm’s length contracts with suppliers or service providers.

̶ Activities where most of the gross revenues go to contracted non-

charitable parties;

̶ Commission-based fundraiser remuneration or payment of fundraisers

based on the amount or number of donations;

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Summary – Indicators and Factors (continued)

̶ Misrepresentations in fundraising solicitations or in disclosure about

fundraising costs, revenues or practices;

̶ Fundraising initiative or arrangements that are not well documented; ̶ The size of the charity; ̶ Causes with limited appeal; ̶ Donor development programs; and ̶ Involvement in gaming activities.”

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Fundraising Ratio

 Ratio of costs to revenue over fiscal period – under 35%

̶ This ratio is unlikely to generate questions or concerns by the CRA.

 Ratio of costs to revenue over fiscal period – 35% to 70%

̶ The CRA will examine the average ratio over recent years to determine if

there is a trend of high fundraising costs. The higher the ratio, the more likely it is the CRA will be concerned the charity is engaged in fundraising that is not acceptable, requiring a more detailed assessment of expenditures.

 Ratio of costs to revenue over fiscal period – above 70%

̶ This level will raise concerns with the CRA. The charity must be able to

provide an explanation and rationale for this level of expenditure to show that it is not engaged in unacceptable fundraising.

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Misrepresentation

 For example, registered charities must not misrepresent:

̶ Which charity will receive the donation; ̶ The geographic area in which the charity operates, and the amount or type

• f work it undertakes;

̶ Whether they have hired third-party fundraisers, and how those

fundraisers are compensated; or

̶ The percentage of funds raised that will go to charitable work.

• Claims that 100% of the money raised by a third party will go to the charity, or

that 100% of money raised by the charity conducting its own fundraising will be used for charitable activities by the charity, must always be made with care.

• Charities usually have some expenses for their fundraising activities, and may be

required to pay substantial fees to any third-party fundraiser it employs. As these expenditures ultimately reduce the charity’s fundraising revenue, this type of claim could be considered to be deceptive.

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Disclosure

 The CRA recommends that charities provide complete disclosure of all

fundraising costs, revenues, practices, and arrangements so that members of the public—and, more specifically, donors or prospective donors—are not deceived or misled about the resources from fundraising that are ultimately available to a registered charity for its programs, services, or gifts to qualified donees.

 To be meaningful, disclosure must be accurate, accessible, and timely.

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• 8. Employment Issues

 Employee vs. Independent contractor - see CRA publication Employee

• r Self-employed?: http://www.cra-arc.gc.ca/E/pub/tg/rc4110/

 Withholding source deductions (CPP, EI, Income Tax)  Remitting source deductions  Proper employment agreements  Excessive compensation / private benefit

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• 9. Political Activities

 “A registered charity may pursue political activities to retain, oppose,

• r change the law, policy, or decision of any level of government inside
• r outside Canada provided the activities are non-partisan, related to

its charitable purposes, and limited in extent.” (see T3010)

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Political Activities

 Cannot have political purpose (object); only political activities  No illegal or partisan political activities  Political activities must be “connected and subordinate” to purpose

(legal objects)

 Comply with “10% rule” and disbursement quota restrictions (political

work not charitable and only if DQ room)

 Informative, accurate, and well-reasoned (not false, inaccurate, or

misleading)

 Read CRA Policy Statement on Political Activities (CPS-022)

̶ http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html

 Budget 2012 changes

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An Activity Can Be…

 Prohibited activities (illegal and/or partisan political)  Allowable political activities  Charitable activities:

̶ Public awareness campaigns ̶ Communicating with an elected representative or public official ̶ Education

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• 10. Unrelated Business Activities

 Income Tax Act prohibits “unrelated business activities” by all charities.  Charitable organizations and public foundations are permitted to

engage in “related business activities” but private foundations may not engage in any business activity.

 “Carrying on business” - activity is commercial in nature (derive

revenue and provisions of goods and services, intention to earn profit) and continuous.

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Why Prevent Unrelated Business?

 Unfair competition with private businesses  Why should charities be able to compete tax-free?  Business is not a charitable object  Will encourage regular business to set up as charities  In some countries, unrelated business is permitted, but the charity will

be taxed on unrelated business income like a private business but not in Canada

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What is a Related Business?

 There are two kinds of related businesses that a registered charity can

conduct:

1.

Businesses that are linked to a charity’s purpose and subordinate to that purpose (for example, a hospital parking lot, church gift shop); or

2.

Businesses that are run substantially (90%) by volunteers (for example, coffee shop run by volunteers).

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Business Activities

 For more guidance, see CRA’s CPS-019 “What is a Related Business?”

̶ http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-019-eng.html

 Penalties for unrelated business: 5% (1st infraction) on gross unrelated

business revenue

̶

2nd infraction: 100% penalty on that revenue and suspension* of tax- receipting privileges

 Earned in a taxation year

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• 11. Gift Restrictions

 If a charity accepts a gift with a restriction on it the charity needs to

comply with the restriction unless:

̶ The charity obtains a court order (cy pres); or ̶ There is a provision for amendment by agreement or otherwise.

 Biggest myth is that if there is a restricted gift with no amendment

clause that charity and donor can mutually agree to make changes after the gift is made

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Is it Restricted and What is the Restriction?

 Restricted and unrestricted gifts

̶ Unrestricted (spend according to objects) ̶ Precatory – non binding restriction ̶ Internally restricted ̶ Conditional (precedent or subsequent)

 Types of restrictions

̶ Restricted as to subject matter of expenditures (help poor in Vancouver) ̶ Restricted as to timing of expenditures (spend 20% of the funds per year)

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Respecting Binding Restrictions

 Who suggests restrictions:

̶ The charity itself ̶ Donors ̶ Third Parties raising funds for charity

 Donors attempt to retain control by placing stringent restrictions on

and ongoing involvement with a gift

̶ May affect its recognition as a charitable gift and any tax benefits of the

donation

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Challenges with Restricted Gifts

 Donors are well-intentioned, but do not know what is in the best

interests of the organization

 What is in the best interest of the organization can change over time

and donors interests change over time

 Can undermine mission as funds may not be available for most

important needs

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Challenges with Restricted Gifts (continued)

 If large proportion of funds is restricted can make financial

management and planning very difficult

 Restricted and long-term gifts can also undermine fundraising as the

• rganization appears to have a large amount of funds, but they cannot

necessarily be used for what is needed

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Preventing Problems with Restrictions

 You can refuse the restrictions but you may lose the gift  You can suggest restrictions to donors that are broad and compatible

with the areas of greatest need

 You can negotiate as broad a restriction as possible with the donor  You can accept restrictions but can diminish real value of gift  Ensure there is clear communication  Include necessary caveats, provisions  Try to maintain as much flexibility as possible  Have an updated and appropriate gift acceptance policy

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Tips for Special Purpose Fundraising

 Special purpose fundraising – only use funds for that purpose  Should include a caveat in the event circumstances change or it is

• versubscribed

 Should be included in a charity’s

̶ fundraising calls, emails, literature, website, discussions

 Otherwise, may need to return funds or apply to court  Keep record of fundraising campaign and purpose

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Other Top Compliance Issues

 Failing to keep adequate books and records in Canada  Involvement with abusive charity gift tax schemes  Fraudulent tax receipts  Disbursement Quota  Transactions with Directors  Mishandling an audit  Commitment to voluntary standards

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Thank you!

Blumberg Segal LLP Barristers & Solicitors 390 Bay Street, Suite 1202 Toronto, Ontario, M5H 2Y2 Tel. (416) 361-1982 ext. 237 Toll Free (866) 961-1982 Fax. (416) 363-8451 Email: mark@blumbergs.ca Twitter at: http://twitter.com/canadiancharity www.canadiancharitylaw.ca and www.globalphilanthropy.ca

CANADI AN CHARI TY LEGAL CHECKLI ST

by Mark Blum berg March 2 0 1 6

Prepared for CPA Ontario w w w .canadiancharitylaw .ca

File name -Canadian Charity Legal Checklist by Mark Blum berg for CPA Ontario - March 2016 last saved

• 03-Mar-16 9: 56 PM

page 1 of 17 created by Mark Blumberg

Measure Yes No Not Sure N/ A For More I nform ation

1 Filing Your T3 0 1 0 Registered Charity I nform ation Return

a.

You have checked that you are a registered charity on the CRA’s Charities Listing http: / / www.cra-arc.gc.ca/ ebci/ haip/ srch/ advancedsearch-eng.action CRA’s Charities Listing

b.

You know the date of your fiscal year end See previous T3010 or CRA listing at http: / / www.cra- arc.gc.ca/ ebci/ haip/ srch/ advancedsearch-eng.action

c.

You know when to file your T3010

d.

You know who is responsible for filing the T3010 in your

• rganization

e.

You always file your T3010 on time

f.

You are up to date with your T3010 filings

g.

CRA has your correct contact information See CRA listing http: / / www.cra- arc.gc.ca/ ebci/ haip/ srch/ advancedsearch-eng.action On the Form TF725, Registered Charity Basic Information Sheet (BI S), which is the same form with pre-printed labels attached, make sure that you file that form and verify all the information on the form. I n addition to updating your contact information you should also update your program areas on the TF725.

CANADI AN CHARI TY LEGAL CHECKLI ST

by Mark Blum berg, March 2 0 1 6 w w w .canadiancharitylaw .ca

File name -Canadian Charity Legal Checklist by Mark Blum berg for CPA Ontario - March 2016 last saved

• 03-Mar-16 9: 56 PM

page 2 of 17 created by Mark Blumberg

Measure Yes No Not Sure N/ A For More I nform ation

2 Ensuring Your T3 0 1 0 is Correct and Com plete

a.

You are using the correct form http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rtrn/ menu- eng.html You might want to try the QuickPrep T3010 form at www.charityfocus.ca

b.

You complete all required information on the T3010 View CRA’s page on the T3010 http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ prtng/ rtrn/ menu-eng.html

c.

You attach all required documentation when you file your T3010 such as financial statements See CRA checklist on pg. 3 in the T3010 guide at http: / / www.cra-arc.gc.ca/ E/ pub/ tg/ t4033/ README.html

d.

I f you are having trouble with the T3010 you have checked CRA resources or called the CRA or obtained professional advice Seehttp: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rtrn/ menu- eng.html

e.

You have checked that you have not made some of the most common mistakes with the T3010 http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rtrn/ mstksb- eng.html

f.

You had your lawyer, accountant and/ or board members check the T3010 before it was filed This is not required but it is a good practice to increase the likelihood of the T3010 being accurate. Changes in the 2012 Federal Budget allow CRA to suspend receipting privileges of a charity if their T3010 filing is incomplete.

g.

After filing the T3010 you have checked your T3010 online at the CRA website to ensure accuracy This is a best practice for larger organizations. See CRA Charities Listing at http: / / www.cra-arc.gc.ca/ ebci/ haip/ srch/ advancedsearch- eng.action Also www.charityfocus.ca

3 Ensuring Your Donation Receipts Are Correct

a.

You only provide official donation receipts for “gifts” when appropriate See definition of “gift” http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ glssry-eng.html# gift. See also P113 Gifts and I ncome Tax http: / / www.cra-arc.gc.ca/ E/ pub/ tg/ p113/ README.html

b.

You only provide receipts for donations to your organization (you do not act as a conduit or lend your registration to another organization such as non-profit or foreign charity) http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cgd/ tsd-cnd- eng.html

• r http: / / www.globalphilanthropy.ca/ index.php/ blog/ comments/ cras

_new_guidance_for_canadian_registered_charities_carrying_out_act ivities/

c.

You understand the “split receipting” rules and ensure that any “advantage” is subtracted from the amount of the donation to determine the eligible amount of the official donation receipt http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rcpts/ splt- eng.html Example of split receipting – someone pays $100 to go to gala dinner, you subtract advantage (food, door prizes etc) and issue receipt for donation minus advantage.

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Measure Yes No Not Sure N/ A For More I nform ation d.

You understand that the definition of “advantage” or benefit is what a donor may receive in return for his or her donation (for example, a meal, tickets to a show), and it must be taken into consideration when determining the eligible amount of a gift for receipting purposes http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rcpts/ dtrmnfmv- eng.html

e.

You understand that advantage is very broad and some of the many possible advantages include property (for example, cash, non-cash gifts also called gifts-in-kind), the use of or enjoyment of property; the provision of services; and other benefits including but not limited to assumption of debt by charity, sponsorship, non-recourse loans, etc. http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ glssry-eng.html

f.

All mandatory fields are included on your receipts You can review CRA’s checklist Issuing complete and accurate donation receipts http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ chcklsts/ rcpts-eng.html

• r review CRA’s sample receipts. http: / / www.cra-arc.gc.ca/ chrts-

gvng/ chrts/ pbs/ rcpts-eng.html

g.

You always ensure that you have the correct donor on the receipt http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cpc/ cpc-010- eng.html

h.

You understand the definition of fair market value namely:

• Fair market value is normally the highest price, expressed

in dollars, that property would bring in an open and unrestricted market, between a willing buyer and a willing seller who are both knowledgeable, informed, and prudent, and who are acting independently of each other http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rcpts/ dtrmnfmv- eng.html http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ glssry-eng.html

i.

You understand that in certain circumstances under the deemed fair market value rules a charity must issue a receipt for the lesser of fair market value or the cost to the donor http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ rcpts/ dmdfmv- eng.html

j.

You understand that if either the fair market value of a gift in kind or an advantage cannot be determined, an official donation receipt cannot be issued

k.

You understand that the onus is on the charity to determine fair market value and that a charity cannot rely on a donor’s valuation or view of fair market value

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Measure Yes No Not Sure N/ A For More I nform ation l.

You are aware of the transactions that generally do not qualify as gifts and therefore no tax receipt is issued? For example:

• A court ordered transfer of property to a charity;
• The payment of a basic fee for admission to an event or to

a program;

• The payment of membership fees that convey the right to

attend events, receive literature, receive services, or be eligible for entitlements of any material value that exceeds 80% of the value of the payment;

• A payment for a lottery ticket or other chance to win a

prize;

• The purchase of goods or services from a charity;
• A donation for which the fair market value of the

advantage or consideration provided to the donor exceeds 80% of the value of the donation;

• A gift in kind for which the fair market value cannot be

determined;

• Donations provided in exchange for

advertising/ sponsorship;

• Gifts of services (for example: donated time, labour);
• Gifts or promises (for example: gift certificates donated by

the issuer, hotel accommodation);

• Pledges;
• Loans of property;
• Use of a timeshare; and
• The lease of premises.

For more information on receipting and Canadian charities see: http: / / www.canadiancharitylaw.ca/ blog/ category/ receipting_by_cha rities Check out the free Blumbergs’ Receipting Kit with information on receipting and relevant CRA policies: http: / / www.canadiancharitylaw.ca/ blog/ blumbergs_2013_receipting _kit_for_canadian_registered_charities

4 Religious School Tuition Receipts

a.

I f your charity is a religious school and is issuing receipts for the religious portion of tuition, it is in compliance with CRA’s circular IC 75-23 http: / / www.cra-arc.gc.ca/ E/ pub/ tp/ ic75-23/ ic75-23-e.txt

5 Fraudulent Tax Receipts

a.

Your charity locks away your receipting book or uses a secure password on any computer or program that produces official donation receipts

b.

Your charity maintains tight controls over who can issue receipts in order to avoid the issuance of fraudulent or improper tax receipts

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Measure Yes No Not Sure N/ A For More I nform ation

6 Charity Gifting Tax Shelters

a.

Your charity avoids any involvement with “abusive tax shelter gifting arrangements” which offer that people can make money

• n a charitable donation

For information on what are abusive tax shelters see: http: / / www.cra-arc.gc.ca/ chrts-gvng/ dnrs/ rcpts/ dntn6-eng.html For information on the scope of the problem see: http: / / news.gc.ca/ web/ article- en.do?mthd= index&crtr.page= 1&nid= 808689

7 Acting Outside Legal Objects

a.

You periodically review the legal objects in your charity’s letters patent/ articles of incorporation, trust deed or constitution to ensure all the activities of your charity are within your legal objects

b.

I f activities are outside the scope of your objects you have discontinued those activities or decided to modify your objects

c.

I f you are modifying your legal objects you have first obtained CRA’s approval for the changes (by submitting the new proposed objects and a detailed description of activities to CRA) and secondly provided CRA with a copy of the supplementary letters patent or articles of amendment after they have been changed See CRA’s guidelines on charitable purposes http: / / www.cra- arc.gc.ca/ chrts-gvng/ chrts/ pplyng/ mdl/ menu-eng.html

d.

I f you are a Federal non-profit Corporation under the Canada Corporations Act (CCA) you have moved (“continued”) from the old act to the new CNCA which includes a review of the appropriateness of your objects. I f you are an Ontario non- profit Corporation under the Ontario Corporations Act you have a plan to bring your corporation into compliance with the new Ontario act (ONCA) which may come into force in 2016 or later. http: / / www.canadiancharitylaw.ca/ blog/ category/ ccl_new_canada_n

• t-for-profit_corporations_act_federal_corporations

See sections below on the new non-profit corporate acts.

8 Non-Charitable Activities

a.

The charitable purposes recognized by CRA are:

• The relief of poverty;
• The advancement of education;
• The advancement of religion, or
• Other purposes beneficial to the community in a way the

law regards as charitable. See CRA Checklist Engaging in Allowable Charitable Activities http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ chcklsts/ ctvts- eng.html

b.

You only conduct non-charitable activities such as fundraising, administration, political, business, and social activities within the limits prescribed by law Other acceptable activities permitted within certain limits http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ prtng/ ctvts/ thr- eng.html

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9 Avoiding Gifts to Non-Qualified Donees

a.

You understand the rules relating to Canadian charities working with non-qualified donees See the CRA’s Guidance for Canadian Registered Charities Carrying

• ut Activities Outside Canada

http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cgd/ tsd-cnd- eng.html or CRA’s Guidance Using an Intermediary to Carry Out Charitable Activities within Canada http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ plcy/ cgd/ ntrmdry-eng.html?rss http: / / www.globalphilanthropy.ca

b.

You know what a “qualified donee” is For a definition see http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ plcy/ cgd/ qlfddns-eng.html

c.

You only grant funds or gift resources to qualified donees

d.

I f your charity provides resources to organizations or individuals that are not qualified donees (such as foreign charities or Canadian organizations that are not registered charities), your charity has a “structured arrangement” with these intermediaries that maintains “direction and control” by: See http: / / www.globalphilanthropy.ca/ images/ uploads/ Structured_A rrangement_versus_Conduit_for_Canadian_Charities_and_Foreign_ Activities.pdf. Also see the CRA’s Guidance for Canadian Registered Charities Carrying out Activities Outside Canada http: / / www.cra- arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cgd/ tsd-cnd-eng.html

e.

Conducting appropriate due diligence on intermediaries See the CRA’s Guidance for Canadian Registered Charities Carrying

• ut Activities Outside Canada http: / / www.cra-arc.gc.ca/ chrts-

gvng/ chrts/ plcy/ cgd/ tsd-cnd-eng.html Or http: / / www.globalphilanthropy.ca/ blog/ cras_new_guidance_for_can adian_registered_charities_carrying_out_activities

f.

Entering into appropriate written agreement with intermediaries with all necessary elements

g.

Agreeing on a detailed description of activities before sending funds or resources

h.

Monitoring and supervising the activities

i.

Maintaining a real, ongoing, active relationship with your intermediary

j.

Providing periodic payments for larger projects

k.

Segregating funds in the case of agency agreements

l.

Maintaining Books and Records in Canada of the activities

m.

You properly categorize foreign activities on the T3010 Registered Charity I nformation Return

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1 0 Fundraising Costs and Practices

a.

I f your charity fundraises then you, or someone else in your

• rganization, has read and understands the CRA’s Guidance

Fundraising by Registered Charities (CG-013)(April 20, 2012) CRA’s Guidance Fundraising by Registered Charities http: / / www.cra- arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cgd/ fndrsng-eng.html For additional information on Canadian charities and fundraising see: http: / / www.canadiancharitylaw.ca/ index.php/ blog/ category/ fundrais ing_guidance_for_registered_charities/

b.

You are aware that CRA in its Guidance on Fundraising by Registered Charities considers fundraising to be acceptable unless the fundraising is:

• a purpose of the charity (a collateral, non-charitable

purpose);

• delivering a more than incidental private benefit (a benefit

that is not necessary, reasonable, or proportionate in relation to the resulting public benefit);

• illegal or contrary to public policy;
• deceptive; or
• an unrelated business.

CRA’s Guidance Fundraising by Registered Charities http: / / www.cra- arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cgd/ fndrsng-eng.html

c.

None of the indicators of concern apply to your charity, such as: 1. Sole-source fundraising contracts without proof of fair market value. 2. Non-arm's length fundraising contracts without proof of fair market value. 3. Fundraising initiatives or arrangements that are not well- documented. 4. Fundraising merchandise purchases that are not at arm's length, not at fair market value, or not purchased to increase fundraising revenue. 5. Activities where most of the gross revenues go to contracted non-charitable parties. 6. Commission-based fundraiser remuneration or payment of fundraisers based on amount or number of donations. 7. Total resources devoted to fundraising exceeding total resources devoted to program activities. 8. Misrepresentations in fundraising solicitations or in disclosures about fundraising or financial performance.

d.

You appropriately allocate fundraising expenditures according to the CRA’s Guidance Fundraising by Registered Charities

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Measure Yes No Not Sure N/ A For More I nform ation e.

You know your charity’s ratios of cost to revenue, and the ratios are in line with CRA expectations

f.

You provide adequate disclosure and transparency of fundraising activities and costs

g.

You are following best practices as outlined in the CRA’s Guidance Fundraising by Registered Charities, including: 1. Prudent planning processes 2. Appropriate procurement processes 3. Good staffing processes 4. Ongoing management and supervision of fundraising practice 5. Adequate evaluation processes 6. Use made of volunteer time and volunteered services or resources 7. Disclosure of fundraising costs, revenues, and practice (including cause-related or social marketing arrangements)

h.

You are taking steps to reduce your fundraising costs if they are high

i.

When third parties, whether paid fundraisers or volunteers, are conducting fundraising on behalf of your charity you have an appropriate written agreement with such third party

j.

I f you have reserves and are fundraising you have a reserves policy which discusses the factors used by the charity to decide

• n what is appropriate reserve

1 1 Failure to Meet Disbursem ent Quota

a.

You understand that changes in the March 2010 Federal budget removed part of the disbursement quota, namely the 80/ 20 expenditure rule. Now charitable organizations will need to expend on charitable activities 3.5 per cent of all assets not currently used in charitable programs or administration, if these assets exceed $100,000 for charitable organizations or $25,000 for public or private foundations. This for example covers reserves, endowments, investment, buildings owned by a charity but not used in charitable programs or administration. See CRA’s note on disbursement quota reform at http: / / www.cra- arc.gc.ca/ gncy/ bdgt/ 2010/ chrt-eng.html Also see article “Canadian Budget 2010 announces disbursement quota reform for Canadian charities” at http: / / www.globalphilanthropy.ca/ index.php/ blog/ comments/ bud get_2010_disbursement_quota_changes_and_anti- avoidance_provisions/

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Measure Yes No Not Sure N/ A For More I nform ation b.

You review your Registered Charity Information Return Summary received from CRA after filing your T3010

c.

Do you have surplus in your disbursement quota?

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1 2 Political Activities

a.

You understand that: Registered charities may conduct limited, non-partisan political activities that further their stated charitable purposes. However, registered charities may not have political purposes, may not conduct partisan political activities and may not be involved in political activities that are unrelated to their

• bjects.

CRA’s Policy Statement on Political Activities (CPS- 022) http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cps/ cps-022- eng.html recently updated to reflect changes in the 2012 Federal Budget. The CRA has in 2013 placed certain resources for charities relating to political activities at http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ cmmnctn/ pltcl-ctvts/ menu-eng.html Here are some additional resources on political activities: Here is a 20 minute presentation on why political activities are important: http: / / maytree.com/ fgi/ five-good-ideas-about-registered-charities- and-political-activities.htm l

b.

You understand that CRA presumes an activity to be political if the activity: 1) explicitly communicates a call to political action (that is, encourages the public to contact an elected representative or public official and urges them to retain, oppose, or change the law, policy, or decision

• f any level of government in Canada or a foreign

country); 2) explicitly communicates to the public that the law, policy, or decision of any level of government in Canada or a foreign country should be retained (if the retention of the law, policy, or decision is being reconsidered by a government), opposed, or changed; 3) explicitly indicates in its materials (whether internal or external) that the intention of the activity is to incite,

• r organize to put pressure on, an elected

representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country; or 4) involves making a gift to another qualified donee to support political activities. CRA’s Policy Statement on Political Activities (CPS- 022) http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cps/ cps-022- eng.html For further information on Canadian charities and political activities see Blumbergs directory on political activities: http: / / www.canadiancharitylaw.ca/ blog/ category/ political_activities_ and_canadian_charities See also CRA’s Upholding Human Rights and Charitable Registration http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ plcy/ cgd/ hmn-rghts-eng.html

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Measure Yes No Not Sure N/ A For More I nform ation c.

I f your organization engages in political activities: CRA’s Policy Statement on Political Activities (CPS- 022) http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cps/ cps-022- eng.html 1. Those political activities are reported on the T3010 See changes to the reporting requirements for charities that conduct political activities http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ cmmnctn/ pltcl-ctvts/ rcntchngs-eng.html See my concerns about how some charities fail to report political activities: http: / / www.globalphilanthropy.ca/ blog/ how_accurate_are_the_t301 0_registered_charity_information_returns/ 2. Those activities are connected and subordinate to your legal objects Your legal objects are in your articles of incorporation (or letters patent), articles of amendment (or supplementary letters patent) or if you are a trust in your trust deed or if you are an unincorporated association in your constitution 3. The political activities are non-partisan See CRA’s note on “What is a partisan political activity?” at http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ cmmnctn/ pltcl- ctvts/ prtsnctvts-eng.html See Political Parties use of charity’s premises: http: / / www.cra- arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cpc/ cpc-007-eng.html 4. The political information or views are not false, inaccurate

• r misleading

5. Your percentage of resources spent on political activities is 10% or less or as outlined in CPS-022 for smaller charities 6. You have a disbursement quota excess even after conducting political activities

1 3 Unrelated Business Activities

a.

You have read CPS-019 What is a Related Business on the CRA website http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cps/ cps-019- eng.html

b.

I f your charity is carrying on a business (i.e. activity commercial in nature), then: 1. Are all goods donated? 2. Are the business activities conducted infrequently? 3. Are business activities related business (i.e. 90% volunteers) or linked AND subordinate to charity’s purpose? http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ cps/ cps-019- eng.html

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Measure Yes No Not Sure N/ A For More I nform ation c.

I f your charity is conducting business activities in order to advance community economic development then you have read CRA’s bulletin Community Economic Development Activities and Charitable Registration (CG-014) http: / / www.cra-arc.gc.ca/ chrts- gvng/ chrts/ plcy/ cgd/ cmtycnmcdvpmt-eng.html

1 4 Transactions w ith Directors

a.

I f your charity operates in Ontario, it does not have any transactions with directors or pay any amounts to directors except for reimbursement of reasonable out-of-pocket expenses related to the work of the charity, unless authorized by court order See “5. Duty to Act Gratuitously” at http: / / www.attorneygeneral.jus.gov.on.ca/ english/ family/ pgt/ cha rbullet/ bullet3.asp

b.

I f your charity operates in Canada, but outside of Ontario, it is careful about any transactions that it enters into with directors to ensure that there is no undue private benefit or conflicts of interest http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ plcy/ csp/ csp-d10- eng.html

1 5 Em ploym ent I ssues

a.

Your “independent contractors” really are independent contractors and not employees See CRA publication Employee or Self-employed? http: / / www.cra- arc.gc.ca/ E/ pub/ tg/ rc4110/

b.

Your charity is deducting appropriate amounts of CPP, EI , and income tax and remitting them to CRA

c.

You have agreements with all employees and independent contractors that cover off at least termination, confidentiality and intellectual property

d.

Compensation is appropriate and no greater than fair market value See How does a Canadian charity determine appropriate compensation for an executive of the charity?

1 6 Keeping Adequate Books and Records

a.

Your charity maintains adequate books and records as defined by CRA CRA’s Books and Records Checklist

b.

You keep records in either English or French

c.

You keep records for at least the prescribed period of time for each record http: / / www.cra-arc.gc.ca/ E/ pub/ tp/ ic78-10r5/ README.html

d.

You keep books and records at an address in Canada that is on file with CRA

e.

You maintain copies or backups of all key documents at a separate site

f.

Electronic documents are backed up regularly and also stored

• ff site

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Measure Yes No Not Sure N/ A For More I nform ation g.

You have easy access to governing documents (incorporating documents, constitution, trust document), bylaws, financial statements, copies of official donation receipts, copies of T3010, written agreements, board and staff meeting minutes, annual reports, ledgers, bank statements, expense accounts, inventories, payroll records, promotional materials, and fundraising materials

h.

You keep source documents (e.g. invoices, vouchers, work

• rders, delivery slips, purchase orders, and bank deposit slips)

1 7 Maintaining Legal Status and the New Federal and Ontario corporate acts

a.

Do you know whether you are a corporation? Many organizations that are registered charities may be unincorporated assocations or trusts. You might want to consider incorporating and having CRA transfer over your charity number to the new corporation but incorporating is not required

b.

I f you are a corporation, are you a Federal non-profit or an Ontario or other provincial non-profit? Check out your letters patent (articles of incorporation) for this information, but if you don’t have these, then try searching the free I ndustry Canada database to at least eliminate the possibility you are a federal corporation. https: / / www.ic.gc.ca/ app/ scr/ cc/ CorporationsCanada/ fdrlCrpSrch.ht ml?locale= en_CA

• r a list from Blumberg Segal LLP of Ontario corporations:

http: / / www.canadiancharitylaw.ca/ blog/ list_of_ontario_non_profit_c

• rporations_revealed_for_the_first_time

Some organizations that are trusts or unincorporated associations will not be affected by either the CNCA or ONCA.

c.

I f you are a Federal non-profit Corporation under the Canada Corporations Act (CCA) you have continued from the old Canada Corporations Act to the new CNCA or you will be dissolved by I ndustry Canada See Blumbergs CNCA Suitcase: http: / / www.globalphilanthropy.ca/ index.php/ blog/ comme nts/ new_cnca_suitcase_for_documents_relating_to_canada_not-for- profit_corporati/

d.

Your charity files necessary corporate returns

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Measure Yes No Not Sure N/ A For More I nform ation e.

I f you are an Ontario non-profit Corporation under the Ontario Corporations Act you have a plan to bring your corporation into compliance with the new Ontario act targeted to be brought into force in 2016 I f you are an Ontario corporation, you may want to consider continuing into the Federal jurisdiction under the Canada Not-for- profit Corporations Act (CNCA). Here is an article on the ONCA at the Ontario Trillium Foundation website: http: / / www.scribd.com/ doc/ 124033018/ Opportunity- Knocks

f.

Do you have copies of the letters patent, supplementary letters patent and by-laws for the organization? I f you are a Federal corporation you can request copies of articles and by-laws from I ndustry Canada. I f you are an Ontario corporation you can request the letters patent and supplementary letters patent from the Ontario government. They will provide you with a microfiche. The Ontario government does not keep copies of the by-laws. Also, if you are a registered charity, the Canada Revenue Agency may have copies of some of these documents, but they could be

• utdated.

g.

Are the objects/ purposes of your organization up-to-date and relevant for the current work of your non-profit? I n some cases, it may make sense to update the organization’s

• bjects as part of the corporate changes. I t is important to

remember that all registered charities will need to ask CRA for pre- approval of these revised objects, which can take months, so this is an example of something that you may wish to start sooner rather than later.

h.

Do you have a copy of your most recent by-law? Federal – for most organizations it is best to start with a new by-law based on the I ndustry Canada model by-law or something similar to that. Ontario - until you are able to review the Ontario government’s draft default by-law, it probably does not make much sense to start making revisions to your existing by-law or begin drafting a new by- law.

i.

Do you know who your members are and do you have an updated list? I f there is more than one membership class, do you know the attributes of each class? (ie name, notice, vote, etc)? Members are like shareholders in a for-profit company, except that members don’t own the corporation, they control it. Under both the ONCA and CNCA members will have more rights. I n some cases non-voting members will even get to vote. Because of this, your organization may wish to clarify who will be the members in the future.

j.

Does the organization want to maintain its current name or change its name? I f you want to change your name you will need to have a NUANS search prepared

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Measure Yes No Not Sure N/ A For More I nform ation k.

Do you have a current list of directors and officers?

l.

What address do you want to use for your corporation under the new act?

m.

Are you up-to-date in the corporate filings for your

• rganization?

I f not, you may want to do arrears in filings.

1 8 Provincial Charitable Registration

a.

For charities operating in Ontario, you have made necessary filings with the Ontario Public Guardian and Trustee http: / / www.attorneygeneral.jus.gov.on.ca/ english/ family/ pgt/ chariti es/

b.

For charities fundraising in Alberta, you have registered with the Alberta government under the Charitable Fundraising Act, if required http: / / www.servicealberta.ca/ 661.cfm

c.

For charities operating in Quebec, or providing receipts to Quebec residents, you have made necessary filings with Revenu Quebec http: / / www.globalphilanthropy.ca/ index.php/ blog/ canadian_charitie s_operating_in_quebec_or_issuing_receipts_to_quebec_reside/

d.

I f you operate in other provinces or issue receipts to residents in other provinces you are aware of the provincial regulations and have complied with them

1 9 I nternal Financial Controls

a.

Your charity is aware of the many ways that some entities may try to take advantage of the charity, including for fraud, money laundering, terrorism, private benefit, etc.

b.

You have adequate internal financial controls in place to prevent misuse of charitable assets CC8 - Internal Financial Controls for Charities (UK Charity Commission) http: / / www.charity- commission.gov.uk/ Publications/ cc8.aspx

c.

You are aware of financial management resources for Canadian charities Understanding Financial Responsibilities of Canadian Charities http: / / www.canadiancharitylaw.ca/ index.php/ blog/ comments/ understanding_financial_responsibilities_of_canadian_ch arities/

d.

You assist your partners and intermediary, if necessary, with basic financial management Building Capacity through Financial Management: A Practical Guide http: / / policy-practice.oxfam.org.uk/ publications/ building- capacity-through-financial-management-a-practical-guide-115411

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Measure Yes No Not Sure N/ A For More I nform ation

2 0 Basic Risk Managem ent

a.

Your charity is aware of its governance risks, operational risks, financial risks, external risks, and the importance of complying with the law http: / / www.charitycommission.gov.uk/ Publications/ cc26.aspx

b.

Your charity has assessed and analyzed the risk that it faces and has an informal or formal risk management plan which considers what risks will be assumed, what will be eliminated, how to reduce risk associated with certain activities and transference of risk by insurance or outsourcing

c.

Your charity avoids any involvement either directly or indirectly with criminal enterprises or terrorism http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ chcklsts/ vtb-eng.html

d.

I f your charity deals with children or vulnerable adults, it has policies and procedures to prevent abuse of beneficiaries and such policies and procedures are being enforced

e.

Your charity maintains appropriate insurance coverage

f.

You attempt to ensure that your directors and officers are appropriate and are not “ineligible individuals” under the Income Tax Act (Canada) http: / / www.canadiancharitylaw.ca/ index.php/ blog/ comments/ prese ntation_to_the_law_society_annual_estate_and_trust_summit/

2 1 Governance

a.

Your board of directors is aware of its basic responsibilities

b.

You run an effective and efficient charity You might find this UK publication helpful CC10 - Hallmarks of an Effective Charity http: / / www.charity- commission.gov.uk/ Publications/ cc10.aspx

c.

I s your non-profit’s governance structure appropriate? I f your current board is ineffective and uncooperative, it would be useful to consider looking into governance training and advice so that the new board can be more successful, strategic and effective.

2 2 Other

a.

I f your charity has accepted a gift with a restriction, such restriction is complied with

b.

Whenever entering into a major agreement between the charity and a third party, the charity understands the content

• f the agreement and if necessary obtains appropriate

professional advice

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Measure Yes No Not Sure N/ A For More I nform ation c.

You occasionally check the CRA website for new developments http: / / www.cra-arc.gc.ca/ chrts-gvng/ chrts/ menu-eng.html

d.

You are aware of various resources for charities For example, http: / / www.canadiancharitylaw.ca

e.

You are signed up to the CRA’s free e-mail newsletter http: / / www.cra-arc.gc.ca/ esrvc-srvce/ mllst/ sbscrbchrts-eng.html

f.

You are signed up to non-profit and private sector providers of news and legal information For example, Mark Blumberg’s http: / / www.Canadian CharityLaw.ca newsletters at http: / / www.canadiancharitylaw.ca/ index.php/ pages/ subscribe/

g.

Your charity obtains appropriate professional advice (from lawyers, accountants, insurance agents etc) when required

This Charity Legal Checklist was prepared by Mark Blumberg, a lawyer at Blumberg Segal LLP in Toronto. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit http: / / www.canadiancharitylaw.ca

• r http: / / www.globalphilanthropy.ca.

This Canadian Charity Legal Checklist is for information purposes only. It is not intended to be or provide legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional. If you found the Checklist helpful then let us know. Also if you have any suggestions for improvem ent they are always appreciated.