by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
The House of Commons Standing Committee on Finance tabled its 2021 pre-budget consultation report on February 16, 2021 (“the Report”). Titled, “Investing in Tomorrow: Canadian Priorities for Economic Growth and Recovery,” the Report includes 145 recommendations organized into five diverse topics: People; Communities; Business; Fiscal Policy, Regulatory Framework and Trade; and Environment and Climate Change. It takes into account how “deeply affected” Canadians have been by the COVID-19 pandemic. The recommendations “focus on measures to provide ongoing assistance to Canadians during the COVID-19 pandemic and support the recovery of the Canadian economy” and to “contribute to the government’s deliberations for the 2021 federal budget.”
Among the recommendations for Communities, the Report includes three recommendations concerning charities and non-profit organizations:
• Recommendation 56: Eliminate the capital gains tax on donations of shares in private corporations or real property to charities.
• Recommendation 57: Establish a fund to provide bridge operating grants for up to 12 months to essential community service organizations. Funding should be flexible to allow organizations to maintain operations and respond to emerging needs. This support should be made available for a three to six-month period as organizations recover from the impacts of COVID-19. Applications should outline need or financial duress, and what other programs have been accessed (or are unavailable), such as wage and rent relief. Support could be differentiated by subsector or relevant need – as immediate humanitarian support may be gauged differently than longer-term institutional goals that can be addressed at a later time.
• Recommendation 58: Review existing tax measures available to both individual and corporate donors and make appropriate amendments to encourage giving to, and supporting the recovery of, the health charities sector.
The Report also includes an infographic map with numbers for the spread of the pandemic. As of 28 January 2021, there had been 766,103 cases of COVID-19 in Canada, including 262,463 in Ontario, and nearly 20,000 Canadians died as a result.
The Report’s inclusion of recommendations concerning charities and non-profit organizations is an encouraging step, and will be of interest to the charitable sector. Charities and not-for-profits will therefore want to review the Report and monitor the federal government’s 2021 budget to see if these recommendations are taken into account.
Read the February 2021 Charity & NFP Law Update
by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
A number of charity lawyers across Canada have prepared an open letter entitled Making It Easier to Do Good: Doing Away with the “Own Activities” Requirement (the “Letter”). The Letter, released on February 19, 2021, summarizes key concerns with the “own activities” rules governing charities, and urges “legislative and regulatory reform to better facilitate the work of the charitable sector in Canada.” It indicates that the key barrier to the efficient operation of charities is the “own activities” requirement under the ITA, which “imposes artificial constraints on charities’ ability to work with third parties that do nothing to further this legitimate objective” of furthering the charity’s charitable purposes. To this end, the Letter supports the revision of the rules regarding charitable work through non-qualified donees, both domestically and abroad. Amendments to legislation to eliminate the “own activities” requirement have also been proposed through draft legislation in Bill S-222. The issues surrounding the current regime and draft legislation are discussed in greater detail in Charity & NFP Law Bulletin No. 486.
Read the February 2021 Charity & NFP Law Update
by Dev User | Feb 25, 2021 | Uncategorized
February 2021 Charity & NFP Law Update
On February 3, 2021, the Charities Directorate of the Canada Revenue Agency (“CRA”) released its latest report on charities, entitled Report on the Charities Program 2018 to 2020 (the “Report”). A drop in the percentage of audits being conducted, improving compliance, and modernizing its programs while reacting to the ongoing impact of COVID-19 are among the information items of interest included in the Report.
The Report is based on information from the Charities Directorate’s activity over the two years from 2018 to 2020, and includes a description of the “initial” impact of the COVID-19 pandemic on its operations. Much of the data in the Report is shown with the help of infographics and covers trends in the charitable sector for the past decade.
Based partially on some data drawn from self-reported T3010s, the Report indicates that there has been an increase since 2014 in the number of private foundations which are registered charities, and a decrease in the number of public foundations. Revenue from government sources amounted to the bulk of charities’ income, with $183.9 billion between 2016 and 2018, compared with $16.9 billion and $8.4 billion from tax-receipted and non–tax-receipted gifts respectively during the same period. Charities reportedly spent an average of 75% of expenditures on charitable activities between 2016 and 2018. Over this same three-year period, 36% of charities reported carrying on activities outside Canada.
In reaction to the COVID-19 pandemic starting in March 2020, the Report notes how the Charities Directorate extended filing deadlines for T3010s, provided its employees with the ability to work remotely, and continued activities relating to the Advisory Committee on the Charitable Sector. The Report also offers information about the Canada Emergency Wage Subsidy (CEWS), which had over 90,000 applications and resulted in $2.4 billion being paid out in approved funds. Updated facts and figures for the 2020 and 2021 fiscal years are expected in the next report from the Charities Directorate.
The Report advises that the Charities Directorate assessed the percentage of submitted charity applications in 2018 to 2020 as 12% for those with a “high” risk/complexity, 32% for “medium” risk, and 56% for a “low” risk. The percentage of audits carried out by the Charities Directorate has reportedly dropped from comprising 37% of the Charities Directorate’s compliance activities in 2015–2016 to 4% in 2019–20. Application outcomes from 2018 to 2020 averaged 75% registrations, with 17% abandoned applications and only 1% refusals to register. The most common reason for refusal was a “lack of information.”
According to the Report, the Charities Directorate has worked hard to modernize delivery of programs, offering them through the Internet, such as the CRA’s My Business Account, and receiving online applications from applicants seeking charitable registration as well as existing charities to be able to file their annual charity information returns (T3010s).
An upgrade to its phone system during the 2018 to 2020 period has reportedly increased the Charities Directorate’s capability to manage enquiries, with 10,855 written and 74,339 telephone enquiries being received from 2019 to 2020. The Report also contains additional information on the addition of a new category of qualified donee in 2020, namely Registered Journalism Organizations (RJOs), as well as consultations on political activities.
In its concluding comments, the Report indicates that the Charities Directorate remains “committed to maintaining the trust and confidence of the sector” through continuing to be “a modern, transparent and effective regulator, particularly during these challenging times”. The Charities Directorate also indicates that it is focused on taking a “People First approach” in its dealing with the charitable sector “including meaningful dialogue and support to improve service delivery.”
The Report’s contents are insightful and will be helpful to those in the charities sector. Readers are encouraged to review the Report in detail for an up-to-date summary of the Charities Directorate’s operations and initiatives going forward.
Read the February 2021 Charity & NFP Law Update
