There are times being a lawyer is a bit like being a plumber. Like a plumber, a lawyer is called when an organization is being built, and like a plumber, we are called in an emergency. But that is where the similarity ends, because while it seems fairly obvious when you have an emergency which might require a plumber, it is apparently less so with a lawyer.
Re-registration not automatic
One situation which tends to elicit panic from organizations is an unexpectedly negative response to a request for re-registration.
This situation often results when an organization is revoked for failure to file the T3010 and then applies for re-registration on its own. Operating under the assumption that they qualified as a charity prior to their revocation, and that they should therefore re-qualify, many organizations are surprised when the Canada Revenue Agency has reservations (or worse) about re-registering them.
We don’t do that any more
At times, this is the result of “mission creep,”, in which case an organization may have been charitable when it was first registered but over time have developed either different objects or a different way of achieving its objects. And this is where a lawyer can help.
Sometimes these changes may be covered by changes to the law, and the organization may still be charitable if its objects are amended to cover what it actually does. At other times, older cases in different jurisdictions may be used to justify the organization’s operations as charitable.
Careful review better than thoughtless assumption
However, just as with a plumber, it is best to call the lawyer before the basement is flooded. In the context of an application for re-registration it is similarly best not to rely on the assumption that the organization will re-qualify for registration, but rather to bring in a professional before the application goes the CRA.
What many organizations do not understand is that the CRA will examine the totality of the organization’s activities over the years prior to an application for re-registration. And given the complexity of the laws governing charities, many groups have been offside one or another legal provision at some point. This in itself can be grounds for denying re-registration. Part of the lawyer’s role is to scour the organization’s record, correct these problems going forward, and provide the relevant information to the CRA in the proper context.
Accountant isn’t all you need when audited
For organizations that are already registered, the emergency in question is usually an audit. It is our experience that a lawyers’ involvement can never come too early, as there are many instances in which a lawyer may have contributions to make which would never even occur to the layperson. For example, we have seen situations where the charity does not have the documents requested (often for good reason) and so undertakes to create the document for CRA. At other times we have seen oral statements by a representative of the charity taken out of context and used as a reason to discipline the charity and reassess the donors.
Fundamentally, charities need to be aware that their conception of the law in a matter may not be entirely accurate and that the additional expense of a lawyer, early in the process, may be necessary to resolve the situation in a timely fashion. As they say, a stitch in time saves nine.
Adam Aptowitzer of Drache Aptowitzer LLP is a charity law lawyer with a national practice based in Ottawa. He has been published in Canadian Taxpayer, Canadian Fundraising & Philanthropy and the Not-for-Profit News. He has also published a widely distributed study on the regulation of Canadian charities with the C.D. Howe Institute.
As a speaker, he has addressed many professional associations and Canadian charities. He has also given expert advice on Parliament Hill. Adam is an executive member of the Canadian Bar Association’s Charity and Not-for-Profit Law section.
For speaking engagements and consultations, contact him at 613-237-3300 or visit http://www.drache.ca.