By Jacqueline M. Demczur and Jennifer M. Leddy

On March 14, 2024, the Charities Directorate of the Canada Revenue Agency (“CRA”) released the Report on the Charities Program 2021 to 2022 (the “Report”). This document provides a summary of the Charities Directorate’s activities during its fiscal period from April 1, 2021 to March 31, 2022. The Report notes that there are 74,615 charitable organizations in Canada, as well as 6,368 private foundations and 4,908 public foundations, for a total of 85,891 registered charities. Charities reported spending $4 billion on activities outside of Canada.

The Report states that 82% of applicants used online services for submissions in the 2021-2022 fiscal period. During this period, the CRA received a total of 2,375 applications for charity registration, along with 84 applications for registration as an “other qualified donee” (“OQD”), with a qualified donee being a registered charity, a registered Canadian amateur athletic association, a registered journalism organization, amongst others. These numbers differ from the previous fiscal period as set out in the Report on the Charities Program 2020 to 2021, specifically during which 1,800 applications were made and with 91% of those being made online. Of those applications made in the 2021-2022 period, 10% were described by the CRA to be of a “high risk/complexity level”, which is comparable to the prior years.

Approval of the application was the most common outcome for those seeking charitable status. Refusal of charitable status was very low, totalling only 1% of applications. This was higher for OQDs, where refusal made up 13% of the applications. The most common reasons for refusal of charitable status were promotion of sport, non-charitable activities, acting as a conduit, lack of direction and control, and lack of information.

According to the Report, the CRA seeks to foster voluntary compliance within the charitable sector, utilizing a risk-based strategy to tailor interventions accordingly. Further to this, the CRA completed 103 virtual Charities Education Program (“CEP”) visits (i.e. one-on-one virtual visits with registered charities to enhance their understanding of compliance obligations) and 182 audits in the 2021 to 2022 fiscal period. The outcome of these 182 audits consisted of 81 education letters, 45 compliance agreements, 28 notices of intention to revoke, 7 “no changes”, and 6 penalties/suspensions.

As well, there were 1,720 compliance revocations in the 2021-2022 period, including 974 voluntary revocations, 714 delinquent revocations for failure to file the T3010, and 29 revocations for cause. This was up from the 2020-2021 fiscal period, which saw 841 compliance revocations, with a similar breakdown for types of revocations. The most common findings in audits of non-compliance in both periods included incomplete/incorrect returns, incomplete/inaccurate donation receipts and inaccurate books/records.

The Charities Directorate also supported the CRA administered subsidy programs, such as the Canada Emergency Wage Subsidy (“CEWS”) and the Canada Emergency Rent Subsidy (“CERS”), with 236,322 approved CEWS applications and 44,302 approved CERS applications. These programs saw a large increase from the earlier 2020-2021 period, which had 138,539 CEWS and 12,307 CERS applications approved.

Among other consultations and stakeholder engagement, including the Technical Issues Working Group and the Federal/Provincial/Territorial Network of Charity Regulators, the Report briefly summarizes the Advisory Committee on the Charitable Sector’s (“ACCS”) work, which was also reviewed most recently in the October 2022 Charity & NFP Law Update. Since its inception, the ACCS has released three reports, with the CRA reviewing each recommendation to assess implementation requirements, lead responsibilities, resource needs, and potential next steps. Notably, the CRA undertook an open call for applications to appoint new committee members, emphasizing inclusivity and diversity in representation. Following this process, nine new members were appointed to the ACCS on April 5, 2022, with the intent of providing a comprehensive and varied perspective within the Committee to address the diverse needs of the charitable sector.

With regard to enquiries from the charitable sector, the Report stated that in the 2021 to 2022 fiscal period, charities primarily requested account updates, such as changes to directors, addresses, legal names, and contact information, which reflects an increasing trend toward utilizing online services for such requests in response to the digital shift. Furthermore, alongside addressing written inquiries, the Charities Directorate’s client service representatives aided charities with various needs over the phone, with common enquiries revolving around online services and My Business Accounts, while also assisting with account modifications and providing guidance on Form T3010, applications, and receipting.

During the 2021 to 2022 fiscal period, the Report indicated that the Charities Directorate received a total of 55,077 telephone enquiries and 12,310 written enquiries. For written enquiries, the service standards aimed for routine responses within 45 days and complex responses within 120 days, both of which were met 99% of the time. In terms of telephone service, the standard was to respond within two minutes, which was achieved 88% of the time. Additionally, the target of 85% of callers successfully reaching the telephone service was exceeded, with a success rate of 98%.

The Charities Directorate undertook 38 audits between 2008 and March 31, 2022 year related to potential terrorist abuse of Canadian charities. The results of these included 14 notices of intention to revoke, 12 compliance agreements, 7 penalties/suspensions, 4 education letters, and 1 pre-registration audit.

The Report provides a helpful snapshot of the activities that the Charities Directorate undertook in its 2021 to 2022 fiscal period. Charities are encouraged to review the Report and its findings in more detail as a means of better understanding the administrative landscape in which they operate.

​Read the March 2024 Charity & NFP Law Update