|
Charities Program 2018 to 2020 Report Shows Drop in Audits as Pandemic Struck 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. |
Subscribe
TO OUR NEWSLETTER & STAY UP-TO-DATE