by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
Public Safety Canada Updates List of Suspected Terrorist Groups
Further to an announcement released by Public Safety Canada on February 3, 2021, the Government of Canada has added 13 new groups to the list of terrorist entities under the Criminal Code. The list, maintained by the Governor in Council on the recommendation of the Minister of Public Safety and Emergency Preparedness pursuant to section 83.05 of the Criminal Code, sets out entities that the Government of Canada has reasonable grounds to believe have either knowingly participated in or facilitated a terrorist activity, or have knowingly acted on behalf of, at the direction of, or in association with such an entity.
The 13 new listed entities are: Atomwaffen Division, the Base, the Proud Boys, Russian Imperial Movement; three Al Qaida affiliates including Jama’at Nusrat Al-Islam Wal-Muslimin, Front de Libération du Macina, and Ansar Dine; and five Daesh affiliates, including Islamic State West Africa Province, Islamic State in the Greater Sahara, Islamic State in Libya, Islamic State East Asia, and Islamic State – Bangladesh; and Hizbul Mujahideen. These additions bring the total listed terrorist entities up to 73.
The Government of Canada is also required to review each listed entity every five years to determine whether they should remain on the list. In this regard, the following seven entities were reviewed, and will remain on the list: Al Qaida in the Arabian Peninsula, Al Qaida in the Indian Subcontinent, Al Shabaab, Islamic State – Khorasan Province, Al-Ashtar Brigades, and Fatemiyoun Division.
The CRA uses listings to support the denial or revocation of charitable status for organizations that maintain connections to listed entities. Charities involved in activities both inside and outside of Canada should therefore have adequate due diligence procedures in place to reduce the risk of unknowingly providing any kind of support to the listed entities.
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by Dev User | Feb 25, 2021 | Uncategorized
March 2021 Charity & NFP Law Update
The Advisory Committee on the Charitable Sector (“ACCS”) released its “Report #1 of the Advisory Committee on the Charitable Sector”) on March 12, 2021, subtitled “Towards a federal regulatory environment that enables and strengthens the charitable and nonprofit sector” (“ACCS Report #1”). This is the first of a series of three reports to be released by the ACCS. In this ACCS Report #1, the ACCS made three very important recommendations: (i) amending the Income Tax Act (“ITA”) to remove the “own activities” test and allow for “resource accountability”; (ii) amending the ITA to allow all appeals to go to the Tax Court of Canada; and (iii) creating a permanent “home in government” for the charitable and non-profit sector.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 489.
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by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
Statistics Canada released Diversity of charity and non-profit boards of directors: Overview of the Canadian non-profit sector on February 11, 2021, a report setting out the results of a crowdsourcing survey conducted from December 4, 2020, to January 18, 2021 (the “Survey”). The Survey had the objective of collecting information on the activities of charities and non-profit organizations (“NPOs”) (although it is unclear whether this includes only s. 149(1)(l) NPOs under the ITA, or a broader range of not-for-profits), the individuals they serve and the diversity of those who serve on their boards of directors. The study surveyed 8,835 individuals, 6,170 of whom were directors of charities and NPOs.
The Survey found that over three quarters of participants were involved in charities and NPOs operating at the local or regional level. In contrast, only 3% of participants indicated that their organizations operated internationally. The main activities of organizations pertained to social services (22%), arts and culture (17%), sports and recreation (13%), education and research (12%), or health (9%). The main activities of the organizations varied somewhat based on their geographic level. With regard to population groups served, a majority (72%) reported that their organizations served at least two of the following groups, and 64% served at least three of those groups: youth; persons in poverty or with low income; newcomers or visible minorities; persons with disabilities; Indigenous persons; LGBTQ2+ individuals; and seniors.
In response to questions on board diversity, the survey found women formed the largest share of board members across most organizations, regardless of the populations they serve and their main activities. However, boards reflected lower representation of board members in diversity groups. For example, only 14% of participants were immigrants to Canada; 11% belonged to a visible minority group; 8% identified as LGBTQ2+ individuals; 6% were persons with a disability; and 3% were Indigenous. The representation of board members in diversity groups increased slightly for organizations mainly engaged in international activities (25%), religious activities (19%), and “law, advocacy and political” activities (18%). As well, organizations with a written policy promoting board diversity were found to be more likely to report slightly higher representation of board members in diversity groups.
The results of the Survey will no doubt be of interest to the sector as a whole, as the Survey suggests the need for greater diversity on boards of directors for charities and NPOs. An important qualification to note about the Survey is that the results were derived from a crowdsourcing initiative rather than a sector-wide survey, and therefore might not necessarily be representative of the sector as a whole.
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by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
Bill C-256 Could Offer Capital Tax Exemption for Charities, but Includes a Fiscal Cost
A private member’s bill introduced to Parliament in November could provide additional relief from tax and a new source of revenue for Canadian charities. Mr. Marty Morantz, M.P., tabled Bill C-256, An Act to amend the Income Tax Act (donations involving private corporation shares or real estate), in the House of Commons on November 26, 2020. Bill C-256 proposes to amend the ITA so that charities can receive donations of real estate and privately-held shares without being subject to capital gains tax. A cost estimate report published on January 25, 2021, available on the website of the Parliamentary Budget Officer, estimates the fiscal cost of the Bill at $42 million in 2020–21, rising eventually to $198.8 million in 2024–25. On the other hand, the financial benefit to charities would be significant, with additional donations “due to behavioural effects of the policy” at $53.2 million in 2020–21 and $250.8 million in 2024–25; total donations that could benefit from the policy would rise from $212.2 million to over $1 billion in the same time period.
Bill S-222, the Effective and Accountable Charities Act
Promising changes may be on the way concerning how charities can use their resources in conjunction with other organizations that are not qualified donees under the ITA. Bill S-222, the Effective and Accountable Charities Act received first reading in the Senate on February 8, 2021. More information is available in Charity & NFP Law Bulletin No. 486.
Exemptions to Police Record Checks Reform Act Reconsidered for Removal
Ontario’s Ministry of the Solicitor General is considering whether to narrow or remove certain exemptions to police record checks. Ontario Regulation 347/18: Exemptions, filed under the Police Record Checks Reform Act, 2015 applies temporary exemptions to specific sectors and positions, such as police officers, correctional officers, child care workers and personnel in financial services oversight. A consultation document posted on the Ontario Regulatory Registry website on February 10, 2021 “seeks feedback from stakeholders on how the proposed changes to the current exemptions may affect different sectors.” The temporary exemptions are set to expire on July 1, 2021. Although it is not anticipated that proposed changes to the temporary exemptions in O Reg 347/18 would result in new costs or significant changes in how police record checks are conducted, the Ministry encourages feedback from affected sectors from their perspective.
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by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
Nearly half of charities in Canada have experienced increasing demand for services during the COVID-19 pandemic, while struggling to find the capacity to meet that demand, according to a new report from Imagine Canada. Over 1,000 organizations provided data for Imagine Canada’s latest Sector Monitor report (the “Report”), published on February 17, 2021. As the ongoing pandemic dramatically affects how organizations operate, many charities are finding it difficult to adjust, with fewer paid staff, volunteers and precarious finances.
Among the highlights in the Report, 45% of charitable organizations reported higher demand compared with April 2020, with 34% reporting demand outstripping their organizational capacity. This was most common for charities delivering “human services”, such as education and healthcare. At the same time 31% of charities are reporting fewer paid staff compared to earlier in the pandemic, and 60% reported a decline in volunteers. Half of charities are reporting staff burnout and poor work/life balance.
Revenues declined an average of 43% since the start of the pandemic, with revenue from donations declining the most as government support increased. Event-based fundraising underwent the most widespread decline among charities (67%), followed by major donors (35%) and sale of goods & services (33%). Organizations are drawing on reserve funds, acquiring debt and selling assets in an effort to offset losses, according to the Report.
More than half of charities (53%) with paid staff applied for government support through the Canada Emergency Wage Subsidy (CEWS). Altogether 42% of charities received some form of government financial aid either through CEWS, the Canada Emergency Commercial Rent Assistance (CECRA), or the Canada Emergency Business Account (CEBA). Those that did not apply indicated that they did not believe they would meet the eligibility requirements for the various programs.
Not all charitable organizations are experiencing increased demand, however. Most arts, culture & recreation organizations (67%) have experienced a decrease in demand, and a significant majority (83%) experienced a decline in revenues. Especially hard hit by social distancing measures, they are over twice as likely as other charitable organizations to have temporarily suspended their operations.
If current trends continue, 16% of reporting charities believed they would no longer be able to operate in a year from now. About 30% reported they could operate for at least a year, but are uncertain for how much longer. Most charities are making efforts to change how they operate: 78% reported increased innovation and experimentation; but the short term is more of an issue, with 67% reporting priority work to address immediate challenges rather than long-term capacity.
Imagine Canada hopes that the Report can be used in a variety of ways such as in “advocacy efforts to stories in the media to helping local leaders compare their own situation to that of peers” and in this way “ensure that Canada’s charities continue to be cornerstones of their communities.”
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