Webinar – Charitable purposes

Webinar Transcript

Slide 3 – Charitable purposes

DANIELLE: “Let me welcome you to the Canada Revenue Agency’s webinar on charitable purposes.

Thank you for taking the time to join us today.

My name is Danielle and I’ll be your host for today’s talk.”

Slide 4 - Objective

DANIELLE: “The purpose of today’s presentation is to familiarize you with charitable purposes under the Income Tax Act, explain what they are and their general requirements, and provide an overview of our new short guide on writing charitable purposes.”

Slide 5 – Overview

DANIELLE: “Our presentation today is divided into 7 parts.

In Part 1, we’ll define purposes and activities.

In Part 2, we’ll review the general requirements for charitable purposes.

In Part 3, we’ll walk through how to write a charitable purpose.

Part 4 will highlight practical tips to keep in mind.

In Part 5, we’ll look at examples of charitable purposes.

Part 6 will cover special topics.

And finally, in Part 7, we’ll show you how to make changes to your purposes and activities.”

Slide 6 – Part 1: Defining purposes and activities

DANIELLE: “Let’s start by defining purposes and activities.”

Slide 7 – Purposes and activities

DANIELLE: “A charity’s purposes are the objectives that an organization is created to achieve. They are contained in their governing documents. They reflect and clearly state the charity’s goals and objectives.

The charitable activities are the actions a charity undertakes to accomplish those purposes.”

Slide 8 – Part 2: General requirements for charitable purposes

DANIELLE: “Let’s now review the general requirements for charitable purposes.”

Slide 9 – General requirements for charitable purposes

DANIELLE: “An organization must meet a number of general requirements to qualify for charitable registration under the Income Tax Act. After registration, registered charities (which include: charitable organizations, public foundations, and private foundations) must continue to meet all registration requirements in order to retain their registered status. 

To be registered as a charity, your organization must have only charitable purposes and use its resources only on activities that further those purposes.

Purposes, also known as objects, are the aims, goals, or objectives of your organization. These should be stated in your organization’s governing document. A governing document gives an organization its legal existence. The document identifies the organization's name, states its purpose, and describes its structure and internal procedures.”

Slide 10 – The four categories of charity

DANIELLE: “To be charitable, each purpose must fit in one of the four categories of charity and be for the benefit of the public. The four categories of charity are:

• relief of poverty
• advancement of education
• advancement of religion
• other purposes beneficial to the community in a way the law regards as charitable
  • This category includes various purposes that do not fall within the other categories but which the courts have recognized as charitable. A purpose that fits under the fourth category will have to state a specific subcategory to show what benefit is conferred by the purpose. For example, the promotion of health, or the protection of the environment.

Your organization can also have a purpose to make gifts to qualified donees (such as other registered charities). We'll cover this later in the presentation.”

​[Image of a hand holding a heart representing the relief of poverty, image of a mortarboard representing the advancement of education, image of a sun representing the advancement of religion, and image of people representing other purposes beneficial to the community]

Slide 11 – Part 3: How to write a charitable purpose

DANIELLE: “In this part of the presentation, we’ll walk through how to write a charitable purpose.”

​Slide 12 – Purposes charitable at common law

DANIELLE: “Charitable purposes are defined by the common law and the Income Tax Act.

A purpose charitable at common law must:

• fit within one of the four categories of charity
• be for the benefit of the public

To ensure these requirements are met, a purpose must:

• identify, explicitly or implicitly, the category or subcategory of charity in which it fits (what benefit is conferred by the purpose)
• define the scope of activities (how the organization will further its purpose)
• identify, explicitly or implicitly, the eligible beneficiary group (who can receive the benefit)

When writing a purpose charitable at common law, we recommend that you include all three elements directly in the wording in order to avoid confusion or misinterpretation.

Here is an example using the what, how, and who:

What: To relieve poverty

How: by providing basic amenities

Who: to the unhoused.”

Slide 13 – How to write your organization’s charitable purpose(s)

DANIELLE: “The CRA has developed a new, concise short guide to help you understand and draft appropriate charitable purposes. This short guide focuses on condensing the key elements of our longer guidance in a clearer, more concise, and accessible format. It includes what you need to know to get started, using straightforward language and practical examples to help you at every step. Whether you are looking to become a registered charity or are interested in changing your existing purposes, this guide is designed to help you.

Here are three different options to help you write your organization’s charitable purpose: 

Copy: use a CRA model purpose

The easiest way to write charitable purposes is to copy one of our examples from our extensive list of charitable purposes.

Simply review the examples and select the ones that accurately reflect your organization’s goals and how it wants to achieve them.

Modify: personalize a model purpose

While the CRA provides an extensive list of examples of charitable purposes, they may not exactly reflect your organization’s activities or who you intend to benefit. You may also want to adapt the wording of a model purpose to better reflect your organization’s terminology and values.

In this case, select a relevant example purpose that identifies the category or subcategory of charity that best fits your organization’s purpose (the what), and tailor it to your organization by changing how you describe:

• the scope of activities (how); or
• the eligible beneficiary group (who)

For example, taking a model purpose under the relief of poverty, you can change its scope of activities and adapt its wording to better reflect your organization’s work:

The original model purpose could be: To relieve poverty by establishing, operating and maintaining shelters for the unhoused.

The modified model purpose becomes: To relieve poverty by providing basic amenities to unhoused individuals.

Create: write your own charitable purpose

While our list of charitable purposes can be helpful to many organizations, they may not meet every organization’s needs. In that case, you might want to write your own charitable purpose for your organization.

When writing your purpose, we recommend that you clearly identify:

• the category or subcategory of charity (what benefit is conferred by the purpose)
• the scope of activities (how your organization will further its purpose)
• the eligible beneficiary group (who can receive the benefit)

You must ensure that your organization’s purpose fits within one of the four categories of charity and is for the public benefit. Your organization’s purposes must also be stated clearly and precisely enough to ensure it cannot pursue non-charitable purposes. Purposes that are too broad or vague do not meet the requirements to be charitable.”

Slide 14 – Part 4: Helpful tips

DANIELLE: “Let’s now highlight practical tips to keep in mind.”

Slide 15 – Helpful tips

DANIELLE: “Here are best practice tips based on common issues identified in organizations’ purposes. While these are not requirements, we recommend following these tips when you choose to write your own charitable purpose or to personalize a model purpose.

Do: use action-based words (for example: provide basic necessities, conduct research, operate a school) that define the scope of your organization’s activities.                              

Avoid: vague words such as to facilitate, support, assist, or coordinate (while not prohibited, they often do not clearly define what your organization will do).   

Do: clearly tie your scope of activities and beneficiaries to the category of charity.              

Avoid: subjective words to define elements of your purpose (deserving, worthy, philanthropic, benevolent, good causes). They may not clearly show that your organization is charitable).

Do: Use the words “for the public” to confirm that your purpose is intended to benefit the public, and not a private group of individuals.      

Avoid: fundraising, granting to non-qualified donees, or public policy dialogue and development activities (PPDDAs) as a scope of activities.       

Do: verify if provincial or territorial requirements apply to your organization’s purposes (only if your organization is incorporated).  

Avoid: vision or mission statements or similar aspirations in your purposes, unless it is written sufficiently in line with this guide (what, how, who).       

These helpful tips can be found in the short guide mentioned earlier. For an in-depth guide on how to write a charitable purpose, see Guidance CG-019, Charitable purposes of a registered charity.”

Slide 16 – Part 5: Examples of charitable purposes

DANIELLE: “In this part of the presentation, we’ll have a look at examples of charitable purposes.”

Slide 17 – Examples of charitable purposes (1/2)

DANIELLE: “Here are a few examples of how to write a charitable purpose. These are provided as a drafting resource to help you write your organization’s purposes.

Any revised purpose must be charitable and reflect your organization’s current and intended activities.

We’ll give you an example for each of the four categories of charity using a CRA model purpose.

Let’s start with the Relief of poverty:

What: To relieve poverty

How: by providing necessities of life and simple amenities, including food, clean water, clothing, and shelter

Who: to people who are experiencing poverty.

Your purpose would read as follows: To relieve poverty by providing necessities of life and simple amenities, including food, clean water, clothing, and shelter to people who are experiencing poverty.

Let’s now look at an example for the Advancement of education:

What: To advance education

How: by developing and delivering structured educational courses, classes, seminars

Who: to children, youth, and adults.

Your purpose would read as follows: To advance education by developing and delivering structured educational courses, classes, seminars to children, youth, and adults.”

Slide 18 – Examples of charitable purposes (2/2)

DANIELLE: “Here is an example for the Advancement of religion:

What: To advance religion

How: by preaching and advancing the teachings 

Who: of [specify religion/faith].

Your purpose would read as follows: To advance religion by preaching and advancing the teachings of [specify religion/faith].

And lastly, here is an example for Other purposes beneficial to the community:

What: To promote health

How: by operating a mobile medical clinic

Who: for unhoused youth.

Your purpose would read as follows: To promote health by operating a mobile medical clinic for unhoused youth.

Please keep in mind that you can also personalize a model purpose or write your own charitable purpose as long as you include the what, how and who.”

(link on slide: Examples of charitable purposes)

Slide 19 – Part 6: Special topics

DANIELLE: “Let’s turn now to some special topics.”

Slide 20 – Gifts to qualified donees

DANIELLE: “Your organization can have a purpose to make gifts to qualified donees, such as other registered charities. This type of charitable purpose does not need to include the what, how, and who.

For examples of purposes to make gifts to qualified donees, see Examples of charitable purposes.

Here are a few examples of charitable purposes to make gifts to qualified donees:

• To make gifts, from time to time, to charitable organizations that are registered charities.
• To make qualifying disbursements to qualified donees.”

Slide 21 – Grants to non-qualified donees

DANIELLE: “Your organization can make qualifying disbursements to grantee organizations (also known as grants to non-qualified donees) to fund charitable activities that further your organization’s charitable purposes.

To do this, your organization must have a charitable purpose that fits within one of the four categories of charity (including the what, how, and who).

That charitable purpose does not need to refer to “making qualifying disbursements to grantee organizations.” However, a charity’s purpose that fits in one of the four categories of charity (including the what, how and who) can also state it allows making qualifying disbursements to grantee organizations.

Both examples of the following charitable purposes to advance education would allow a charity to make grants: 

• To advance education by providing books, equipment, and educational aids to students.
• To advance education by providing books, equipment, and educational aids to students, through the making of qualifying disbursements to grantee organizations.

The additional wording in the second example limits the charity to making qualifying disbursements to further its purpose.”

(link on slide: Guidance CG-032, Registered charities making grants to non-qualified donees)

Slide 22 – Public policy dialogue and development activities (PPDDAs)

DANIELLE: “Your organization can carry on unlimited public policy dialogue and development activities that further its stated charitable purposes.

However, your organization cannot have a political purpose. This means that when writing your organization’s purpose, you should avoid referring to influencing the laws, decisions, or policies of the government. This is the case even if most or all of your organization’s activities are PPDDAs. Instead, your organization’s purpose must describe the public benefit it seeks to achieve.

For example, if your organization wants to carry on PPDDAs to advocate for the implementation of public policies to preserve wetlands or other ecologically sensitive land, you could draft its purpose as follows:

- To protect the environment for the benefit of the public by conserving or restoring ecosystems and biodiversity on a long-term basis.”

(link on slide: Guidance CG-027, Public policy dialogue and development activities by charities)

Slide 23 – Part 7: Making changes to purposes and activities

DANIELLE: “We’ll wrap up in Part 7 by showing you how to make changes to your purposes and activities.”

Slide 24 – Change purposes and activities

DANIELLE: “As a registered charity, your mission may evolve over time. It’s important to know that purposes and activities can be amended. When this happens, you must first ensure that any new or revised purposes and activities are considered charitable at law. This responsibility rests with the charity.

The Charities Directorate no longer pre-approves changes to a charity’s purposes or activities. However, our client service representatives are available to support you by directing you to relevant guidance and answering general questions about what is considered charitable. You can reach them at 1-800-267-2384 from Monday through Friday, from 8 a.m. to 5 p.m. Eastern time.

A charity should report any updates so its file with the CRA remains accurate and up to date.”

Slide 25 – Before making any changes

DANIELLE: “To support charities in navigating updates to their purposes or activities, we recommend reviewing the following resources:

• To change purposes: Short guide: How to write a charitable purpose
• To change activities: Describe your activities

You can also consult our guidance products for more information on charitable activities.

Introducing purposes or activities that are not charitable could put your charity’s registered status at risk.”

Slide 26 – Report changes to your purposes and activities (1/4)

DANIELLE: “If your charity changes its purposes, the revised purposes must be formally adopted in your governing document in accordance with your charity’s internal procedures and applicable legislation.

You should then send us an updated copy of the governing document reflecting these changes, along with a revised statement of activities, so that your file remains current.

To begin, you’ll need to sign in to your CRA account. You can do so with a sign-in partner, using your CRA user ID and password or by using a provincial partner if you have an Alberta.ca or BC Services card.

If you do not have an account, you can Register to use online services for charities. To get you started, we also have a recorded webinar that walks you through each step.”

Slide 27 – Report changes to your purposes and activities (2/4)

DANIELLE: “Once you’re in, on the navigation menu to your left, select your ”Registered charity” account.”

​[Arrow pointing to Registered charity]

DANIELLE: “Under the “Manage” section, select ”Update registered charity or RCAAA information”.”

​[Arrow pointing to Update registered charity or RCAAA information]

Slide 28 – Report changes to your purposes and activities (3/4)

DANIELLE: “From the dropdown menu, select ”Change purposes and activities”.”

​[Arrow pointing to Change purposes and activities]

DANIELLE: “If you are changing your purposes, include a copy of your amended certified governing document.”

Slide 29 – Report changes to your purposes and activities (4/4)

DANIELLE: “In the “Description” box, you will need to provide a detailed description of your request.”

​[Arrow pointing to Description box]

DANIELLE: “In addition, you can add any supporting document to assist in processing the request.

Once you’re done, click “Submit”.”

Slide 30 – Contact us

DANIELLE: “And, of course, if you would like to speak with a client service representative dedicated for Charities, you can call 1-800-267-2384. There, you can ask your questions directly to one of our representatives. They are available to help you Monday through Friday, from 8 a.m. to 5 p.m. Eastern time.

Thank you so much for attending today’s webinar. We hope we were able to answer your questions.

We will be sending you a link to an online survey about today’s webinar. Please take a few minutes to complete the survey.

Your feedback is really important to us. It helps us evaluate the effectiveness of our webinars and plan for our future outreach activities.

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Thank you.”

(link summary on slide:

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