This article was first published on rabble.ca
Registered charities in Canada find themselves increasingly drawn to find ways of operating through partnerships and networks. There are two legal impediments they face in doing their work. One is the requirement under the Income Tax Act that charities carry on their own activities themselves, known as the “direction and control” requirement. The other impediment is the prohibition against registered charities making gifts to any entity that is not a qualified donee (qualified donees are registered charities and other various tax-exempt entities specified in the act).
The Canada Revenue Agency’s (CRA) view is that charities are allowed to use their resources in only one of two ways: either by making gifts to other qualified donees (for most charities, this means to other registered charities) or by applying their resources to their “own activities,” which the charities must carry on themselves.
It is in this context that the Senate Special Committee on the Charitable Sector, established in January 2018, held hearings into the effect of laws and policies on the charitable sector. It issued its report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector, in June 2019.
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