Resources: Learn More About the Charitable Sector and Direction and Control Regulations
Senator Omidvar is the sponsor of the Effective and Accountable Charities Act. This bill will amend the Income Tax Act to replace the language of “own activities” with “resource accountability.” This change will require charities to take reasonable steps to ensure their resources are dedicated to charitable outcomes, instead of forcing them to micromanage the activities of partner organizations. To learn more about the problems with the current language of “own activities” and “direction and control,” check out the articles below.
Foreign Activities by Canadian Registered Charities: Challenges and Options for Reform by Andrew Valentine
“Toronto charity lawyer Andrew Valentine outlines the challenges with the current “direction and control” rules that apply to Canadian charities working abroad. He also presents proposals to reform the system, ranging from simple administrative amendments to full blown legislative reform, including grants to foreign organizations to further the charitable purposes of the Canadian charity.”
The Problems with Direction and Control by John Lorinc
“Canadian charities working internationally are subject to regulations that are intended to boost accountability and ensure that charitable dollars flow to genuinely charitable activity. Recently the Canada Revenue Agency has stepped up audits of these same charities. Increased accountability demands are placing an administrative burden on charities working internationally, particularly those that are small and have few, if any, staff. Some argue that the system works just fine, while others would like to see change and point to both the U.S. and the U.K., both of which are more flexible than CRA.”
Forcing Foundations to Invest in Infrastructure Won’t Work as Well as Modernizing Tax Rules that Constrain the Use of Funds for Public Good by Hilary Pearson
“There has not been a comprehensive review of the ITA with respect to charities in 50 years. Many of the provisions regarding charities were introduced piecemeal and are inconsistent. This is no way to regulate an important sector that contributes so much to Canada’s economy and society in the 21st century.”