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Charitable Donations - Ensuring Legitimacy


Richard Weber on October 27, 2014 in Advice for Charities

Charitable donations make all sorts of sense: they support worthy causes, donors can be eligible for tax write-offs and let’s face it, helping others makes us feel good. You may budget for a certain amount each year to be distributed to your favourite organization or respond to requests in a more organic manner. Regardless of your approach, what’s important is that your money is being directed where you want it to go.

Unfortunately, there are always going to be people taking advantageous of the generosity of others. The Canadian Anti-Fraud Centre – a partnership between the RCMP, Competition Bureau, and the OPP –receives over 50,000 complaints annually via telephone and 1,200 email submissions daily from victims of fraudulent activity.  

Avoid becoming a statistic by giving to registered charities and doing your research.

The Canada Revenue Agency (CRA) has responsibilities for ensuring that organizations registered as charities meet certain eligibility requirements. In cases where the agency has determined that the requirements are not being met, they have the power to revoke the charitable registration as was the case recently with the Jesus of Bethlehem Worship Centre. An extract from CRA correspondence on the issue notes that:

“The Organization did not maintain adequate books and records, issued receipts other than in accordance with the Act, and did not file accurate T3010 information returns. During the course of the audit, the CRA also obtained official donation receipts totaling approximately $156,000 that were not provided by the Organization. The audit also revealed that the board of directors of the Organization includes “ineligible individuals” as defined in the Act.”

Although the case clearly illustrates the penalties for non-compliance with meeting the requirements to be a registered charity, it’s clear that registration alone with the CRA does not ensure credibility. Audits take time and resources. For this reason, donors should not assume an organization’s legitimacy at face value, but rather, perform their due diligence by reviewing the organization’s website, financial history and activities. 

Information about ‘donating wisely’ is available on the CRA website at: http://www.cra-arc.gc.ca/chrts-gvng/dnrs/rcpts/dntn3-eng.html