A great deal has been written about legal compliance surrounding registered charities in Canada.  However, most of that material is overly technical, hard to understand and sometimes quite esoteric for the average person working or volunteering at a charity.  As a result, it can be extremely difficult for charities, employees and volunteers to determine what the most important compliance issues for a charity are. 

We have prepared a brief summary of the some of the most important items charities and their boards of directors need to know about charity law in Canada below:

1) Filing an accurate T3010 - registered charity information return form

The T3010 is due six months after the charity’s year-end.  Failure to file the T3010 within a few months of that date will result in a charity being deregistered and losing its charitable status, and consequently also losing its receipting privileges.  It is important that Directors record the date on which their returns are due and ensure that the address the CRA has on file is current.  Otherwise, CRA reminder notices may never arrive and a charity may be deregistered without any notification. About 600 charities per year lose their status for non-filing the T3010 – the number one reason for revocations. 

Charities must also make sure that they file the correct T3010 form and all necessary schedules and financial statements must be also be filed. Also, you can use the QuickPrep tool from Imagine Canada that will help in completing the T3010.  The 2012 Budget gave CRA the power to suspend a charity’s receipting privileges for filing incomplete T3010 forms. 

2) Corporate law changes that can affect your non-profit

There have been tremendous changes in non-profit corporate law over the last few years. Over 10,000 Federal non-profit corporations have continued to the new Canada Not-for-profit Corporations Act (“CNCA”).  About another 5,000-7,000 have not continued and will soon be dissolved if they don’t move quickly. In addition, in 2010 Ontario passed the Ontario Not-for-Profit Corporations Act (“ONCA”), which will probably be brought into force in 2016 or 2017.   This will affect over 50,000 Ontario non-profits.  Alberta and BC are also looking at reforming their non-profit statutes.  

If your charity has not reviewed its corporate governance structure in the last few years then it should spend some time thinking about important issues, particularly those surrounding membership, purposes, updated articles and by-laws and multiple corporate structures.  With registered charities, as CRA is backlogged with its review of corporate documents, it is important to start the process early and get proper corporate and charity law advice.  Here is our directory on non-profit corporate law changes and an article on Ontario non-profits moving to Federal jurisdiction which might be a good solution for some.  

3) Acting outside legal purposes

Charities in Canada have legal purposes in their founding documents (e.g. Articles, Letters Patent, Trust deed, constitution, etc.) and must not act outside of these legal purposes. These purposes are sometimes referred to as ‘legal objects’.  A charity’s legal purposes set out the scope of the charity’s activities. Charities cannot undertake charitable activities that are outside of their purposes. These purposes should be reviewed periodically to ensure they are appropriate. Especially with older charities, it is extremely common to have dated purposes that may no longer reflect the work of the charity. 

Registered charities that wish to change or amend their purposes should first seek pre-approval from CRA. In 2013, CRA released its Guidance on How to Draft Purposes for Charitable Registration.  CRA has taken a more formulaic approach to a charity’s purposes and will also require a detailed statement of activities to be submitted alongside a proposed change to the purposes.

The corporate changes discussed above in 2) also provide an opportunity for a charity to amend its purposes as part of the transition to a new corporate act.

Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. Contact him at mark@blumbergs.ca or at 416-361-1982 x237. For more information, visit his websites, www.canadiancharitylaw.ca  orwww.globalphilanthropy.ca