Report on the Charities Program 2018 to 2020
Message from the Minister
I am pleased to present the next edition of the Report on the Charities Program and to share the progress made by the Canada Revenue Agency’s (CRA) Charities Directorate in 2018 to 2019 and 2019 to 2020.
Now more than ever, charities are relied upon to provide valuable services to Canadians, including the most vulnerable. The Directorate remains committed to supporting the charitable sector. To this end, it has implemented new digital services to improve service delivery and enabled new ways of working. It also increased its outreach engagements and diversified its methods to better provide key information and respond to the needs of registered charities. These efforts will play a key role in ensuring workforce agility and support for the sector in the wake of the COVID-19 pandemic. The CRA is committed to taking a People First approach, and I am proud to see the Charities Directorate continues to consult and engage with the sector. This collaboration is an important part of our work, and helps to improve program delivery and better serve charities across Canada.
This report reflects the ongoing evolution of the regulatory environment that enables charities to succeed.
The Honourable Diane Lebouthillier, P.C., M.P.
Minister of National Revenue
Message from the Commissioner
The CRA administers the Income Tax Act for all taxpayers, including registered charities. It aims to meet key government priorities and uphold the public’s trust in the tax system by delivering a program that balances education, client service, and responsible enforcement.
The CRA’s Charities Directorate is responsible for registering charities in Canada and providing them with the resources they need to meet their obligations under the Act. Feedback from the charitable sector and other stakeholders has been invaluable in helping the Directorate to meet the needs of charities. This ultimately helps to protect the integrity of the sector as a whole, and aligns with our goals of being trusted, fair, and helpful by putting people first.
Charities play a vital role in Canadian society. We understand that the COVID-19 crisis has been difficult for the charitable sector as they continue to deliver services to Canadians during this extraordinary time. The CRA remains firmly committed to supporting the interests of the charitable sector and is dedicated to openness and transparency. This report offers a means for us to share the inner workings of the regulatory process with charities and the public, and to demonstrate the Directorate’s commitment to being a responsive and adept regulator of charities in Canada.
Bob Hamilton
Commissioner of the Canada Revenue Agency
Message from the Director General
The Charities Directorate recognizes the important role that charities play in the everyday lives of Canadians and understands that many charities are also experiencing challenges as a result of the COVID-19 pandemic. We truly value and commend the selfless contributions and perseverance of registered charities who remain dedicated to providing critical services to Canadians in need.
At the Directorate, we understand the importance of public trust in the charitable sector. Through our regulatory role of promoting compliance with income tax legislation relating to charities, we help ensure Canadians can have confidence in the operations of registered charities, including in the areas of accountability and transparency. I have had the opportunity to connect with many charity representatives through consultation and outreach activities, such as through the newly created Advisory Committee on the Charitable Sector. Over the course of these and other interactions, I have seen and supported charitable sector initiatives to set standards in these areas and promote the ongoing development of best practices.
These interactions have also helped the Directorate understand the needs of, and how it can better support, the sector. Since our last report, we have made significant progress toward modernizing our program, including launching a host of new digital services for charities through the CRA’s secure My Business Account (MyBA) portal. We have also improved our educational tools, resources, and processes, and are committed to continued enhancements in the years to come. I want to thank everyone for their time and valuable contributions to our discussions and I look forward to future engagements where we can continue to exchange ideas and advance emerging issues relating to charities.
In closing, I am pleased to share this report which highlights our work over the last two years and our efforts to promote and preserve a strong, reputable, and vibrant charitable sector.
Tony Manconi
Director General
Charities Directorate
Canada Revenue Agency
Overview
The charitable sector is a major social and economic force, offering vital services to Canadians and people around the world. The Charities Directorate employs an education-first approach and client-centric philosophy. It aims to promote compliance with the charity-related income tax legislation and regulations in order to support charitable giving and development of the sector, while protecting charities and the public from abuse.
This report provides an update on the Directorate’s activities over the past two years, including the initial impact of the COVID-19 pandemic.
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The charitable sector by the numbers
The number of registered charities by designation came from the Directorate’s administrative data. The remaining figures came from Registered Charity Information Returns (T3010s) filed by registered charities for the 2016, 2017, and 2018 calendar years. Please note that the latter information is self-reported.
Pie chart – Registered charities by designation
| - | 2018 | 2019 |
|---|---|---|
| Charitable organizations | 75,280 | 74,757 |
| Private foundations | 5,805 | 5,986 |
| Public foundations | 5,027 | 4,975 |
| Total | 86,112 | 85,718 |
The number of private foundations has increased over the last nine years, surpassing the number of public foundations in 2011. Conversely, the number of public foundations has been on a downward trend since 2014, reaching a nine-year low in 2019.
Pie chart – Assets, revenue, and expenditures (in billion dollars)
| 2016 to 2018 (average) |
2018 | |
|---|---|---|
| Assets | $444 | $469 |
| Revenue | $276 | $285 |
| Expenditures | $262 | $272 |
Pie chart – Expenditures by type (in billion dollars)
| - | 2016 | 2017 | 2018 |
|---|---|---|---|
| Charitable activities | $190 | $201 | $197 |
| All other expenditures | $56 | $52 | $66 |
| Gifts to qualified donees | $8 | $9 | $9 |
Charities reported spending an average of 75% of their resources on “Charitable activities” over the three year period. “Gifts to qualified donees” made up an average of 3% of expenditures over the same timeframe. “All other expenditures” made up an average of 22% of expenditures over the three year period. These are necessary expenses incurred by a charity in order to operate, including administration, management, and fundraising costs.
Revenue figures
2016 to 2018 (Averages in billion dollars)
This graphic presents a selection of different revenue statistics of interest.
Tax-receipted gifts: $16.9
Non tax-receipted revenue: $8.4
Revenue from government: $183.9
10-year gifts*: $0.7
Tax-receipted revenue from outside of Canada: $0.1
Non tax-receipted revenue from outside of Canada: $2.3
*A 10-year gift is a tax receipted donation that is subject to the donor’s direction that the gift be held by the charity for 10 years or more.
Activities outside Canada
Approximately 36% of registered charities indicated that they conducted or provided resources for activities outside of Canada over the three year period (T3010, line 2100).
2016 to 2018 average
Charitable organizations: 25,531
Public foundations: 3,159
Private foundations: 2,078
Regulating through COVID-19
Recognizing this, the Directorate took immediate actions to support charities by:
- extending the filing deadline to December 31, 2020 for all charities with an annual information return (T3010) due between March 18, 2020 and December 31, 2020
- progressively equipping its employees to work remotely to keep its programs running during the crisis
- continuing all activities related to the Advisory Committee on the Charitable Sector
- contributing to the Government of Canada relief efforts
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Canada Emergency Wage Subsidy
Charities data as of December 31, 2020
91,303 applications
90,632 approved applications
$2.4 billion approved funds
Please note: updated facts and figures for the 2020 to 2021 fiscal year will be included in the next Report on the charities program.
The Government of Canada introduced several relief measures in response to the pandemic, many of which directly support the charitable sector. The Directorate has supported the delivery of the Canada Emergency Wage Subsidy by reviewing applications for the subsidy and responding to applicant questions and concerns.
The Directorate will continue to manage and respond to this situation as it evolves, maintaining its commitment to providing service to the sector and Canadians. Through continued cooperation and collaboration, the Directorate and the charitable sector will weather this crisis together.
Serving the sector
The Charities Directorate continued to improve services over the last two years for the sector and public.
Charities IT Modernization Project
The Directorate has modernized its Information Technology (IT) systems to provide new digital service options through the CRA’s My Business Account and Represent a Client. As of June 2019, registered charities, and organizations seeking to register, can now go online to:
- apply for registration (replaces Form T2050)
- complete and file their Registered Charity Information Return (T3010)
- update charity information
- correspond with the Directorate
Sign up for My Business Account or Represent a Client to access these new online services.
Enquiries
Streamlining enquiries
Over the last two years, the Directorate has worked diligently to clear a backlog of written enquiries while continuing to meet established service standards for both telephone and written enquiries. The Directorate undertook a review of its client service operations in order to develop a sustainable strategy for meeting its service standards. As a result of these efforts, the Directorate is now equipped to reply more promptly moving forward.
Service standards/calls
The Directorate also upgraded its telephone system in 2018 as part of the Government of Canada’s Contact Centre Transformation Initiative. This new system comes with increased capabilities including managing calls in real-time, interactive voice response, live call monitoring, and increased reliability. These features enable the Directorate to provide better service to charities and their representatives.
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2019 to 2020 enquiries
- Written enquiries: 10,855
- Telephone enquiries: 74,339
Written service standards
- Response target:
- 45 days routine
- 120 days complex
- Met target 89% of the time
Telephone service standards
- Response target: within two minutes
- Met target 82% of the time
Telephone accessibility
- Target: 85% of callers successfully reaching the telephone service
- Met target 97% of the time
Program policy
The Charities Directorate has worked to provide policy direction and interpretation during a transformative period which saw the creation of a new category of qualified donee, legislative changes, and a Senate Committee report on the charitable sector.
Journalism – a new category of qualified donee
Changes in technology and the way that Canadians consume news have made it difficult for many news media organizations to maintain financial sustainability. Recognizing the need for Canadians to have access to informed, reliable journalism, Budget 2019 introduced three tax measures to support Canadian journalism organizations producing original news. The Directorate is responsible for registering and monitoring the newly created category of qualified donee, Registered Journalism Organizations (RJO).
Consultations on political activities
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Political activities recap
2015: Minister mandate letter: modernize the rules governing charities’ political activities.
2016: CRA in-person and online consultations. Consultation Panel on the Political Activities of Charities.
2017: Panel report: amend the Income Tax Act to allow non-partisan public policy dialogue and development activities when subordinate to and furthering charitable purpose(s).
2018: New legislation enabling charities to carry on unlimited non-partisan public policy dialogue and development activities in support of their charitable purposes.
2019: CRA response to Panel report: retroactive application of the new legislation to the remaining audits and objections.
The Government of Canada has made important legislative and policy changes since its commitment to modernizing the rules governing charities’ political activities in 2015. These changes reflect the recommendations set out in the Report of the Consultation Panel on the Political Activities of Charities, which were echoed in the Ontario Superior Court of Justice’s ruling in Canada Without Poverty v Attorney General of Canada, 2018 ONSC 4147.
In December 2018, the Government passed new legislation that allows registered charities to carry on unlimited public policy dialogue and development activities in support of their stated charitable purposes, provided those activities do not support or oppose a political party or a candidate for public office. The Directorate published materials to assist the sector in understanding the new regulatory environment by preparing related guidance, questions and answers, and instructions about completing forms.
The Government issued a formal response to the Panel’s report on March 7, 2019, where it confirmed that the CRA would resume the remaining audits and objections in accordance with the new legislation.
In continued support of the Panel’s report, the Directorate worked to expand its internal training program to ensure consistency in decision making across the Directorate. This included enhancing the core training that employees receive when they join the Directorate, and strengthening the knowledge of experienced employees by developing new training opportunities. These enhancements align with the CRA’s service transformation agenda to improve the service experience for Canadians, and support the vision of being a trusted and fair regulator that puts people first.
Advisory Committee on the Charitable Sector
In support of recommendations made in the Panel’s report, the Government of Canada announced the creation of the permanent Advisory Committee on the Charitable Sector (ACCS) in the 2018 Fall Economic Statement. The ACCS is a consultative forum for the Government to engage in meaningful dialogue with the charitable sector, to advance emerging issues relating to charities, and to ensure the regulatory environment supports the important work that charities do. Membership is made up of representatives from the CRA, the Department of Finance Canada, and the charitable sector.
The ACCS held its first two meetings in 2019, at which it reviewed the terms of reference and mandate, and identified the following priority themes that will guide its work:
- evolving the institutional framework to effectively advance public purposes and maximize sector impact
- ensuring financial sustainability within the charitable sector
- establishing modern governance for the charitable sector
Visit the ACCS web pages for information on the committee, working groups, and readouts from each meeting.
Senate Committee on the Charitable Sector
On January 30, 2018, the Senate passed a motion creating the Special Senate Committee on the Charitable Sector (CSSB) to examine the impact of federal and provincial laws and policies governing charities, non-profit organizations (NPO), foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada. In 2018 and 2019, the CSSB obtained contributions from over 160 witnesses, more than 90 written briefs, and nearly 700 responses to its electronic questionnaire.
The Directorate’s Director General and Director of the Policy, Planning, and Legislation Division, testified before the Committee and responded to its requests for information.
On June 20, 2019, the CSSB released its report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector. It contains 42 recommendations, some of which may have implications for the Directorate if they are accepted by the Government of Canada.
Social innovation and social finance
The Government of Canada committed to developing a Social Innovation and Social Finance Strategy (SISF Strategy) for Canada.
Employment and Social Development Canada (ESDC) is leading the development of the SISF Strategy with collaboration from various government departments including the CRA and stakeholders from various sectors.
Directorate technical experts participated in design workshops and steering groups led by ESDC to facilitate social innovation and social finance.
Outreach and education
The Charities Directorate continues to improve its service culture through a number of initiatives designed to enhance communication, transparency, and accessibility.
Consultations
During the past two years, the Directorate:
- continued to host the Technical Issues Working Group
- this group provides a forum for the CRA, the Department of Finance Canada, and individuals with charitable sector experience to discuss trends and technical issues related to the regulation of charities
- continued to coordinate the Federal/Provincial/Territorial Network of Charity Regulators (FPT Network) to ensure communication between jurisdictions
- the FPT Network consists of representatives from federal, provincial, and territorial governments, most commonly the corporate registrars from each jurisdiction
- reinstated the Charities Information Sessions, providing information on gifting and receipting to over 1,350 charity representatives in 15 cities across Canada
- conducted public opinion research to seek feedback on the Directorate’s communication and outreach products
- the Directorate will use this valuable input to continue improving its Charities and giving web pages and developing more user-friendly products to explain charity rules and obligations for its web pages
- consulted with stakeholders to develop outreach products that will help charities understand the risks of terrorism and actions they can take to mitigate these risks and protect the sector from terrorist abuse
Service improvements
Registration
The Directorate continued to provide services for external clients applying for registration as a charity, Canadian amateur athletic association, National arts service organization, or other qualified donee. This included examining applications for charitable registration and re-registration, assessing file complexity, and deciding whether an applicant qualifies for registration under the Act.
By the numbers
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Application outcomes
2018 to 2019 and 2019 to 2020 average
Registrations: 75%
Abandoned applications: 17%
Withdrawals: 7%
Refusals to register: 1%
Common reasons for refusal
2018 to 2019 and 2019 to 2020
Lack of information
Promotion of sport
Ineligible individuals
Acting as a conduit
Fraternal organization
Non-charitable activities
Modernization
The Charities Directorate has made efforts to modernize the registration process over the last couple of years.
Application web pages
In 2018, the Directorate reorganized its charity application web pages to improve clarity and ease of use. The information an applicant needs is now categorized by stage of the application process. Filtering the information in this way is intended to reduce confusion and help prevent applicants from feeling overwhelmed by the volume of information presented.
Application review process
The Directorate has continued to modernize its application review process in order to provide fair and timely service to all applicants. In response to stakeholder feedback, it recently updated the risk-based assessment approach used to identify the complexity of incoming applications in an effort to improve response times. The Directorate developed and implemented a new application screening tool that has enabled it to more rapidly process applications with clearly charitable purposes and activities, reserving its resources for applications that require additional analysis to make a determination.
As a result of the new screening tool, 56% of applications were identified as low risk/complexity and the Directorate was able to rapidly process and triage these applications straight to registration after screening (shown in the graphic above).
Compliance
The Directorate promotes compliance with charity-related income tax legislation, regulations, and the common law in order to uphold the integrity of the sector. It fulfills this mandate through education, quality service, and responsible enforcement.
In 2016 to 2017, the Directorate transformed its compliance program to better align with the CRA’s service mandate and similar compliance models in other areas of the CRA. In an effort to increase efficiencies and service while addressing these factors, the Directorate introduced a multi-streamed compliance approach with various non-audit interventions to address lower and mid-risk non-compliance among a broader segment of the charitable sector. This approach benefits the sector and the public by providing education to charities earlier for minor types of non-compliance while appropriately directing audit resources for the more isolated serious cases of non-compliance.
Directorate developments include:
- the Charities Education Program (CEP)
- outreach initiatives, such as automated phone calls and letter writing campaigns
- projects, such as the review of specific fields on the T3010 and cryptocurrency usage within the charitable sector
- process enhancements, such as creating an audit quality assurance program
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2018 to 2019 and 2019 to 2020
850+ Charities Education Program (CEP) visits
6,550+ charities contacted to file their T3010 on time
2,800+ charities contacted to improve T3010 accuracy
Rebalancing the compliance program has enabled the Directorate to be more proactive and increase the overall number of charities with whom it interacts before enforcement action is required. This means that the Directorate can strategically reserve audits for charities that demonstrate a high risk of engaging in non-compliant activities.
Looking ahead
Over the past two years, the Charities Directorate has continued to improve its operations and delivery of services to the charitable sector and the public. It has implemented new e-services for charities, developed innovative outreach and educational resources, updated its web pages, and restructured its compliance program.
The Directorate recognizes the significant impact of the COVID-19 pandemic on charities, as well as the importance of the charitable sector in Canada’s COVID-19 recovery. It has strived to support charities during this time by participating in information sessions and webinars, offering an annual reporting extension, consulting with stakeholders on the impact of the pandemic on the charitable sector, and contributing to Government of Canada relief efforts. It has also been able to honour prior commitments while working to promptly restore its regular operations. Now more than ever, the CRA recognizes the importance of the People First approach when working with the charitable sector, which includes meaningful dialogue and support to improve service delivery.
Moving forward, the Directorate remains committed to maintaining the trust and confidence of the sector and the public by being a modern, transparent, and effective regulator, particularly during these challenging times.
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