About becoming a registered charity
Registering your organization as a charity can be rewarding. It empowers you to serve communities across Canada and abroad, while advancing the public good.
Registration has many privileges that enhance your ability to carry out your charitable work. However, it also comes with important responsibilities and obligations.
Privileges
Once registered, your organization:
- can issue official donation receipts for gifts it receives, allowing donors to claim a charitable tax credit or deduction
- doesn't have to pay income tax
- can receive gifts from other registered charities
- is listed on the List of charities, which increases its credibility
- is exempt from goods and services tax and harmonized sales tax (GST/HST) on many goods and services it provides
Non-profit organizations do not have some of these privileges.
For more information: Difference between registered charities and non-profit organizations
Responsibilities
To maintain its registration, your organization must:
- use its resources (funds, personnel, and property) only to further its charitable purposes
- ensure its official donation receipts are complete and accurate
- file a Registered Charity Information Return (T3010) every year within six months of its fiscal year-end
- keep complete books and records
- meet its disbursement quota (also known as annual spending requirement)
- continue to be established and resident in Canada
Types of registered charity (designations)
There are three types of registered charity. Your organization will receive a designation after registration, based on:
- how it carries out its activities
- the structure of its board of directors
- its source of funding
- Charitable organization
A charitable organization focuses most of its resources on carrying out its own charitable activities or on making grants to non-qualified donees. It generally receives its funding from a variety of arm’s length donors.
It is established as a corporation, a trust, or under a constitution, and more than 50% of its directors, trustees, and like officials deal with each other at arm’s length.
- Public foundation
A public foundation primarily funds activities carried out by other qualified donees (usually other registered charities) by giving more than 50% of its income each year. However, it may also carry out some of its own charitable activities. It typically receives its funding from a variety of arm’s length donors.
It is established as a corporation or a trust, and more than 50% of its directors, trustees, and like officials deal with each other at arm’s length.
- Private foundation
A private foundation may focus on carrying out its own charitable activities, funding other qualified donees (usually other registered charities), or both.
It is established as a corporation or a trust.
An organization is typically designated as a private foundation if any of the following conditions apply:
- 50% or more of its directors, trustees, and like officials do not deal with each other at arm's length
- More than 50% of its funding comes from a person, group, or organizationFootnote 1 that either:
- controls or manages the charity in any way
- does not deal at arm's length with someone who controls or manages the charity in any way