The Charities Division and Corporate Community Investment

Reference Number
CES - 007

Date
September 23, 1999

Update on Charities Division

1. The Revenue Canada conversion to the Canada Customs and Revenue Agency will take effect on November 1, 1999.

2. Additional funding is becoming visible for:

• speeding up the application process;
• a greater outreach program, including new publications, (e.g., on community economic development, foreign activities, etc.) See Revenue Canada Web site: http://www.rc.gc.ca/charities for a list of registered charities;
• more staff to handle written and telephone enquiries;
• a new Charity Information Return (T3010) section to upgrade data.

Government voluntary sector initiative

3. Red Book II undertook to enhance the government's understanding of the sector and to work in partnership with it to explore new models for overseeing and regulating registered charities and enhancing their accountability to the public.

4. In March 1999, the Cabinet Committee on the Social Union approved the formation of three joint government-sector committees ("Joint Tables") to look at: developing a new relationship with the sector; strengthening the sector's capacity; and improving the regulatory regime. The Tables' combined report has just been published. (See http://www.pco-bcp.gc.ca)

5. The Tables identified a series of issues that need to be addressed and classified them into a list of priority items and a second tier.

6. The Table looking at the regulatory regime covered a number of issues directly relevant to the Department's charities program. It proposed that, after further consultations are held, consideration be given to:

• allowing charities to be more politically active by revising the 10% rule;
• opening up the register to certain advocacy organizations that do not qualify under existing rules;
• introducing new intermediate penalties for non-compliance;
• developing alternatives to the present appeal process; and
• reforming the institutional structure for registering and monitoring charities. Three options were put forward: (1) an enhanced Revenue Canada Charities Division; (2) a quasi-judicial commission as in the United Kingdom that is independent of both the government and the sector; and (3) a sector-dominated agency standing somewhere between the first and second models.

7. The Regulatory Table also proposed that the government move directly to:

• remove the confidentiality restrictions surrounding the registration process;
• introduce a shorter annual return for smaller charities;
• provide more information about charities on the Departmental Web site; and
• clarify the guidelines on what constitutes an acceptable "related" business.

8. Clearly, there are a number of issues affecting the Charities Division. There will be a period of consultations before any decisions are made.

Perceived Barriers

9. Sponsorship vs. donations - there is a lack of clarity in interpretation of the rules. The dollar value attached to recognition is perceived as being too low.

10. Reasoning behind rules for issuing official tax receipts - in light of the tax treatment for corporate donations and business expenses being the same.

11. Administrative and compliance burden is perceived to be excessive.

How to improve communications and enhance relations between corporate community and Charities Division?

12. Corporate representation on policy committees in order to promote development of effective policies.

13. Implementation of an up-to-date, Web site accessible database that stores publicly available information on registered charities.

14. Publishing a regular newsletter.

15. Greater consistency in information provided by Charities Division telephone representatives on a particular topic.

16. Identification of written sources that Community Involvement managers can reference after a telephone inquiry.

17. Organization of an ongoing advisory committee or task force that has representation from the corporate, government, and voluntary sector.

18. We are very open to policy discussions and proposals. We need to learn more; to understand each other's problems. But see Finance Canada for legislative changes, and the Rulings Directorate within Revenue Canada for administrative policy on general tax issues.