Political Activity Reporting: no longer required as of Feb. 2019!
On February 5, 2019, the CRA announced:
“In December 2018, the rules governing the political activities of registered charities changed as a result of new legislation that permits charities to carry on unlimited public policy dialogue and development activities in furtherance of a stated charitable purpose. Under the new rules, the reporting requirements related to a charity’s spending on political activities are no longer relevant. The Canada Revenue Agency is revising Form T3010, Registered Charity Information Return, and Form T2050, Application to Register a Charity under the Income Tax Act, and will publish instructions on its webpages soon.”
Charitable Status and Helping Other Organizations
Churches and other charities should NOT accept donations (with tax receipting) designated for other organizations that do not have charitable status. This is called being a conduit and is expressly prohibited by charity law. In the charity world it is the equivalent of money laundering.
And, if there is no tax receipting, there is no reason to run the money through the church at all. Folks can donate directly to the other organizations.
Both of these concepts respect charity law and the notion that our churches are required to limit their activities to their “own charitable activity,” which they conduct directly or through entities over which they have “direction and control.”
In the case of helping a non-charity with a grant, great care must be taken in setting up a formal arrangement that would allow the church board to assert it has direction and control over the enterprise. To the extent money flows into the church, the outflow needs to be compliant with charity law. Ideally you would have a memorandum of understanding with the organization that documents that the church charitable purpose aligns with the organization you want to help. Then there would be a trustee agreement that demonstrates on what conditions you receive and subsequently disburse the money. For most churches, this might be too complex an undertaking and it is best to say no—with regret.
Note that if you receive a big grant and disburse it, it also has to show on your financial statements and charitable filings.
Federal and Provincial Non-Profit Corporations Legislation and Congregations
A common question from a congregation is “Where do we find our letters patent?” or “Are we a corporation?” Congregations themselves are not corporations. Congregations have some independent legal status under the Act of Parliament that created The United Church of Canada in 1925, but they are neither federally nor provincially incorporated.
Congregations are charitable organizations and as such do have to submit a T3010 filing to Canada Revenue. Currently, the CRA website reports the following re: charities incorporated in Ontario:
If you are incorporated in Ontario and subject to the Ontario Corporations Act, you must also include:
- Form RC232, Corporations Information Act Annual Return for Ontario Not-for-Profit Corporations.
- As of May 7, 2021, Form RC232, Corporations Information Act Annual Return for Ontario Not-for-Profit Corporations will no longer be available for download on Canada.ca.
- As of May 15, 2021, Form RC232, Corporations Information Act Annual Return for Ontario Not-for-Profit Corporations will no longer be accepted by the Canada Revenue Agency.
This information has caused some confusion for congregations. Our churches/pastoral charges are not incorporated and therefore have no provincial reporting duty. A lot of paperwork we see from governments, financial institutions, etc. assume the charity is incorporated (because most are). You file as an internal division listing The United Church of Canada 108102435RR0003 as your governing body.
Federal Funding for Accessibility Projects
The federal government periodically announces a call for proposals that may be of interest to ministries considering accessibility projects. Full details are available at Employment and Social Development Canada. Small projects that create or enhance accessibility for people with disabilities may receive up to $50,000 from the federal government. At least 25 percent of the total project costs must come from other, non-federal government sources.
Since the window for applying is often quite short, we recommend you put yourself on the notification list as offered on the government webpage.
Church Finance Webinars
For upcoming webinars or recordings of past webinars, see United in Learning.
I am hearing from across the country that CRA auditors are getting more concerned with cash payments being given to individuals even for modest sums. Technically a charity shouldn't give money to a non-charity (without demonstrating direction and control of what happens to the money). Modest payments from benevolent funds have not been an issue until now. It is always a good idea to purchase vouchers, or pay actual bills, when administering a benevolent fund.
For more information