There is more to inter-provincial compliance than just watching out for differences in registration processes and fundraising rules. One such set of rules is contained within the Trustee Acts of various provinces. Generally speaking, the Trustee Acts will apply when a charity holds funds regardless of whether it is incorporated.
A complicating factor arises when the charity in question may be resident in a particular province but has directors present in more than one. This may result in the application of different acts to different directors. It should be noted that the province of Ontario in particular tends to assert jurisdiction when a charity is operating in that province. In such a circumstance one would hope that there would not be a conflict of laws (and if so this raises new issues) but regardless, it generally forces the charity to act according to the most stringent set of rules.
Investment rules may vary by province
This is unfortunate when one jurisdiction may have a more sophisticated set of rules designed to allow for a more nuanced approach to certain types of behaviors. For example, the Ontario Trustee Act contains certain provisions which are beneficial for a charity wishing to delegate some investment decisions. If an organization has directors in more than one province, then directors in another province that does not allow this freedom may be required to act to the stricter requirement in order to comply with the rules of the province in which they live.
Of course, a charity in this position may look to simply change the director structure in order to take advantage of a certain set of rules. However, a result which requires losing good people because of bad laws is most unfortunate. This article is intended not to provide concrete advice, but rather to alert readers to the problem. When considering fundamental decisions, it is important that directors consider the particular responsibilities imposed by their specific province. If you require any additional guidance in managing the provincial regimes, you may find professional legal advice helpful.
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.