By Terrance S. Carter and Urshita Grover

The Charities Directorate of the Canada Revenue Agency (the “CRA”) released its Report on the Charities Program 2023 to 2024 (the “Report”) on March 20, 2025. The Report covers the period between April 1, 2023, to March 31, 2024, and according to the Director General of the Charities Directorate, “features the work that the CRA does to not only support registered charities and other qualified donees, but also maintain public trust in the Canadian charitable sector.” What follows is a brief summary of the CRA’s activities as highlighted in the Report.

The Charitable Sector by the Numbers

Based on the Charities Directorate’s administrative data for 2023, the Report notes that there were 85,518 registered charities in Canada, of which 73,966 were charitable organizations, 6,775 were private foundations, and 4,777 were public foundations.

According to the CRA and based on Form T3010, Registered Charity Information Return, as submitted by registered charities for the 2022 calendar year (self-reported information) (“Form T3010”), government funding remained the main source of revenue for charities, accounting for 70% of all revenue. Regarding expenditures, also based on Form T3010, out of the total reported expenditures by type in 2022 of $334 billion, 73% of reported expenditures were allocated to charitable activities, 4% on gifts to qualified donees, and 23% to “other” expenditures such as professional and consulting fees, management and administration, and travel and vehicle expenses. Charities reported spending approximately $4.6 billion on activities outside Canada in 2022.

The Regulatory Process

The CRA regulates registered charities and is responsible for protecting the integrity of the tax system and the charitable sector by ensuring that all registered charities follow applicable rules.

Registration

The Report indicates that during the 2023 to 2024 fiscal year, 88.2% of applicants used online services provided by the CRA to submit applications, documents and correspondence during the registration process. The CRA received 2,333 applications for registration as a charity and 38 applications for other qualified donee categories. The CRA made 2,014 decisions on applications.

The Report notes the CRA’s continued efforts to improve internal efficiencies in the application process to shorten processing times and enhance consistency in treatment and final outcomes for all applications. The CRA adapted a people-centric approach to communicate with potential registrants, and promoted an education first strategy in communications with the sector.

For the 2023 to 2024 fiscal year, the most common application outcome for both charities and other qualified donees was approval of registration (77.9% and 77.4%, respectively), with denial being the least common. The denial of applications for charities was only 1.6%, as compared to 8% of applications for other qualified donees. The Report states that the most common reasons that applicants were not granted charitable status included a lack of information provided on proposed activities, carrying on non-charitable activities, acting as a conduit, lack of direction and control over the use of resources, and private benefit.

Promoting Compliance

The CRA states that it continued to employ a risk-based approach to promote and address compliance within the charitable sector, by balancing its interactions with charities for voluntary compliance and taking remedial action to address serious non-compliance.

Non-audit interventions, such as education letters, requests for information, and telephone calls, are an efficient way to address low-risk to medium-risk compliance issues, with the CRA conducting between 8,000 and 12,000 such interventions annually to promote education and voluntary compliance for charities that want to comply, but may need some help to stay on track. For situations where risk of potential non-compliance is high and a closer look at the books and records and operations of an organization is necessary to identify and address any serious concerns, the CRA uses audits through its compliance program, which includes the work of the Review and Analysis Division (“RAD”). Audits can lead to different compliance outcomes ranging from education letters to revocation of charitable registration.

In the 2023 to 2024 fiscal year, the CRA completed 196 audits and 6,556 non-audit interventions. Common non-compliance findings from audits included incomplete or incorrect T3010 returns (64%), incomplete or inaccurate donation receipts (56%), and inadequate books and records (48%). Almost 70% of audits resulted in less severe outcomes, such as education letters. More severe non-compliance measures included compliance agreements and Notices of Intention to Revoke. The most common reason for revocation was a registered charity or other qualified donee’s failure to file its annual return as required under the Income Tax Act.

Program Policy

The CRA establishes policy priorities based on changes in law, Government priorities, and developments in the charitable sector. Notably, in 2023 to 2024, the CRA:

• announced that it will not require registered charities to file the T3, Trust Income Tax and Information Return, for internal trusts held by them;
• published Guidance CG-032, Registered charities making grants to non-qualified donees, which reflects legislative changes on qualifying disbursements; and,
• released version 24 of Form T3010, Registered Charity Information Return, which incorporated new reporting requirements and a new schedule for calculating the disbursement quota.

Stakeholder Engagement

The Report summarizes how the CRA engages with the charitable sector through various forums, including:

• The Advisory Committee on the Charitable Sector (“ACCS”), which serves as a consultative forum for dialogue between the Government and the charitable sector, providing recommendations on policy and guidance development to the CRA.
• The Technical Issues Working Group (“TIWG”), which discusses trends and technical issues, exploring workable administrative solutions and expand the CRA’s understanding of the charitable sector.
• The Federal/Provincial/Territorial Network of Charity Regulators (“FPT Network”), which facilitates discussion and collaboration on issues related to regulating charities across Canada.

Serving the Sector and Canadians

The CRA states that takes an education-first approach to compliance, offering a range of services to clients, including a call centre, written enquiries service, information request, webinars, various outreach opportunities and the Charities and Giving web pages. In the 2023 to 2024 fiscal year, account updates continued to be the most common type of written enquiries made by charities. The most common telephone enquiries related to filing an annual information return, applying for registration, account changes, and receipting. The Report includes data for its service standards.

In the 2023 to 2024 fiscal year, the Charities Directorate processed 1,569 public information requests for documents and 189 from reporters. The most common types of information requests are for Form T3010, Registered Charity Information Return and financial statements for registered charities or other qualified donees, as well as governing documents and application forms. The CRA also held three interactive webinars on topics like books and records and completing the T3010 return online. The CRA states that it is working on web optimization for its existing content to make it easier for the sector and the general public to find the information they search for and to understand it. The Charities Directorate also uses other activities to raise awareness among the charitable sector of its regulatory obligations, and the electronic mailing list is a tool that shares helpful information with subscribers, including for upcoming events, new and updated web pages, as well as regulatory and legislative changes and updates.

External Reviews

The CRA Report explains that the Financial Action Task Force (“FATF”) sets international standards to combat money laundering and terrorist financing. In November 2023, FATF revised Recommendation 8 to better protect Non-Profit Organizations (“NPOs”) from terrorist financing risks while minimizing disruption to legitimate activities. FATF also released updated Best Practices Paper on Combatting the Abuse of Non-Profit Organizations, supported by the CRA, to educate stakeholders.

Canada will be subject to a mutual evaluation review by the FATF between 2024 and 2026 to assess compliance with its Recommendations. The CRA participated in Canada’s Anti-Money Laundering and Anti-Terrorist Financing (“AML/ATF”) Regime and supported the publication of various key Regime initiatives led by the Department of Finance, including the Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada and Canada’s AML/ATF Regime Strategy 2023-2026.

The CRA Report states that Charities Directorate was subject to an external review, for the first time, by Canada’s National Security Intelligence Review Agency (“NSIRA”), which is ongoing, focusing on the CRA’s national security activities and decision-making related to charities, to assess their reasonableness, necessity, and compliance with the law. The Office of the Taxpayers’ Ombudsperson (“OTO”) also conducted a review, releasing a report in March 2023 that included a recommendation for mandatory unconscious bias training for CRA employees involved in the audit process. The CRA states that it agreed with this recommendation and implemented measures that go beyond the OTO’s recommendation, including mandatory training courses and updated training materials.

Conclusion

The Report provides a helpful snapshot of the activities that the Charities Directorate undertook in its 2023 to 2024 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 2025 Charity & NFP Law Update