Your non-profit organization is growing and helping more people everyday, but it needs to collect donations from the public to expand its activities. After weighing the pros and cons of becoming a registered charity, you decide registering is the best course of action.
What exactly is the process to become a registered charity?
Submitting an application to the Canada Revenue Agency
In order to become a registered charity, you must submit an application to the Charities Directorate of the Canada Revenue Agency (CRA). The Directorate is a branch of the agency. There is no fee for applying.
Before applying
The application process requires charities to provide a lot of detailed information regarding the charity’s mission, how it will carry out that mission and how it will operate as an organization. For example, you will be asked to provide a very precise description of the charity’s purposes and activities, and a proposed budget.
For this reason, it’s a good idea to think about all these aspects before starting the application process.
Filling out the application form
In order to apply to be a registered charity, you must fill out a form online. For help with filling out the form, you can contact the Charities Directorate by phone at 1-800-267-2384.
The form can be filled out by either
- a person with a position of authority in the organization (chairperson, treasurer, manager, etc.), or
- someone acting on behalf of the organization (for example, a legal representative).
The certification section at the end of the application must be dated and signed by two people with permission to sign for the charity, for example, directors, trustees or treasurers.
Required information and documents
Many applications are delayed or turned down because they are incomplete. Make sure to provide everything requested. You don’t have to use a legal advisor to apply, but in more complicated cases, their assistance could be useful.
Here are some important parts of the application:
1. Description of the charity’s purposes
This is one of the most important parts of the application. It often creates difficulties for charities applying for registration.
Charities must provide a very precise statement of their “purposes.” Purposes means the reason the charity was created – its mission. The CRA sometimes refers to purposes as “objects”.
It is not enough to use general words such as “promote”, “support”, “foster”, “facilitate”, “building networks” or “act as an umbrella”, without being specific about why the organization was created. For information on the level of detail required, consult the CRA’s Q&A.
The CRA has a guide on how to describe purposes and examples of purposes considered acceptable. Some of these models might fit with what your organization wants to do.
The CRA will evaluate whether the charities’ purposes fall under one of four acceptable categories to decide whether registration is possible. Consult our article Introduction to Registered Charities or the explanation of the CRA for more information on these categories of purposes.
The description of purposes must also show that there will be a real benefit to the general public or a significant section of the public. The people who will benefit cannot be a restricted group or people who share a private connection, such as a social club or professional association. To learn more, consult the CRA’s explanation of the public benefit test.
Finally, the purposes must match with the activities of the organization.
2. Description of the charity’s activities
The application form also asks to describe the charity’s activities. “Activities” are the projects and programs an organization will use to carry out its purposes. Again, you must provide details: for each purpose, you must describe the specific activities that will be used to achieve that purpose. It is not enough to just repeat the purposes.
Also, the description of activities must make it clear there will be a real benefit to the general public or a significant section of the public.
If your charity wants to carry out its purposes by giving resources to qualified donees, which include other registered charities, you must provide details on these resources.
Many applications are delayed or rejected because the description of activities is not detailed enough, or there are too many different activities listed. The CRA’s application guide contains information on the required level of detail.
3. Governing document
A “governing document” identifies a charity’s name and describes its purposes, structure and internal procedures.
There are different kinds of governing documents. The type of document required by the CRA depends on a charity’s “designation” as a charitable organization, public foundation or private foundation.
Charitable organizations must provide either a constitution, trust deed or, if they are incorporated, their incorporation documents. Public or private foundations must provide either a trust document or, if they are incorporated, their incorporation documents. The appropriate governing document must accompany the application.
The CRA’s application guide also explains the requirements for the contents of each kind of governing document.
Since the governing document will contain a statement of the organization’s purposes, make sure these purposes also meet the requirements mentioned above regarding the acceptable categories and benefit to the public.
Charities that are a branch, chapter, division, congregation or other part of an existing Canadian registered charity do not need governing documents: they can provide a letter of good standing from the existing registered charity confirming they are part of that charity.
4. Information on the charity’s officials
The application form asks for information about directors, officers, trustees and other similar officials in the charity.
You must provide the dates of birth for directors and trustees: it is to ensure there is no confusion around the identity of the people who are responsible for the charity. Two people can have exactly the same name. Providing a date of birth makes it clear who is being identified. Date of birth information remains confidential.
For a complete list of the information and documents you need, consult the CRA’s checklist.
How are applications processed?
As a general rule, applications are dealt with on a first-come, first-served basis. But if an organization thinks its application should be processed more quickly than normal, it can submit a special request in writing.
Note that priority is not given just because a group wants to receive donations and issue receipts right away, nor because the group must be registered to get money from funding agencies or other sources.
If the application is complete but there are problems with the description of purposes and activities or other parts of the application, the CRA will contact the organization to request clarification or more information.
If the application is approved, the CRA will send the charity a notification of registration with a registration number.
If the application is incomplete, the application will be rejected and returned.
If the organization’s purposes or activities do not meet the various tests, the application will be denied. This decision can be appealed.
How can I find out about the status of an application?
You can track your application status online, on the same platform used to fill in the application form.
Anyone named on the application form as an authorized representative of the charity can also call the CRA’s toll free line (1-888-892-5667) to ask about the status of an application.