CRA Publishes Report on the Charities Program 2018-2020

Today the Canada Revenue Agency (CRA) Charities Directorate released its Report on the Charities Program 2018 to 2020. It takes a look at how the Directorate serves the sector online and through its call centre; program policy updates, including the new journalism category of qualified donee, the Advisory Committee on the Charitable Sector, the Senate Committee on the Charitable Sector; outreach and education; registration; and compliance.

Here are a few highlights.

How many charities?

In 2019, there were approximately 75,000 charitable organizations, 6,000 private foundations and 5,000 public foundations in Canada. The report notes that private foundations are on the rise, while public foundations are trending downward, with 2019 representing a 9-year low. The Report doesn’t break down charities by purpose, so there isn’t any information specific to faith-based charities; it’s more of a big-picture, sector-wide snapshot.

How many charity registration applications?

The Report gives average registration numbers for 2018-2019 and 2019-2020. Of the applications submitted:

• 75% were registered
• 17% were abandoned
• 7% were withdrawn
• 1% were refused registration

What were some of the reasons for refusal? Lack of information, promotion of sport, ineligible individuals, acting as a conduit, fraternal organization, non-charitable activities.

A new review process categorizes applications by risk/complexity level. The rubric isn’t included in the Report, but the percentage of applications in each category is set out: 56% low, 32% medium, 12% high. Low risk/complexity applications are more rapidly processed.

What about audits and compliance?

Compliance activities have moved to a multi-streamed approach with a variety of non-audit interventions for low and mid-risk non-compliance. The Report notes that the Directorate has rebalanced its compliance program to be more proactive, and increase interactions before enforcement action would be necessary.

Audits are strategically reserved for charities that demonstrate a high risk of engaging in non-compliant activities.

In 2015-2016, audits made up 37% of compliance activities; that has dropped to 4% for 2019-2020.

That’s good news for charities. It also means that charities should be attentive to the topics, reminders and guidance the Directorate communicates through its Charities Education Program, outreach initiatives (i.e. automated phone calls, letter writing), and specific requests (i.e. improve T3010 accuracy). Making changes in light of these updates – or confirming that your existing processes align – are great ways to ensure your charity remains compliant.

Money – How much? On what? From whom?

Charities’ expenditures averaged $263 billion, and expenditures on charitable activities ranged from $190 billion in 2016 to $201 billion in 2017 to $197 billion in 2018.

Gifts to qualified donees ranged from a low of $52 billion in 2017 to a high of $66 billion in 2018. If Bill S-222 passes into law, it will be interesting to see whether, how and to what extent it impacts reporting of gifts to qualified donees verses non-qualified donees. It will also be interesting to see if the percentage of charities with activities outside Canada changes. The 2016-2018 average was 36%.

Average 2016-2018 revenues from tax-receipted gifts were $16.9 billion; non tax-receipted revenue was $8.4 billion. The average from government was $183.9 billion. 

Government provided charities with almost eleven times the amount of revenue than did tax-receipted gifts. This ties in directly to a question raised in our CCCC Bulletin 2020:5 (November), where we ask about the meaning of charity, how government is involved, and the role of government funding for charitable activities.

Contacting the Directorate?

In case you’re wondering, the Charities Directorate received 10,855 written and 74,339 phone enquiries from 2019-2020.

The written service standards have response targets of 45 days for routine questions and 120 days for complex matters. These were met 89% of the time. The phone service standards have a two-minute response target. This was met 82% of the time.

The Directorate commits to maintaining the trust and confidence of the sector and the public. We at CCCC respect and applaud that commitment. We share that perspective and commitment for our members!

And while we’re encouraged to see the Directorate’s high success rate in meeting its service standards (and we say well done!), you won’t have to wait 45 days to hear back from us. Members can reach us by phone or email – if you have questions about your charity’s operations, we’re here to help.