When the Canada Revenue Agency suspends the registration of a Canadian charity or revokes its charitable status, the charity’s inability to issue income tax receipts is not the only consequence.
Other funding doors may close
A number of organizations register as a charity and never issue a receipt for income tax purposes. These organizations may register knowing that their charitable status adds to their credibility with the public.
Some organizations register to become a charity because it is a requirement if they want to be eligible to receive federal and/or provincial funding.
In some cases a charitable organization may receive funding from another registered charity. In this situation the recipient organization must be a registered charity that has not had its charitable status revoked or suspended. This is because registered charities can only give money and/or resources to other qualified donees, which in most cases means another registered charity in good standing.
If your organization’s charitable status has been suspended or revoked, you may not be eligible to receive provincial or federal funding. Furthermore, your charity cannot receive any money and/or resources from other registered charities while the suspension is in place or the charity status is revoked. This may have a significant impact on your charity’s ability to operate if your organization relies on grants and/or contributions from these sources.
Also important to note: if your charity has been imposed with a suspension or its charitable status has been revoked, the CRA will post this information on their web-site for the public to view. This may deter potential donors from making a donation to your charity in the future.
Debbie Lucas has extensive experience with the charitable sector, including 24 years with the Canada Revenue Agency (CRA) Charities Directorate, and is now the CEO of Charities Compliance Connection. Debbie delivers charity compliance training with individual consultations, group presentations and seminars, and demystifies the subject of income tax requirements for charities. She also offers assurance internal reviews to help protect charities by ensuring ongoing compliance with CRA rules and regulations.
For more information, email her.