Applying for Registration as a Charity

There are a number of benefits to becoming a registered charity. One of the biggest is that a registered charity can issue official donation receipts. These receipts can be used by donors to receive tax credits. Many organizations depend on donations to be able to do their work. People often base their donations on whether they can get a charitable donation receipt.

In addition, only registered charities can receive donations from certain other organizations. This includes foundations and other registered charities. Being a registered charity can also increase an organization’s credibility in the community. This is because registered charities must follow certain rules to keep their charitable status.

You may decide that your organization would benefit from being a registered charity. However, this alone does not necessarily mean that registration is the right choice. You will want to consider whether you have the financial resources and people to carry out your charitable purpose. You should also consider if you have the ability to meet the obligations of being a registered charity. A registered charity that does not meet its obligations may be subject to penalties. Their charitable status could also be revoked.

Registered charities are required to:

• engage only in charitable activities
• control and direct the use of all their resources
• issue complete and accurate donation receipts
• meet the annual spending requirement
• maintain adequate books and records and have them available for review by the Charities Directorate on request
• file the Registered Charity Information Return annually
• maintain their status as a legal entity, such as being validly incorporated as a non-profit

An application is required to become a registered charity. There are a number of requirements that must be met as part of the application process. Before an organization can apply, it must have a legal structure. You will then need to provide information about the charity, including what charitable activities it will engage in.

Every organization that wants to apply for charitable status must have a legal structure. This means it must be recognized in law as a legal entity. For example, it could be incorporated as a non-profit. Another example is a foundation created through a trust.

The organization must have a document proving its legal existence. This can be something like their articles of incorporation. The exception to this is if it is an internal division of another registered charity.

Depending on the type of legal structure, different documents must be included with the application. For example, a non-profit will need to include their bylaws. You can use the application document checklist tool to see what you will need to include.

A registered charity will be designated as one of three types:

• a charitable organization
• a public foundation
• a private foundation

Your designation will depend on:

• whether you provide money to other charities
• where your funding comes from
• how many of your officials are at arm’s length

Charitable organizations do their own charitable work. More than 50% of the officials must be at arm’s length from each other.

Public foundations give more than 50% of their income to other charities. They may also carry on their own charitable activities. More than 50% of the officials must be at arm’s length from each other.

Private foundations carry on their own charitable activities. They can also give to other charities. More than 50% of a private foundation’s funding comes from a person or group that also controls the foundation in some way. At least 50% of the officials in a private foundation must be at arm’s length.

As part of the application, there is certain information that must be included…

The application for charitable status requires:

• the current legal name of the organization
• the operating name if different then the legal name
• any previous names that the organization operated under
• a business number if one has been assigned to the organization
• the organization’s mailing and physical address
• the location where the organization keeps its books and records

If there has been any previous contact with the Charities Directorate, the reference number from this must be listed. If an organization has ever been registered as a charity before, the name it was registered under and the business number it was using must be listed.

Information must be provided about directors, trustees, officers and any other official, including:

• their first and last names
• the positions they hold in the organization
• their addresses, occupations and dates of birth

You must provide the name of the person who will be your contact with the Charities Directorate. The person’s name, address, telephone number and fax number must be provided. If the person is an official of the organization, only their name needs to be provided.

You must also include details on the organization’s finances…

Organizations must complete a projection of what they expect to spend and receive over the next fiscal year.

Organizations must include the date of their fiscal year end. This determines the start and end of the year for budgeting and financial statement purposes. This may have already been chosen when the organization incorporated. It can be a calendar year or some other 12 month period. A registered charity cannot change its fiscal year end without the approval of the Charities Directorate.

If your organization has been in operation for at least one year, financial statements for that year must be included.

A detailed list of the sources of any revenue the organization expects to receive must be completed. This includes gifts, grants, money raised from fundraising, revenue from the sale of goods or services and any other revenue from any source.

Each charitable activity the organization plans on doing must be listed. You must also include the amount the organization expects to spend on each activity. Money that will be spent on fundraising, sale of goods or services and political activities must be detailed.

How much will be spent on administration and management must also be included. Details such as the salary and other expenses for administrative personnel must be provided. Administrative costs for office supplies, printing, and travel must also be included.

Costs for things that are directly related to the organization’s charitable purpose are not considered to be administrative. For example, travel to provide services of the charity would not be an administrative expense. However, travel for attending a board meeting would be.

Registered charities must record:

• any revenue from outside of Canada and its source
• any resources used outside of Canada including the amount and what it will be used for

Assets include money in the bank, investments and capital assets. Capital assets are things like cars other property. The cost or the fair market value of assets must be recorded. Any money the organization owes must be included as a liability. This could be a mortgage or money owed for services the organization has received.

Your application will be complete once all the required information and attachments are submitted. You will then receive an acknowledgement letter. This letter will tell you approximately how long it will be before your application is given to an officer for review.

You may be contacted if the Directorate needs clarification or more information. They may also give you the opportunity to amend your purposes if they think these are not in line with your activities. You will generally be given 60 days to respond. If an organization does not respond, the file will be closed. The Directorate will use any information provided to make a final decision. If an organization wants a final decision without providing more information, they can notify the directorate in writing.

The Directorate will send a letter denying the application if they conclude that the purposes or activities are clearly not charitable. This decision can be appealed within 90 days.

If the application is approved, the charity will be given a charitable registration number. They will also be told the effective date of registration.