Canadian Charities Say Building Partnerships With Local Organizations Is Tough. This New Senate Bill May Change That

If the Mastercard Foundation ever wanted to give a million dollars in scholarship money to McGill University, a major Canadian post-secondary institution, arguably the most complicated task on its to-do list would be writing the cheque. 

McGill is a registered charity recognized by the Canada Revenue Agency. As a qualified donee, it is considered to be capable of appropriately handling gifts and donations for charitable purposes. Jennifer Brennan, head of Canada programs at the Mastercard Foundation, says the grantmaker could simply give over the money in a variety of ways. 

Running the exact same program at Ashesi University, a prestigious university in Ghana’s capital city of Accra, would mean mountains of red tape. The Mastercard Foundation would have to, under Canadian law, collect receipts for all expenses paid by Ashesi University to administer its program — from personnel costs to program administration. “Essentially, we’re contracting them to act on our behalf in delivering these scholarships,” Brennan explains. “It’s a very complex arrangement, not a partnership at all.” That’s because Ashesi University is not a registered charity with the CRA, and therefore not a qualified donee.

Canadian charities have long complained about these legal hurdles whenever they try to work together with non-profits, charities, and grassroots organizations who aren’t considered qualified donees by the CRA, both at home and abroad. Bill S-222, a Senate bill quietly making its way through Parliament could flatten them if passed. 

Bill S-222, tabled by Independent Senator Ratna Omidvar earlier in 2021, would amend the Income Tax Act to allow Canadian charities to give resources (including grants) to a non-qualified donee so long as they take “reasonable steps” to ensure said resources are only used for charitable purposes. Under current CRA rules, charities who work through an intermediary organization, either in Canada or overseas, must prove that they exercise “direction and control” over its activities as an accountability measure. 

“You actually have to prove to the CRA that when you, as a charity, grant money to a non-charity, you are directing and controlling it,” Omidvar says. “It is your project, not their project. It is your voice, not their voice. It is your intellectual property, not their intellectual property.” To her, these laws force Canada’s charitable sector to engage in colonial practices. 

In an era when humanitarian organizations are increasingly open about the colonial history of their sector in everything from the deployment of Global North professionals overseas to the undignified depiction of Global South residents in fundraising campaigns, a bill that would allow Canadian charities to work with grassroots and intermediary organizations with less red tape is welcome news to some major charities. But a critic argues the bill (barring any major amendments) could make Canadian charities less accountable — and doesn’t prevent charities from continuing to engage in the colonial granting practices it strives to prevent.