It appears that the Canada Revenue Agency, Charities Directorate has been receiving trust documents that do not meet their basic requirements for registration in sufficient numbers to warrant a new guidance on the subject.[1]  They are recommending that those seeking charitable registration for a trust send in a draft trust document for their review, not one signed in final form.  The reason given for this in the guidance is "amendments to a trust that is already established may not be possible or may require court approval."  This would be a problem for the potential charitable registrant. 

It has always been open to potential registrants to submit draft documents.  The Charities Directorate will "review draft governing documents on a one-time basis when submitted with a complete application"[2].  For those who choose a not-for-profit organizational structure for their charity such as a corporation however, this process does not seem to shorten the charitable registration process at all. If the draft documents are deemed to be fit for registration then you still have to send the final incorporation documents in with a competed application and get back in the application line for charitable registrations (although now with the Charities Directorate service standards[3], perhaps the time period to acknowledge your actual non-draft form application might be reduced to two months). If the draft documents are not fit for registration you cannot keep sending in draft documents for the same application until they are acceptable in a final form.  It may be best to get incorporated (if that is the chosen form of organization) in the Canadian jurisdiction of choice and then get in the application line.  If problems are identified with the incorporating documents then you have to go through the amending procedure required by the statute that governs the corporation to fix the problems before charitable registration is ultimately granted, but you will still be in the same place in line. 

However, in the new trust document guidance the Charities Directorate states: "If we approve the application, applicants will have to submit a signed trust document prior to registration."  This seems to imply that if the Charities Directorate approves of the trust document, signing it will be the last thing needed to do to achieve the prize of registration.  It should be noted that aside from the objects or purpose of the charitable trust (which in the case of foundations are often simply to donate to other qualified donees), the basic requirements for a registerable trust document are simple and straightforward.   The guidance on trust documents reminds us that for registration purposes, the Charities Directorate requires that at least the following requirements are in a trust document:

 . the name of the trust;

 . the name of the settlor(s) or the name of the person(s) making the declaration of trust;

 . the names of the original trustees;

 . the charitable purposes of the trust;

 . the rules governing how the trustees will administer all property (including money) received;

 . an acknowledgement that the initial trust property (including money) has been transferred to and received by the trustee;

 . a provision in which the trustees give assurance that all property (including money) received will be applied only for the purposes outlined in the trust document;

 . a provision detailing how the trustees will be replaced;

 . the effective date of the document; and

 . the signatures of the trustees.

For many reasons and in certain circumstances, a trust is often preferable to a not-for-profit corporate entity when setting up a charitable structure.[4]  This new trust document guidance, potentially easing the process of charitable registration, may be one more reason to consider using a trust.  At the end of the trust document guidance, however, the Charities Directorate cautions that their approval of a trust for charitable registration "should not be considered as being legal advice regarding the validity of the trust." In bold type the Charities Directorate recommends independent legal advice.