The Canada Revenue Agency has not changed its position on fundraising by charities. It had asked for feedback on the Guidance CPS-028, Fundraising by Registered Charities, when that was published in June 2009. After reviewing the submitted comments, the CRA revised the guidance to clarify certain key concepts. The resulting new Guidance, CG-013, issued April 20, 2012, replaces the previous version.

The new section entitled "When is fundraising not acceptable?" bears further analysis and should be carefully reviewed by all charities. It answers the question by saying that fundraising is acceptable unless it is described in a delineated list. It states:

"Fundraising by registered charities must be conducted within legal parameters. Fundraising is acceptable unless it:

• is a purpose of the charity (a collateral non-charitable purpose);
• delivers a more than incidental private benefit (a benefit that is not necessary, reasonable, or proportionate in relation to the resulting public benefit);
• is illegal or contrary to public policy;
• is deceptive; or
• is an unrelated business.

Charities that engage in unacceptable fundraising cannot be registered under the Income Tax Act because they are not constituted and operated exclusively for charitable purposes, or they are not devoting their resources to charitable purposes and activities."

"Illegal or contrary to public policy"

In time we will write about each of these prohibitions, as they should be understood by all charities that want to stay in the CRA Charity Directorate's good books. In light of issues that we have previously written about, the specific prohibition against fundraising activities that are illegal or contrary to public policy deserves first mention. The guidance gives examples worth considering.

Examples of illegal fundraising activities

The guidance says, "Examples of illegal fundraising activities are those that are criminally fraudulent, or violate federal or provincial statutes governing charitable fundraising, charitable gaming, the use of charitable property, or consumer protection."

That is a very wide net and could include everything from failing to register every year under the Charitable Fund-raising Act in Alberta ( a significant percentage do not) to fundraising by stealing from the elderly, which would no doubt be considered to be a criminal offence. In this respect charities should really govern themselves accordingly and know with certainty what legislation applies to them in each jurisdiction where they operate. If they do not or choose not to understand and comply with all that governs them, they may be doing so at their own peril.

Examples of fundraising activities contrary to public policy.

The guidance says, " For example, making a fundraising solicitation that does not comply with Canadian Radio-television and Telecommunications Commission directives or telemarketing rules, or other established government policy, may be considered contrary to public policy."

Consider whether not complying with Canada's new anti-spam law, expected to be in force in 2013, will make a charity not only offside that new law but also subject to a potential revocation of charitable status. This would be an undesirable state of affairs for many, but is certainly within the realm of possibility.

All of this goes to the point made many times before that Canada's charities are being subjected to micro-management. They are required to know not only basic common sense rules that one would think would apply to organizations whose purpose is to do good, but also a plethora of regulatory statutes, both provincial and federal.

For each charity and especially for those who operate in multiple jurisdictions, this is becoming more of a headache. Who will be able to keep up?

Yvonne Chenier prefers to work for clients in the philanthropic and aboriginal sectors, acting as general legal counsel and advising on planning, organizational, regulatory and governance matters.

She has served as a trustee, board member or founder of numerous organizations. She is actively involved in her professional associations and speaks frequently to various groups on topics ranging from legal to financial matters.

Contact her by email, www.drache.ca.