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Starting A Non-Profit Society in British Columbia: A Complete Guide

Post author By Press Secretary
Post date December 18, 2018

Starting A Non-Profit Society in British Columbia: A Complete Guide

Starting a non-profit society in British Columbia involves navigating complex registration requirements and legal obligations. We know how challenging it can be to understand the incorporation process for charitable organizations.

We start a non-profit society in BC by gathering at least three directors, choosing a unique name, creating bylaws, filing incorporation documents with BC Registry Services, and paying the $30 fee. The process takes 10-20 business days and creates a legally recognized society that can operate for charitable or community purposes.

Just a heads-up, things in the non-profit world shift. The Societies Act got a refresh as of May 4, 2023. You can find the summary on the changes here: BC Government Societies Act Amendments. This guide focuses specifically on British Columbia-specific rules.

Your Step-by-Step Timeline for Starting a BC Society

Before we dive into the details, here’s what your timeline will look like from start to finish. Understanding this roadmap helps you plan your time and resources effectively.

During the first two weeks, you’ll gather your founding directors and draft your purpose statement. This is when you’ll have those important conversations about why your society exists and what you want to accomplish. Take your time here because a clear purpose makes everything else easier.

In weeks three and four, you’ll work on creating your bylaws and reserving your society name. The bylaws take some thought because they’re your organization’s rulebook. You can start with the provincial template and customize it to fit your needs. While you’re working on bylaws, you can reserve your chosen name online, which protects it while you finish your paperwork.

Weeks five and six are when you’ll file your incorporation documents with BC Registry Services. Once you submit everything online with the $30 filing fee, the registry reviews your application. Most societies receive their certificate of incorporation within 10-20 business days, though it can take longer if there are questions about your name or bylaws.

In weeks seven and eight, after receiving your certificate, you’ll open a bank account for your society. Bring your incorporation documents to the bank, and make sure at least two directors are available to sign. Banks typically require two signing officers for nonprofit accounts.

If you’re planning to apply for charitable status with the Canada Revenue Agency, that happens in months three through six or even longer. The CRA takes time to review applications, often six to twelve months, so start this process as soon as your society is established and operating. You’ll need to show a track record of activities that align with your charitable purposes.

Throughout your first year and every year after, you’ll have ongoing compliance requirements. Annual reports must be filed with BC Registry Services, annual general meetings must be held, and financial statements must be prepared. If you become a registered charity, you’ll also file annual T3010 returns with the CRA. Mark these dates on your calendar now so you don’t miss important deadlines.

Step 1: Building Your Core Team – Officers and Directors

First things first, you need people to run the show. Think of it like this:

Officers: They’re the hands-on folks, handling day-to-day operations. If you get funding, they’re the ones who might hire staff or contractors.
Directors: They’re the big-picture strategists. They set the direction and make sure everything’s running smoothly.

Now, in smaller non-profits, these roles often overlap, and that’s okay. Especially when you’re just starting out and budgets are tight. You’ll need at least three directors, unless you’re a member-funded society, then one is enough.

Think about who you’re bringing on board. You want people with different skills. Someone good with finances, someone who knows fundraising, maybe someone with marketing experience. Each director should bring something valuable.

You’ll need their full names and addresses for the incorporation paperwork. And each director has to give their written okay to take on the role. It doesn’t have to be fancy; a simple note saying, “I agree to act as a director for [society name],” signed and dated, will do. You don’t have to name your officers when you incorporate.

BC Society vs. Federal Nonprofit Corporation: Which Should You Choose?

Before you start the incorporation process, you need to decide whether to incorporate provincially under the BC Societies Act or federally under the Canada Not-for-Profit Corporations Act. This choice affects your costs, governance requirements, and where you can operate.

If your nonprofit plans to operate mainly in British Columbia, a BC society makes the most sense. The incorporation fee is just $30, which is significantly cheaper than federal incorporation. The process is straightforward, and you can complete everything online through BC Registry Services. Most community groups, sports clubs, and local charities choose this route because it’s simple and affordable.

A BC society is incorporated under the BC Societies Act and must follow provincial regulations. You’ll file annual reports with the provincial registry and follow BC’s governance rules. If you later want to operate in other provinces, you can register extra-provincially, which means registering your BC society in other provinces where you’re active. This adds some paperwork and fees, but it’s manageable if you’re only in a few provinces.

Federal incorporation makes sense if you plan to operate across Canada from the start. A federal nonprofit corporation can operate in any province without extra-provincial registration. The Canada Not-for-Profit Corporations Act provides a consistent framework across the country, which some national organizations prefer. However, federal incorporation costs more upfront and has more complex governance requirements.

The governance differences matter too. Federal nonprofits follow the rules in the Canada Not-for-Profit Corporations Act, which has specific requirements for member meetings, voting, and record keeping. BC societies follow the BC Societies Act, which has different rules, especially around member-funded versus non-member-funded structures. You’ll need to understand which set of rules fits your organization better.

For most groups just starting out in British Columbia, we recommend provincial incorporation as a BC society. It’s cheaper, simpler, and perfectly adequate if you’re focused on serving your local community. You can always expand later if needed. If you’re planning national operations from day one, or if you’re setting up a branch of a national organization, then federal incorporation might be worth the extra cost and complexity. For more information on registering a federal nonprofit in BC, see our guide on extra-provincial registration for federal nonprofits in British Columbia.

Step 2: Picking and Reserving Your Society’s Name

Your name is your first impression, so make it count. Here’s how:

Make it unique: Do a quick Google search to make sure no one else is using it. You don’t want any confusion.
Make it descriptive: Your name should give people an idea of what your society does. If you’re a birdwatching group, include words like “birds” or “nature.”
End it right: Your name has to end with either “Society,” “Association,” or “Club.” Those are the rules.
Watch out for restricted words: Some words, especially those related to government, hospitals, or locations, might need extra approvals. To be safe, give the provincial registrar a call at 1-877-526-1526. They can tell you if you need any special permissions.

Once you’ve got a few names you like, you can reserve one online. It costs a small fee, so have your credit card ready. You can also do it by mail or in person at a Service BC centre, but it’ll take longer.

Step 3: Defining Your Society’s Purpose

While you’re waiting for your name to be approved, get clear on why your society exists. Write it down as a “focus statement.” It’s a quick summary of what you’re all about.

For example:

“To promote the interests of bird-watching seniors in the North Vancouver area.”
“To provide an amateur softball league for elementary school children in Saanich.”
“To encourage and foster responsible exotic pet ownership in the Lower Mainland of British Columbia.”

If you need more than one sentence to explain it, that’s fine. Just make sure it’s clear and to the point.

Step 4: Crafting Your Society’s Bylaws

Think of your bylaws as your society’s rulebook. They cover everything from how members join to how meetings are run.

Here’s what they should include:

The rights and duties of members.
How directors are elected (and if they get paid).
How the society manages its money (can you borrow money?).
How meetings are conducted.

The provincial registrar provides a model set of bylaws, which is a great starting point. But you’ll probably want to tweak them to fit your society’s specific needs.

Remember, you can always change your bylaws later, but it takes time, effort, and approval from your members. And there might be fees involved. So, it’s best to get them right from the start.

Also, be sure to fully understand the difference between Member funded, and non member funded societies. This will impact the rules your society will need to follow. [BC Government Member Funded Societies]

Understanding Member-Funded vs. Non-Member-Funded Societies

BC has a unique feature in its Societies Act that other provinces don’t have. You need to choose whether your society will be member-funded or non-member-funded, and this choice affects your governance structure significantly.

A member-funded society is one where members provide the majority of the society’s funding through membership fees, dues, or assessments. Think of it like a sports club where members pay annual fees, or a professional association where members pay dues. In a member-funded society, the members have more control because they’re the primary funders. Member-funded societies can have just one director, though most choose to have more. Members in these societies typically have strong voting rights and direct say in how the organization runs.

A non-member-funded society is one where funding comes mainly from sources other than membership fees. This includes donations, grants, fundraising events, government contracts, or investment income. Most charities and community service organizations are non-member-funded because they rely on donations and grants rather than membership fees. Non-member-funded societies must have at least three directors, and the governance rules are more structured to ensure accountability to the public rather than just to members.

How do you decide which structure fits your organization? Think about your funding model. If you’re running a club where members pay substantial fees and that’s your main revenue source, you’re probably member-funded. If you’re planning to fundraise from the public, apply for grants, and offer free or low-cost services, you’re probably non-member-funded.

The distinction affects more than just the number of directors. Member-funded societies have different rules about member meetings, voting, and financial disclosure. Non-member-funded societies have stricter transparency requirements because they’re often seeking public donations or applying for charitable status. If you plan to become a registered charity later, you’ll almost certainly need to be non-member-funded because charities typically receive donations from the public.

You can change from one type to another later if your funding model changes, but it requires amending your bylaws and filing a notice with BC Registry Services. It’s easier to choose the right structure from the beginning. If you’re not sure, most organizations default to non-member-funded because it gives you more flexibility and is required if you want charitable status.

Your bylaws must clearly state which type of society you are. This is one of the required provisions in your bylaws, and the registry checks this when reviewing your incorporation application. Make sure your bylaws align with your choice and include all the provisions required for your society type.

Director Responsibilities and Liabilities: What You’re Signing Up For

Before you finalize your list of directors, make sure everyone understands what they’re taking on. Being a nonprofit director in British Columbia comes with real responsibilities and potential liabilities. It’s important to go into this with eyes open.

Directors have fiduciary duties, which is a legal term meaning they must put the society’s interests ahead of their own. This means making decisions that benefit the society and its purposes, not decisions that benefit the directors personally. If a director has a conflict of interest, they must disclose it and often must not vote on that matter.

The standard of care required of directors is acting honestly and in good faith with a view to the best interests of the society, and exercising the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. This doesn’t mean directors need to be experts in everything, but it does mean they need to pay attention, ask questions, and make informed decisions.

Personal liability risks exist for directors in certain situations. While the society itself usually shields directors from liability for ordinary activities, directors can be personally liable for specific things. Directors can be personally liable for unremitted source deductions like employee income tax and CPP contributions. They can be liable for GST/HST that the society collected but didn’t remit to the government. They can be liable for environmental violations if the society owned property with contamination. These specific statutory liabilities cut through the corporate shield.

Directors can also be liable if they breach their fiduciary duties, meaning if they act fraudulently, dishonestly, or with gross negligence. If a director steals from the society or deliberately makes decisions that harm the organization, they can be personally sued and held liable for damages.

Protection through insurance and proper governance is available and important. Most societies should purchase directors and officers liability insurance, often called D&O insurance. This insurance covers legal defence costs and damages if directors are sued. It’s not terribly expensive for small nonprofits, often just a few hundred dollars per year, and it gives directors peace of mind.

Indemnification clauses in your bylaws provide another layer of protection. These clauses say the society will pay for a director’s legal defence if they’re sued for actions taken in good faith as a director. Combined with insurance, this makes the risk manageable for directors who are acting properly.

Minimum director requirements depend on whether you’re member-funded or non-member-funded. As we discussed earlier, non-member-funded societies must have at least three directors. Member-funded societies need only one, though most choose to have more because shared decision-making is generally better governance.

Residency requirements, or actually the lack thereof, might surprise you. BC societies do not require directors to be Canadian citizens or residents. Your directors can live anywhere in the world. Their addresses may be outside Canada. However, if you later register as a charity with the Canada Revenue Agency, the CRA requires that the charity’s management and control be in Canada, which usually means a majority of directors should be Canadian residents. But for just incorporating a BC society, there’s no residency requirement.

Make sure potential directors know they should keep good records, attend meetings regularly, read the materials provided before meetings, ask questions when they don’t understand something, and recuse themselves from decisions where they have a conflict of interest. Being a director isn’t just a title. It’s an active responsibility that requires ongoing engagement.

Step 5: Filing for Incorporation Online

Once your name is reserved, you can start the incorporation process online. You’ll need:

A copy of your purpose statement.
Your bylaws.
The names and addresses of your directors.
Information on if you are member funded, or non member funded.
A credit card to pay the filing fee.

You’ll get an email confirming your name reservation. Use that to start the online process. Once you’re done, you’ll get your incorporation documents by email or mail.

If your nonprofit is already federally incorporated, you’ll also need to register in BC. See our guide on extra-provincial registration for federal nonprofits in BC.

What Does Incorporating Actually Cost: Beyond the $30 Fee

Everyone focuses on the $30 incorporation fee, and yes, that’s the official cost to file with BC Registry Services. But being realistic about your total startup costs helps you plan better and avoid surprises.

Name reservation is an additional $30 if you choose to reserve your name before incorporating. Some people skip this step and just include their preferred name in their incorporation application, taking the risk that the name might not be approved. Reserving the name first adds a bit of cost but gives you certainty that your name is available before you invest time in preparing all the other documents.

Legal fees might apply if you use a lawyer for reviewing or drafting your bylaws. Many societies use the model bylaws from BC Registry Services and customize them without legal help, which keeps costs down. But if your society will have complex operations, significant assets, or unusual governance needs, spending $500 to $1,500 for legal advice on your bylaws can prevent much bigger problems later. Think of it as insurance against governance disputes down the road.

Accounting software or bookkeeping costs should be budgeted from day one. Even small societies need to track income and expenses, prepare financial statements, and provide records to directors and members. Basic accounting software like Wave is free for nonprofits. QuickBooks for nonprofits costs around $20 per month. Or you might pay a bookkeeper $50 to $150 per month to handle your books, depending on your transaction volume.

Insurance costs, particularly directors and officers liability insurance, should be in your budget. D&O insurance for a small nonprofit typically costs $500 to $1,500 per year, depending on your budget size and activities. General liability insurance, if you’re running events or programs where people might get injured, adds another $500 to $2,000 per year. Some societies also need property insurance if they own equipment or rent space for activities.

Annual filing fees with BC Registry Services are currently $40 per year for the annual report. This report is due every year and keeps your society in good standing. Missing this filing can lead to your society being struck off the registry, so budget for this recurring cost.

Professional fees for CRA charity application can be significant if you decide to pursue charitable status. Some societies complete the application themselves, which is free but time-consuming and has a high rejection rate. Hiring a charity lawyer to handle the application typically costs $3,000 to $8,000, depending on the complexity of your organization. The lawyer prepares all the required documentation, liaises with the CRA, and responds to any questions or concerns the CRA raises during the review process.

Estimated total startup costs for a basic BC society with no complications might be around $500 to $1,000, including the incorporation fee, insurance, initial accounting setup, and basic office supplies. For a society planning to apply for charitable status and wanting legal help with bylaws and the charity application, budget $5,000 to $10,000 for your first year. This might sound like a lot, but it’s an investment in building a solid foundation.

The point isn’t to discourage you with these costs. The point is to plan realistically. A society that budgets properly from the start has a much better chance of success than one that runs into unexpected expenses and can’t cover them. Talk with your founding directors about these costs and make sure everyone understands the financial commitment involved in starting a nonprofit.

Step 6: Opening a Bank Account for Your Society

Now that you’re officially incorporated, you’ll need a bank account. Take your incorporation documents to a bank or credit union.

Before you go, have a discussion with your board about internal controls. Ask yourselves:

Who will have access to the account?
How many signatures are needed for transactions?
Is there a dollar limit for single signatures?

Typically, only directors or officers can sign on the account, and they’ll need two pieces of ID.

Understanding Annual Compliance Requirements: Staying in Good Standing

Getting incorporated is just the beginning. BC societies have ongoing compliance requirements that you must meet every year to stay in good standing with BC Registry Services and, if applicable, the Canada Revenue Agency.

Annual report filing with BC Registry Services is required for every society. This report updates your society’s information, including current directors’ names and addresses, your registered office address, and confirmation that your society is still active. The annual report is due once per year, and you can file it online through BC Registry Services. The fee is currently $40. If you miss this filing, your society can be struck off the registry, which means you lose your legal status and all the benefits that come with being an incorporated society.

The due date for your annual report is based on the month you incorporated. If you incorporated in June, your annual report is due every year in June. BC Registry Services sends reminder emails to the email address on file, but it’s your responsibility to track this deadline. Put it on your calendar with reminders starting a month before the due date so you don’t forget.

Annual general meeting requirements depend on whether you’re member-funded or non-member-funded and what your bylaws say. Most societies must hold an annual general meeting with members once per year. At this meeting, you typically present financial statements, elect directors, and discuss the society’s activities and plans. Your bylaws specify how much notice members must receive, what constitutes quorum, and what business must be conducted.

Financial statement preparation is required even if you’re a small society with a modest budget. You need to prepare a statement of revenues and expenses and a statement of assets and liabilities at least once per year. For societies with revenues over $50,000 per year, many funders and regulatory bodies expect financial statements prepared by a professional accountant. For smaller societies, internally prepared financial statements may be sufficient, but they still need to be accurate and complete.

If you’re a registered charity, T3010 filing requirements apply to you. The T3010 is the annual information return that all registered charities must file with the Canada Revenue Agency. It’s due within six months of your fiscal year-end. The T3010 asks for detailed information about your revenues, expenses, directors, activities, and charitable programs. Most charities need professional help preparing this form because it’s complex and errors can lead to CRA sanctions or even loss of charitable status.

Penalties for non-compliance can be serious. If you fail to file your annual report with BC Registry Services, late fees apply, and eventually, your society can be struck off the registry. If you’re a registered charity and fail to file your T3010, the CRA can revoke your charitable status, which means you lose the ability to issue tax receipts and you lose your tax-exempt status. These penalties aren’t just theoretical. The CRA revokes charitable status for nonprofits that don’t comply, and BC Registry Services strikes off societies that don’t file annual reports.

Timeline considerations matter for planning purposes. Your annual report to BC Registry Services is due in the month you incorporated. Your annual general meeting should typically be held within a few months of your fiscal year-end so you can present annual financial statements to members. If you’re a registered charity, your T3010 is due six months after your fiscal year-end. Juggling these different deadlines requires planning and organization.

Good calendar management prevents compliance problems. At the start of each year, sit down with your board and map out all your compliance deadlines. Put them in a shared calendar with reminders at 60 days, 30 days, and 7 days before each deadline. Assign responsibility for each task to a specific director or officer so nothing falls through the cracks.

Charitable Tax Status: A Separate Process

Getting charitable tax status is different from incorporating. It’s an additional application process through the Canada Revenue Agency, and it comes with significant benefits and significant responsibilities. Understanding this process helps you decide if charitable status makes sense for your society.

Let’s be clear about the distinction. Incorporation does not equal charitable status. When you incorporate a BC society, you create a legal entity that can enter contracts, own property, and sue or be sued. But incorporation alone doesn’t give you any tax benefits. Your society still pays taxes on any income it earns, and donors can’t get tax receipts for their donations. To get those benefits, you need charitable status from the CRA.

Eligibility criteria for charitable purposes are strict. The CRA recognizes only certain purposes as charitable. These include relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community. Each of these categories has specific meanings developed through hundreds of years of legal decisions. Relief of poverty means providing necessities to people who can’t afford them. Advancement of education means teaching or training with educational content, not just any activity involving learning. Advancement of religion means promoting religious worship or instruction in religious doctrine. Other purposes beneficial to the community is the catch-all category that includes things like amateur sports, environmental protection, animal welfare, and cultural activities, but only if they provide a clear public benefit.

The application process starts with the Application to Register a Charity, which is the CRA’s detailed form for applying for charitable status. You complete this application, providing information about your purposes, activities, directors, finances, and governance. The CRA wants to see that your purposes are exclusively charitable, your activities will achieve those purposes, you have proper governance in place to protect charitable assets, and you’re likely to be able to operate sustainably.

Timeline for the application is typically six to twelve months, though it can be longer if the CRA has questions or concerns. Some applications get approved faster, especially if they’re straightforward and all the documentation is complete. Complex applications, or applications where the CRA has doubts about whether the purposes are truly charitable, can take eighteen months or even longer. During this time, the CRA may ask follow-up questions, request additional documentation, or ask you to clarify aspects of your application.

Common rejection reasons include purposes that aren’t exclusively charitable, activities that don’t align with the stated purposes, inadequate governance structures, unrealistic budgets or financial projections, and conflicts of interest among directors. The CRA rejects about 60% to 65% of charity applications, so getting it right the first time is important. Many societies hire charity lawyers to prepare their applications because of the high rejection rate.

CRA compliance requirements once registered are substantial. You must file an annual T3010 information return within six months of your fiscal year-end. You must issue donation receipts in the exact format specified by the CRA, including all required information. You must maintain proper books and records showing all receipts, expenditures, assets, and charitable activities. You must ensure at least 90% of your directors deal at arm’s length with each other, meaning they can’t all be family members or business partners. You must devote your resources exclusively to charitable activities, which means you can’t operate a business unless the business is integral to your charitable purposes.

Benefits of charitable status are significant. You can issue official donation receipts that donors can claim on their income taxes, which dramatically increases your fundraising potential. Most donors prefer to support registered charities because of this tax benefit. Your charity is tax-exempt on most types of income, which means you don’t pay income tax on donations, grants, or investment income. You become eligible for grants and funding that are only available to registered charities. Many foundations, corporations, and government programs only fund registered charities, so this opens doors that are closed to regular nonprofits.

When charitable status makes sense depends on your organization’s goals and capacity. If you’re planning to fundraise significantly from the public, charitable status is almost essential because donors want tax receipts. If you’re applying for grants from major funders who only support charities, you’ll need charitable status. If you’ll be generating investment income or business income, tax exemption can save substantial money. But if you’re a small member-funded club that doesn’t need outside donations, the compliance burden of charitable status might not be worth it.

The Canada Revenue Agency (CRA) has all the details: CRA Charities and Giving. You’ll need to show that your society’s purpose is charitable. Also, review resources from Canadian charity law experts, such as those found at charitylawgroup.ca.

Key Considerations for Long-Term Success

Record-keeping: Keep accurate records of everything – meetings, finances, etc.
Regular reviews: Your bylaws and purpose might need updates over time.
Legal advice: Don’t hesitate to seek legal advice if you’re unsure about anything.
Insurance: Consider liability insurance to protect your directors and society.
Volunteer management: If you use volunteers, have clear policies for recruitment and training.
Communication: Keep your members and stakeholders informed.

Additional Compliance Considerations:

Privacy legislation compliance is required even though many societies don’t realize it. British Columbia’s Personal Information Protection Act (PIPA) or, in some cases, federal privacy legislation (PIPEDA) applies to nonprofits that collect personal information. This means having privacy policies, obtaining consent before collecting information, securing personal information properly, and allowing people to access their information. Privacy breaches can result in significant penalties, so understanding your obligations under privacy law is important.

Employment standards compliance kicks in if you hire staff. If your society grows to the point of hiring employees or contractors, you need to understand employment standards legislation. This includes things like minimum wage, vacation entitlements, termination notice, and employment contracts. Many societies start with contractors to keep things simple, but make sure you understand the difference between employees and contractors. Misclassifying an employee as a contractor can result in penalties and back taxes.

HST and GST registration might be required depending on your revenue. Most charities are exempt from charging GST/HST on their services, but if you’re selling goods or running businesses as part of your activities, you might need to register for GST/HST. The threshold for mandatory registration is $50,000 in taxable supplies per year, but voluntary registration might make sense sooner if you’re paying GST/HST on purchases and want to claim input tax credits.

Fundraising regulations in BC aren’t particularly onerous compared to some provinces, but you still need to follow the rules. If you’re soliciting donations from the public, you need to be truthful in your fundraising materials and use donations for the purposes described. If you’re running raffles or lotteries, you’ll need a gaming licence. The Gaming Policy and Enforcement Branch regulates gaming in BC, and running an unlicensed raffle can result in fines.

Gaming licences are required if you’re running raffles, bingos, or other games of chance. Many societies run raffles as fundraisers without realizing they need a licence. The Gaming Policy and Enforcement Branch issues licences for different types of gaming activities. Application processes and fees vary depending on what type of gaming you’re doing. Getting a licence isn’t difficult, but you need to plan ahead because applications take time to process.

Accessible BC Act compliance is relatively new but important. The Accessible British Columbia Act requires organizations to take steps to identify, remove, and prevent barriers to accessibility. This includes barriers related to physical access, communication, receipt of information, and employment. Accessibility requirements will increase over time, so staying informed about your obligations helps ensure your programs and services are inclusive.

Anti-spam legislation compliance applies if you send commercial electronic messages, which includes fundraising appeals by email. Canada’s Anti-Spam Legislation (CASL) requires obtaining consent before sending commercial electronic messages, including an unsubscribe mechanism, and properly identifying your organization in all messages. Violations of CASL carry significant penalties, so if you’re doing email fundraising or marketing, make sure you understand and comply with these rules.

Setting up a non-profit takes time and effort, but it’s a rewarding experience. Just follow these steps, and you’ll be well on your way.

Common Mistakes to Avoid When Starting Your BC Society

Learning from others’ mistakes is cheaper than learning from your own. Here are the most common problems new BC societies run into and how you can avoid them.

Confusing incorporation with charitable status is probably the most frequent mistake. People think that incorporating automatically means they can issue tax receipts. It doesn’t. Incorporation and charitable status are completely separate processes. Incorporation creates your legal entity under the BC Societies Act. Charitable status comes from the Canada Revenue Agency and requires a separate application. Many societies incorporate and never become charities because charitable status isn’t necessary for their work. Understanding this distinction from the beginning prevents frustration and helps you plan appropriately.

Not maintaining proper records causes problems years later when you need information and can’t find it. Minutes that were never written, financial records that weren’t kept, member lists that weren’t updated—these oversights seem minor at the time but create major headaches. Board members change, memories fade, and suddenly no one remembers what was decided or why. Keep proper records from day one, even if your society is small and informal. Future you will be grateful.

Missing annual filing deadlines with BC Registry Services or the CRA results in penalties and potentially losing your good standing. Set calendar reminders, assign responsibility to specific people, and check on these deadlines regularly. An annual report that costs $40 and takes 15 minutes to file online seems trivial until you forget it and your society gets struck off the registry. Then you have to pay reinstatement fees and file all the missed reports, which is far more work than just filing on time.

Inadequate financial controls lead to fraud, errors, or disputes. Not requiring dual signing authority on large cheques, giving too many people access to the bank account, not reconciling bank statements monthly, or not reviewing financial reports regularly—these lapses create opportunities for problems. Even if no one intends to steal, poor financial controls lead to mistakes that are hard to catch and fix. Implement basic controls from the beginning, even if your budget is small.

Poor conflict of interest management damages trust and can lead to legal problems. Directors who vote on matters where they have personal interests, societies that contract with companies owned by directors without proper disclosure, or directors who take opportunities for themselves that should belong to the society—these conflicts poison governance and can result in personal liability for directors. Have a clear conflict of interest policy, require directors to disclose conflicts, and make sure conflicted directors don’t vote on matters where they’re conflicted.

Not updating bylaws when circumstances change creates confusion and governance problems. Your bylaws are from your early days when you had different needs. As your society grows, you might need different governance structures, different meeting procedures, or different financial authorities. Bylaws that don’t match your current reality lead to disputes and make decision-making harder. Review your bylaws every few years and update them as needed through proper member approval processes.

Operating outside your stated purposes risks losing charitable status if you’re registered, or can cause problems with funders who gave you money for specific purposes. Your purposes statement defines what you can do. Activities that don’t fit within your purposes are ultra vires, meaning beyond your powers. If you want to expand into new areas, amend your purposes first rather than just doing it and hoping no one notices.

Failing to maintain minimum board requirements can result in your society being unable to function. If your bylaws require three directors and you drop to two because someone resigned and you didn’t replace them, you might not have quorum for meetings. Board vacancies should be filled promptly. If you’re having trouble recruiting directors, that’s a red flag that you need to address by making board service more appealing, expanding your recruitment efforts, or reconsidering whether your society is sustainable.

These mistakes are all preventable with proper planning, good governance practices, and attention to detail. Take the time to do things right from the beginning, and you’ll avoid most of the problems that plague struggling nonprofits.

Do you need help setting up your Society in British Columbia?

Schedule a free 15 minute free consultation with our team, or contact us at:

Frequently Asked Questions

We’ve answered the most common questions about incorporating non-profit societies in BC. These responses cover the essential information you need to get started.

How to start a nonprofit organization in British Columbia?

We gather at least three directors, choose a unique name, and create bylaws for our society. We file incorporation documents online with BC Registry Services, pay the $30 fee, and receive our certificate of incorporation. After that, we open a bank account and apply for charitable status if needed.

How much does it cost to register a society in BC?

We pay $30 to incorporate a society through BC Registry Services. This is the basic registration fee. We might have additional costs for name reservation or legal help with bylaws, but the core incorporation fee is just $30.

What is the difference between a society and a non-profit in BC?

We use “society” as the legal term in BC for non-profit organizations. A society is incorporated under the BC Societies Act and operates for charitable or community purposes. All societies are non-profit, but some non-profits use different legal structures like federal incorporation.

What are the steps to legally start a non-profit society in British Columbia?

We follow these steps: gather founding directors, reserve our society name, create bylaws, file incorporation documents online, pay the registration fee, and receive our certificate. Then we open a bank account and handle additional requirements like charitable status applications.

What are the rules and regulations governing non-profit organizations in Canada, specifically in British Columbia?

We follow the BC Societies Act for incorporation and ongoing operations. This covers director responsibilities, meeting requirements, and annual reporting. For charitable status, we also follow Canada Revenue Agency rules. The Societies Act was updated in May 2023 with new requirements.

Can non-residents of Canada be directors of a BC society?

Yes, BC societies do not require directors to be Canadian citizens or residents. Your directors can live anywhere in the world, and their addresses may be outside Canada. However, if you later register as a charity with the Canada Revenue Agency, the CRA requires that the charity’s management and control be in Canada, which usually means a majority of directors should be Canadian residents.

How do I dissolve a non-profit society in BC?

Dissolving a BC society requires a special resolution passed by members at a general meeting. You must pay all debts, distribute remaining assets to another qualified organization with similar purposes (not to members or directors), and file dissolution paperwork with BC Registry Services. If you’re a registered charity, you must also notify the Canada Revenue Agency and follow their requirements for distributing charitable assets.

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What is Director and Officer Liability for Charities in Canada?

Post author By Press Secretary
Post date December 7, 2018

What is Director and Officer Liability for Charities in Canada?

In Canada, individuals who serve as directors and officers for charities play a vital role in ensuring the organization runs smoothly and adheres to legal and ethical guidelines. However, many people don’t realize that these roles come with potential personal liabilities. Understanding director and officer liability is crucial for anyone involved in running a charity, as failure to comply with regulations can lead to personal legal consequences.

Who Are the Directors and Officers?

Directors are the individuals who sit on the board of a charity. They are responsible for making high-level decisions, setting policies, and overseeing the organization’s activities. Officers, on the other hand, are typically appointed by the board to handle the charity’s day-to-day operations, such as a CEO, CFO, or Executive Director.

In many cases, directors and officers are volunteers who serve out of passion for the cause. However, the responsibilities they carry can put them at risk for personal liability if the organization fails to comply with the law.

The Legal Obligations of Directors and Officers

Directors and officers must fulfill several legal duties under Canadian law:

Duty of Care: Directors and officers must act prudently and diligently. This means they must make informed decisions and consider the best interests of the charity at all times. For example, a director should attend board meetings regularly and actively participate in decision-making.
Duty of Loyalty: They must avoid conflicts of interest and always put the charity’s interests first. For instance, if a director has a business that could benefit from a charity’s decision, they must disclose this conflict and avoid participating in related decisions.
Duty of Obedience: Directors and officers must ensure the charity complies with all applicable laws and regulations, including maintaining its charitable status. This involves following the rules set by federal and provincial governments as well as adhering to the charity’s bylaws.

What Can Directors and Officers Be Liable For?

There are several areas where directors and officers can face personal liability if the charity does not meet its legal obligations:

Financial Mismanagement: Directors and officers may be held personally liable for unpaid taxes, including GST/HST, or for failing to remit employee payroll deductions. For example, if a charity does not send the appropriate tax payments to the Canada Revenue Agency (CRA), directors could be personally responsible for the debt.
Non-Compliance with Laws: Charities must adhere to a range of federal and provincial regulations, including those related to employment, privacy, and health and safety. If the charity violates these laws, directors and officers may face fines or other penalties.
Improper Use of Charitable Funds: Directors and officers must ensure that funds are used for the charity’s stated mission. If funds are misused, such as being spent on activities unrelated to the charity’s objectives, directors could be held accountable.
Negligence or Breach of Duty: Directors can be held liable for failing to meet their duties of care, loyalty, or obedience. For example, if a director fails to supervise the organization’s activities and this leads to harm (such as mismanagement of funds), they could face personal lawsuits.

How Can Directors and Officers Protect Themselves?

Understanding the potential liabilities is the first step in protecting oneself as a director or officer of a charity. Here are some practical ways to mitigate these risks:

Education and Training: Directors and officers should undergo training to fully understand their legal obligations. Many organizations, like Capacity Canada, provide workshops on governance, compliance, and risk management for charities.
Board Governance Best Practices: It is crucial to establish clear policies and procedures. This involves setting up systems for financial oversight, holding regular board meetings, and maintaining detailed records of decisions.
D&O Insurance: Directors and officers can safeguard themselves from personal liability by obtaining Directors and Officers (D&O) insurance. This insurance type helps cover legal costs and damages resulting from lawsuits or claims of misconduct.
Legal and Financial Expertise: It is advisable for charities to involve legal and financial professionals who can offer guidance on complying with federal and provincial laws. This includes regular audits and legal reviews to ensure the charity is fulfilling all its obligations.
Conflict of Interest Policies: Implementing a clear conflict of interest policy can help prevent situations where directors or officers could be liable for decisions that benefit themselves over the charity.

How Do Canadian Laws Affect Charity Directors and Officers?

In Canada, charity directors and officers are subject to both federal and provincial laws, depending on where the charity operates. For example, the Canada Not-for-Profit Corporations Act (CNCA) governs federally incorporated charities, while provinces like Ontario have their own laws, such as the Ontario Not-for-Profit Corporations Act (ONCA). These laws outline the specific responsibilities of directors and officers and the penalties for failing to meet them.

It’s important for charity leaders to be aware of which laws apply to their organization. For example, federally incorporated charities must file annual returns with the CRA, while provincially incorporated charities may have different filing requirements. Understanding these differences is key to avoiding penalties and staying compliant.

Serving as a director or officer for a charity in Canada is a rewarding experience, but it comes with significant responsibilities and potential liabilities. Directors and officers must fulfill their legal duties, ensure compliance with laws, and protect the charity’s resources. By staying informed, implementing best practices, and securing appropriate insurance, charity leaders can minimize their risk and continue to support their cause with confidence.

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What Roles Do Members Play in Canadian Charities, and How Do They Engage with Directors?

Post author By Press Secretary
Post date December 1, 2018

What Roles Do Members Play in Canadian Charities, and How Do They Engage with Directors?

Understanding the term “members” in the context of charities is crucial for ensuring smooth operations and avoiding conflicts. Many people might think that a member is anyone involved with the charity, whether as a volunteer, donor, or advocate. However, in a legal sense, a “member” has a specific definition. Legally, a member is someone with voting rights as defined in the organization’s corporate documents, typically the bylaws.

Who are Members?

In many charitable organizations, members play a vital role. Unlike general participants or supporters, members have specific voting rights and responsibilities outlined in the charity’s bylaws. For example, they vote on key issues like electing the Board of Directors or approving major changes in the organization’s direction.

Charities with Members

In contrast to US nonprofits, all Canadian not-for-profits (and incorporated charities) must have members. The presence of members adds a layer of democracy to the organization’s operations.

The Role of the Board of Directors

In addition to the requirement for all Canadian not-for-profits to have members, all must also have a Board of Directors. These directors are responsible for the overall governance and strategic direction of the organization. To avoid confusion, we will refer to them simply as directors in this article.

Types of Conflicts Between Directors and Members

Conflicts between directors and members typically arise from two main issues:

Unclear Communication: Misunderstandings about the roles, responsibilities, and hierarchy within the organization.
Disagreements on Actions: Directors taking actions that members disapprove of, or vice versa.

Conflicts Due to Communication

Communication issues often arise from unclear corporate documents or poorly communicated policies. To prevent this, it’s essential for charities and not-for-profits to have well-defined documents, such as bylaws and articles of incorporation, which clearly outline:

The hierarchy within the organization.
The voting rights and responsibilities of members.
The process for selecting members and directors.

If these details are missing or unclear, it is crucial to update your corporate documents. Clear communication of these policies to all involved parties is also essential. Providing new members with a welcome packet or email that outlines their benefits and responsibilities, and where to go with questions, can go a long way to help prevent conflicts.

Conflicts Over Actions

When conflicts arise from actions taken by either directors or members, it’s essential to refer to the organization’s conflict resolution procedures outlined in the bylaws. If there’s a suspicion of bylaw violations or legal issues, consulting a charity lawyer is recommended.

Benefits of Having Members

Having members can strengthen a charity by making it more democratic and accountable. Members can contribute valuable ideas and hold directors accountable, fostering a more dynamic and responsive organization.

While having members can enhance a charity’s operations by introducing democratic elements, it also requires careful management to avoid conflicts. Clear communication, well-defined corporate documents, and an understanding of legal requirements are key to maintaining a harmonious relationship between directors and members. By proactively addressing potential issues, charities can ensure that all parties work together effectively towards their common goals.

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Guest Article: Sandy Rees, Founder and Chief Encouragement Officer of Get Fully Funded

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8 Hot Ways to Fundraise for your Charity

Post author By Press Secretary
Post date October 3, 2018

8 Hot Ways to Fundraise for your Charity

When you have a new Charity, you need money fast to get everything up and running.

You need to pay for programs, overhead, and salaries.

There are thousands of ways you can raise money, but you need something that will work for YOU and generate as much as possible, not just the some cookie-cutter approach.

Before you start fundraising, get clear about why you’re raising money. Will your programs feed the hungry? Save a homeless animal? Be sure you’re asking for something that donors will support.

Once you’re clear, choose a strategy that will play to your personal strengths, appeal to your ideal donor prospects, and meet your revenue goals. In short, don’t try raising money the same way that the Charity down the street does. Try something that will most likely to work for you.

8 Fundraising Ideas for New Charities

Fundraising ideas are a dime a dozen and a Google search will return more ideas than you can ever implement. But not all ideas are created equally. Some are more efficient than others and some produce more revenue than others.

Check out these 8 hot ideas for fundraising. See if there’s one that feels like a good fit for you and give it a shot.

Hold an event. Something as simple as a backyard BBQ or a dinner in a church fellowship hall can be simple to organize and promote. Small events are great for raising modest amounts of money but can take a lot of work to pull off, so be ready to put the time in. To push your event over $10,000, create a planning committee to help with the details, get sponsors, and sell tickets.
‍
Facebook fundraiser. Set your Charity up on Facebook and tap into the power of your current relationships through Facebook. Be sure to tell people WHY you’re raising money (e.g., feed 200 hungry people) to inspire them to give. Set a start and end date, and don’t be afraid to post frequently to remind people about your fundraiser. Don’t give up until it’s over – promote it all the way to the end. Most people are deadline-oriented and may wait until the last minute to give.
‍
Crowdfunding. There are tons of crowdfunding sites online that can help you raise money through your network of relationships. One of my favorites is GivingGrid, which lets people upload a photo to fill in a blank spot for the donation they make. Understand that crowdfunding is not a “build it and they will come” model. You’ll still need to promote the fundraiser via email and social media to drive people to the crowdfunding site to give. This fundraising tactic can be a good way to get your Board and volunteers involved in fundraising since the ask is easy.
‍
Online auction. If you have or can get a couple of dozen nice items or packages, consider holding an online auction. The benefit is that people from all over the world can participate as long as you can affordably ship the item to the winner. You can use one of the many online auction tools or use a Facebook group. Either way, the key to success is to have items that people want and can’t easily buy for themselves (artwork, experiences, etc.).
‍
House parties. One of the best ways to leverage the relationships of key people including Board members, current donors, and volunteers is through house parties. Imagine if each of your Board members hosts a dinner party at their home and invites 20 of their friends, how fast you could raise awareness and find new donors for your organization! It doesn’t have to be fancy and there’s no need for a formal program – just a few words from you about what your new Charity will do once it’s up and running, then pass around some information and pledge cards.
‍
Giving Day. If your community or province has a specified Giving Day, use that as an opportunity to raise money. There will already be lots of publicity around the day, so jump on the bandwagon to let people know about your organization. If they don’t have a specific site for you to set up a giving page, set up one on your website and track the donations that come in on and just before the Giving Day.
‍
Champion letters. Invite your Board members and volunteers to send a special letter or email to their friends inviting them to give to your Charity. This is another great way to leverage the power of relationships since people will often give to Charities where their friends are involved. Be ready to write the letter for folks so all they have to do is insert their friends’ names and send.
‍
Matching gift. Ask a Board member, current donor, or volunteer to offer to match donations up to their gift amount. People LOVE knowing their donation is matched dollar for dollar, and statistically proven to inspire more people to give.
‍

Steer Clear of These Fundraising Ideas (at least for now)

You may notice there are a few things that are NOT on the list. That’s because not every method for fundraising is a good one – some strategies you should avoid. And not every good strategy works right now.

Here are 3 you should think carefully about while you’re in the startup phase:

Selling t-shirts, candles, calendars, etc. These have their place and can work well for some Charities, but the problem is they’re transactional. If you’re going to work hard to raise money, do it in a sustainable way. Raise money and build relationships at the same time so that people want to give again and again.

Corporate donations. Outside of event sponsorships, it’s tough to get corporate donations. As a startup, you’ll have a really hard time unless you know someone in a decision-making role in the company. Instead of spending time on this strategy that may not be successful for a new Charity, focus on something else that WILL bear fruit. You’ll be ready to go after corporate donations in a couple of years, especially if you’re growing a signature event.

Grants. Most new Charity founders want to go after grants and certainly it’s attractive, but it’s not as easy as it looks nor as productive as you’d like. Most funders want to see 3-5 years of experience before they’ll give you money. Plus, there’s an art and a science to grant writing that you must master to have a shot at getting funds. It’s smarter to start by building a donor base then working on grants later.

Ultimately, you need a fundraising plan that’s based on strategic decisions and sound fundraising practices to help you raise the kind of money you need to get your Charity up and running quickly.

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If you or anybody that you know, think that you meet the requirements and wish to receive further information.
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T3010 Return for Canadian Charities: Why It’s Important

Post author By Press Secretary
Post date August 10, 2018

T3010 Return for Canadian Charities: Why It’s Important

Every year, usually around the same time your personal tax return is due, charity administrators across Canada face a filing deadline that can make or break their organization’s compliance status. The T3010 Registered Charity Information Return isn’t just paperwork – it’s your charity’s annual report card that determines whether you maintain good standing with the Canada Revenue Agency.

Here’s what makes the T3010 different from other government forms: it’s not just about your finances. The CRA uses your T3010 to evaluate whether you’re actually operating as a charity, following the rules, and deserving of your tax-exempt status. Get it wrong, and you could face penalties, compliance agreements, or even loss of charitable status.

The good news is that T3010 filing doesn’t have to be a nightmare. With proper preparation, understanding of requirements, and attention to detail, most charities can complete their annual returns accurately and on time. The key is knowing what the CRA is looking for and how to present your organization’s activities in the best light.

Let’s walk through everything you need to know about T3010 filing, from basic requirements to advanced strategies for presenting your charity’s work effectively.

‍What is the T3010 Return?

The T3010 Return, officially known as the “Registered Charity Information Return,” is a document that all registered charities in Canada must file with the CRA. This return provides detailed information about a charity’s activities, financials, and governance. Charities are required to submit this return every year, within six months of the end of their fiscal year.

The T3010 is crucial because it helps the CRA monitor the operations of charities to ensure they follow legal requirements. It also provides transparency to the public about how charities use their resources, fostering trust in the nonprofit sector.

‍Why is the T3010 Important for Canadian Charities?

There are several reasons why the T3010 is an essential filing for Canadian charities:

Compliance with the CRA: Registered charities must submit the T3010 annually to maintain their status as a charity. Failure to file can lead to penalties, fines, or even the revocation of charitable status.
Transparency and Accountability: By filing the T3010, charities provide transparency about their activities and finances. This helps donors, government agencies, and the public understand how charity resources are spent.
Eligibility for Funding: Many government and private funders require charities to file the T3010 as part of their eligibility for grants or funding opportunities.
Public Trust: Regular filing of the T3010 demonstrates a charity’s commitment to being open and accountable. This helps build trust with donors and the community.

Who Needs to File the T3010?

Only charities that are registered with the CRA are required to file the T3010. If your organization is a registered charity in Canada, you are legally obligated to complete and file this form every year. This applies to:

Charities that have received charitable registration from the CRA

Even if a charity did not receive any income during the year, it must still file a T3010 form.

What Information Does the T3010 Require?

The T3010 return requires charities to report various aspects of their operations. Below are some of the key sections that must be completed:

1. General Information

This includes the charity’s name, address, and contact details, as well as its charitable registration number. Charities must also update any changes in their organizational structure or contact details.

2. Financial Information

‍Charities must provide a detailed breakdown of their income and expenses. This includes:

Total revenue from donations, grants, and other sources.
Expenses for programs, administration, fundraising, etc.
Statement of assets and liabilities.

3. Activities and Programs

‍Charities need to report on the programs they run and the services they provide. This includes a description of their key activities, their goals, and how they measure success.

4. Fundraising Information

‍If a charity raises funds through various methods (like events, online donations, etc.), they must report the total amount raised and how the funds were used. The T3010 also asks about any professional fundraisers hired and the fees paid to them.

5. Governance and Management

‍This section requires details about the charity’s board of directors, including the number of board members and their roles. Charities also need to confirm that they have governance policies in place and that they follow the CRA’s rules for managing funds and operations.

How to File the T3010

Filing the T3010 return is done electronically through the CRA’s Charity Portal. Here’s a step-by-step guide on how to submit the form:

Log in to the CRA Charity Portal through the CRA’s My Business Account: You’ll need a CRA user ID and password to access the portal. If you don’t have one, you can create an account.
Complete the T3010 Form: Answer all the questions on the return, ensuring that the information is accurate. It’s helpful to gather all the necessary financial and program information before starting the form.
Review Your Information: Double-check the accuracy of the return before submitting it. Inaccurate information can delay the approval process and may lead to fines.
Submit the Return: Once the form is complete, submit it through the Charity Portal. You’ll receive an acknowledgment from the CRA once they’ve processed the return.

When is the T3010 Due?

The T3010 must be filed within six months after the charity’s fiscal year-end. For example, if a charity’s fiscal year ends on December 31st, the T3010 must be filed by June 30th of the following year.

If a charity misses this deadline, it could face penalties or the revocation of its charitable status. In some cases, the CRA may grant an extension, but this must be requested in advance.

Standard Filing Deadline

Your T3010 is due six months after your charity’s fiscal year-end. For example:

Fiscal year ends December 31: T3010 due June 30
Fiscal year ends March 31: T3010 due September 30
Fiscal year ends any other date: T3010 due six months later

No Extensions Available

Unlike personal tax returns, the CRA doesn’t grant extensions for T3010 filing. The deadline is firm, and late filing automatically triggers penalties.

What Happens if You Don’t File the T3010?

Failing to file the T3010 return on time can have serious consequences for a charity:

Late Filing Penalties: If a charity doesn’t submit the T3010 by the due date, the CRA may impose a penalty. The penalty is calculated based on the charity’s revenue, with larger charities facing higher fines.
Revocation of Charitable Status: If a charity fails to file the T3010, the CRA may revoke its charitable status, which means the charity would no longer be recognized as a charity in Canada. This can lead to the loss of tax exemptions, tax penalties, and the ability to issue donation receipts.
Loss of Public Trust: Not filing the T3010 or submitting incomplete or inaccurate information can damage a charity’s reputation and cause donors to lose confidence in the organization.

Common Mistakes to Avoid When Filing the T3010

Missing Information: Failing to provide all the required information, especially in the financial section, can delay processing or lead to rejection. Make sure all fields are complete and accurate.
Incorrect Financial Reporting: Charity financials should be thoroughly reviewed before submission. Errors or discrepancies in income or expenses can lead to penalties or questions from the CRA.‍
Late Submission: Always file before the due date. Filing late may result in fines or, in extreme cases, the loss of charitable status.

Common T3010 Filing Errors to Avoid

Learning from common mistakes helps you avoid problems that could trigger CRA questions or compliance issues.

Incomplete Activity Descriptions

Many charities provide vague descriptions of their activities that don’t clearly demonstrate charitable purpose:

Wrong: “We help people in need.” Right: “We provide emergency food assistance to 150 low-income families monthly through our community food bank, serving residents of downtown Toronto who meet income eligibility criteria.”

Financial Reporting Inconsistencies

Common financial errors include:

Numbers that don’t match your audited financial statements
Revenues and expenses that don’t add up correctly
Missing or incorrectly categorized transactions
Failure to report all revenue sources accurately

Governance Information Gaps

Many T3010s contain incomplete governance information:

Missing director information or qualifications
Inaccurate board meeting frequency reporting
Failure to report significant governance changes
Incomplete conflict of interest policy information

Political Activities Misreporting

Political activity reporting errors are particularly serious:

Failing to report political activities that actually occurred
Incorrectly categorizing advocacy work as non-political
Overstating political activities as charitable programs
Missing required explanations of how political activities further charitable purposes

Disbursement Quota Calculation Errors

Private foundations and some charitable organizations must meet disbursement quotas. Common errors include:

Incorrect calculation of required disbursements
Failure to account for eligible disbursements properly
Missing documentation for quota calculations
Timing errors in multi-year quota compliance

To know more about how to avoid common mistakes when filing T3010 Return and keep your charity compliant, read our full guide.

Tips for Filing the T3010

To make the filing process easier and avoid mistakes, here are a few tips:

Start Early: Don’t wait until the last minute to file. Gather your financial and program details ahead of time to ensure everything is accurate.
Review the CRA’s Guide: The CRA provides a detailed guide to help you complete the T3010. Make sure to read it thoroughly before submitting the form.
Consult a Professional: If you’re unsure about how to complete the T3010, consider seeking help from a charity lawyer or accountant who specializes in nonprofit organizations. They can guide you through the process and ensure your return is filed correctly.
Keep Detailed Records: Maintain accurate financial records and supporting documentation throughout the year to make completing the T3010 easier. This will also help you in case of an audit.

T3010 Schedule Requirements and When to Use Them

The T3010 includes various schedules that provide additional detail about specific aspects of your charity’s operations. Understanding when to complete each schedule ensures comprehensive reporting.

Schedule 1: Charitable Programs

Complete this schedule if your charity operates formal charitable programs:

Required for most charitable organizations
Provides detailed description of each program
Reports resources devoted to program activities
Demonstrates charitable impact and outcomes

Schedule 2: Political Activities

Use this schedule when your charity engaged in political activities:

Required if you checked “yes” to political activities questions
Provides detailed description of political activities
Reports resources devoted to political activities
Explains how political activities further charitable purposes

Schedule 3: Business Activities

Complete when your charity operates business activities:

Required for any unrelated business activities
Reports revenue and expenses from business operations
Demonstrates arm’s length nature of business relationships
Shows compliance with business activity limitations

Schedule 4: Compensation

Use this schedule to report compensation information:

Required for certain compensation arrangements
Reports compensation for directors, trustees, and key employees
Provides transparency about organization’s compensation practices
Helps demonstrate reasonable compensation levels

Schedule 5: Gifts to Qualified Donees

Complete when your charity makes gifts to other qualified donees:

Reports grants or gifts to other registered charities
Provides information about recipient organizations
Demonstrates due diligence in gift-making
Shows compliance with qualified donee requirements

Schedule 6: Detailed Financial Information

Use for additional financial detail when required:

Provides breakdown of complex financial transactions
Reports detailed asset and liability information
Explains unusual financial circumstances
Supports main form financial reporting

Financial Statement Requirements for T3010

Your charity’s financial statements play a crucial role in T3010 filing and must meet specific CRA requirements.

Financial Statement Preparation Standards

Depending on your charity’s size, different financial statement requirements apply:

Small charities (revenue under $100,000):

Financial statements prepared by charity
No independent review required
Must follow basic accounting principles

Medium charities (revenue $100,000-$500,000):

Financial statements must be reviewed by independent accountant
Review engagement provides limited assurance
Must follow generally accepted accounting principles

Large charities (revenue over $500,000):

Financial statements must be audited by independent accountant
Audit provides highest level of assurance
Must follow generally accepted accounting principles

Timing Requirements

Financial statements must be prepared for the same fiscal period covered by your T3010. The statements should be completed before T3010 filing to ensure consistency between documents.

Key Financial Information for T3010

Your T3010 financial reporting must align with your financial statements:

Revenue figures must match exactly
Expense categorizations should be consistent
Asset and liability amounts must agree
Any significant variances require explanation

Common Financial Statement Issues

Problems that affect T3010 filing include:

Financial statements not completed in time for T3010 deadline
Inconsistencies between financial statements and T3010 reporting
Inadequate detail in financial statement notes
Missing required disclosures about related party transactions

Understanding charity registration costs helps you budget for professional financial statement preparation as part of your ongoing compliance expenses.

Electronic vs Paper T3010 Filing

The CRA strongly encourages electronic T3010 filing, which offers significant advantages over paper submission.

Benefits of Electronic Filing

Electronic filing through the CRA’s online portal provides:

Immediate confirmation of receipt
Built-in error checking and validation
Faster processing and availability of public information
Ability to save drafts and return to complete filing
Automatic calculation of certain fields

Electronic Filing Requirements

To file electronically, you need:

CRA business number and charitable registration number
Access to the CRA’s My Business Account portal
All required financial and operational information
Completed financial statements (if required)

Paper Filing Limitations

Paper filing is still available but has significant disadvantages:

Longer processing times
Higher risk of errors and omissions
No immediate confirmation of receipt
Limited error checking
Potential for lost or delayed documents

Mixed Filing Approach

Some charities prepare their T3010 using tax software, then submit electronically. This approach combines the convenience of professional preparation with the benefits of electronic submission.

Technical Support for Electronic Filing

The CRA provides technical support for electronic filing issues, but having professional help can resolve complex filing problems more efficiently.

T3010 Filing for First-Year Charities

New charities face unique challenges when filing their first T3010, as they may have incomplete years of operation and limited historical data.

First-Year Filing Timeline

Your first T3010 is due six months after your first fiscal year-end as a registered charity. This may be a partial year if you received charitable status partway through your fiscal year.

Unique First-Year Considerations

New charities often face special circumstances:

Limited operational history to report
Startup costs that may seem disproportionate
Board and governance structures still developing
Limited program delivery in early months

Describing Startup Activities

When describing your charitable activities, explain your startup phase:

Board formation and governance development
Program planning and development activities
Fundraising and resource development efforts
Community outreach and partnership building

Financial Reporting for New Charities

First-year financial reporting may include:

Significant startup and organizational costs
Limited revenue in early months of operation
Infrastructure investments in systems and capacity
Professional fees for registration and compliance

Setting Expectations for Future Years

Use your first T3010 to set realistic expectations:

Explain your growth plans and development timeline
Describe how your activities will expand in future years
Demonstrate understanding of compliance requirements
Show commitment to proper governance and oversight

Conclusion

The T3010 return is an essential filing for Canadian charities, ensuring they remain compliant with CRA regulations and continue to operate as registered charities. By submitting the return accurately and on time, charities can maintain their status, avoid penalties, and build trust with their donors and the public. Take the time to gather the necessary information, and if needed, seek professional assistance to ensure your T3010 is filed correctly.

Professional assistance with T3010 preparation often pays for itself by preventing errors that could trigger CRA audits or compliance reviews. Many charities find that working with experienced professionals improves both their filing accuracy and their overall understanding of compliance requirements.

BNorthfield & Associates provides comprehensive T3010 preparation and filing services, helping charities meet their annual reporting obligations while presenting their work in the best possible light to the CRA and the public.

Ready to streamline your T3010 filing process and ensure full compliance with CRA requirements? Work with professionals who understand both the technical requirements and strategic considerations that make T3010 filing an opportunity to showcase your charity’s impact and commitment to excellence.

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Charity Bookkeeping and Financial Management Best Practices

Post author By Press Secretary
Post date July 20, 2018

Charity Bookkeeping and Financial Management Best Practices

You started your charity to change the world, not to spend hours wrestling with spreadsheets and receipts. But three months into operations, you’re drowning in financial paperwork, your board is asking questions you can’t answer, and you’re pretty sure your bookkeeping system wouldn’t survive a CRA audit.

Here’s the reality that hits most charity founders like a brick wall: good financial management isn’t just about compliance – it’s the foundation that makes everything else possible. Poor bookkeeping doesn’t just create problems with regulators; it undermines your ability to make good decisions, demonstrate impact to funders, and plan for the future.

The good news is that charity bookkeeping doesn’t have to be overwhelming or expensive. With the right systems, clear processes, and basic understanding of requirements, you can create financial management practices that actually support your mission instead of draining your time and energy.

But here’s what many charity leaders don’t realize: nonprofit bookkeeping is different from business bookkeeping in important ways. The rules about fund restrictions, donation receipting, and compliance reporting require specialized knowledge that your regular business accountant might not have.

Let’s walk through everything you need to know to build financial management systems that keep you compliant, informed, and focused on your charitable mission.

Essential Bookkeeping Requirements for Canadian Charities

Canadian charities face specific bookkeeping requirements that go beyond basic business accounting. Understanding these requirements helps you build systems that support both compliance and effective operations.

Legal Foundation for Charity Bookkeeping

The Canada Revenue Agency requires all registered charities to maintain adequate books and records that:

Support all information reported on annual T3010 returns
Demonstrate compliance with charity law requirements
Track the use of charitable funds for intended purposes
Provide audit trails for all financial transactions

These aren’t just suggestions – they’re legal requirements backed by potential penalties for non-compliance.

What “Adequate Books and Records” Means

The CRA expects charity books and records to include:

Complete financial statements prepared according to accounting standards
Detailed general ledger with all transactions properly recorded
Supporting documentation for all revenues, expenses, and transfers
Donor records including receipting information and gift restrictions
Board minutes documenting financial decisions and oversight

Retention Requirements

Canadian charities must retain financial records for specific periods:

Books and records: Must be kept for six years from the end of the last tax year they relate to
Donation receipts: Duplicate copies must be kept for two years
Supporting documents: All invoices, contracts, and supporting materials for six years

Record Accessibility Requirements

Your financial records must be:

Kept in Canada (or accessible electronically from Canada)
Available for CRA inspection during business hours
Organized in a way that allows efficient review and audit
Maintained in English or French (translations may be required)

Electronic Records Considerations

If you maintain electronic records, ensure:

Backup systems prevent data loss
Security measures protect confidential information
Electronic signatures and approvals are properly documented
Paper documents are scanned and stored appropriately

Consequences of Inadequate Bookkeeping

Poor financial record-keeping can result in:

CRA compliance reviews and potential penalties
Difficulty preparing accurate T3010 returns
Problems with funding applications and grant reporting
Board governance issues and reduced oversight capability
Potential loss of charitable status in extreme cases

Chart of Accounts Setup for Nonprofits

A well-designed chart of accounts is the foundation of effective charity bookkeeping. Unlike business accounting, nonprofit charts of accounts must track fund restrictions, program activities, and compliance requirements.

Basic Structure for Charity Chart of Accounts

Your chart of accounts should include these major categories:

Assets:

Current assets (cash, accounts receivable, prepaid expenses)
Investments and endowment funds
Fixed assets (equipment, property, accumulated depreciation)
Other assets specific to your operations

Liabilities:

Current liabilities (accounts payable, accrued expenses)
Long-term debt and obligations
Deferred revenue for future programs or services

Net Assets:

Unrestricted net assets (available for general operations)
Temporarily restricted net assets (donor-restricted funds)
Permanently restricted net assets (endowment principal)

Revenue Accounts

Organize revenue accounts to support both financial reporting and compliance:

Individual donations (receipted and non-receipted)
Corporate and foundation grants
Government funding by source and program
Fundraising event revenue
Investment income and realized gains
Fee-for-service revenue (if applicable)

Expense Accounts by Function and Nature

Track expenses both by function (program vs administrative) and by nature (salaries, rent, supplies):

Functional categories:

Program expenses by major program area
Administrative and general expenses
Fundraising expenses

Natural categories:

Personnel costs (salaries, benefits, contract staff)
Occupancy costs (rent, utilities, maintenance)
Professional services (legal, accounting, consulting)
Office expenses (supplies, communications, technology)
Travel and transportation
Grant payments to other organizations

Fund Accounting Considerations

Many charities need to track multiple funds within their accounting system:

General operating fund for unrestricted activities
Designated funds for board-designated purposes
Restricted funds for donor-specified purposes
Endowment funds for permanently restricted assets

Account Numbering Systems

Develop a logical numbering system that supports:

Easy identification of account types and purposes
Consistent reporting across accounting periods
Integration with grant reporting requirements
Efficient data entry and error reduction

Understanding proper chart of accounts setup becomes especially important when preparing annual T3010 filings that require detailed financial information organized by specific categories.

Donor Receipting and Revenue Recognition

Proper donor receipting and revenue recognition are crucial for maintaining charitable status and providing appropriate tax benefits to supporters.

Legal Requirements for Donation Receipts

All charitable tax receipts must include specific information:

Charity’s legal name and charitable registration number
Donor’s name and address
Date the donation was received (not pledged)
Amount of donation or description and fair market value of gift-in-kind
Statement indicating the receipt is for income tax purposes

When You Can Issue Tax Receipts

Tax receipts can only be issued for true charitable gifts where:

The transfer is voluntary with no expectation of return benefit
The donor receives no material advantage or benefit
The gift is made to support charitable purposes
The donor is eligible to receive charitable tax benefits

Revenue Recognition Timing

Record donation revenue when:

Cash gifts: When received and deposited
Pledges: Generally when received, not when pledged (unless legally enforceable)
Gift-in-kind: When received at fair market value
Securities: When received at fair market value on date of transfer

Restricted vs Unrestricted Donations

Properly classify and track donor restrictions:

Unrestricted donations: Can be used for any charitable purpose within your mandate

Temporarily restricted donations: Restricted by donors for specific:

Time periods (must be spent by certain date)
Purposes (must be used for specific programs)
Activities (can only be used for designated functions)

Permanently restricted donations: Endowment gifts where principal must be maintained permanently

Gift-in-Kind Donations

Special considerations apply to non-cash gifts:

Must obtain proper appraisals for gifts over $1,000
Issue receipts for fair market value, not original cost
Maintain documentation supporting valuation
Apply special rules for gifts of securities, real estate, or other property

Split Receipting for Benefit Events

When donors receive benefits (meals, tickets, auction items):

Calculate fair market value of benefits received
Issue receipt only for amount exceeding benefit value
Clearly document benefit calculation and methodology
Maintain records supporting benefit valuations

Understanding proper receipting becomes especially important when considering the broader costs of charity registration and ongoing compliance requirements.

Managing Restricted vs Unrestricted Funds

Effective fund management ensures donor intentions are respected while maintaining operational flexibility and compliance with charity law.

Understanding Fund Restrictions

Donor-imposed restrictions come from explicit donor instructions about how gifts must be used:

Purpose restrictions (funds must support specific programs)
Time restrictions (funds must be used by certain dates)
Geographic restrictions (funds must benefit specific communities)
Beneficiary restrictions (funds must serve particular populations)

Board-designated restrictions are internal decisions about fund use:

Board reserves for specific purposes
Quasi-endowment funds created by board action
Operating reserves for financial stability
Capital funds for future equipment or facility needs

Tracking Restricted Funds

Implement systems that clearly track:

Source and nature of each restriction
Current balance of restricted funds
Compliance with spending restrictions
Release of restrictions when conditions are met

Compliance with Fund Restrictions

Ensure restricted funds are used only for designated purposes:

Establish clear policies for fund management
Train staff on restriction requirements
Implement approval processes for restricted fund spending
Regular monitoring and reporting on fund balances and usage

Communication About Fund Restrictions

Clear communication prevents problems:

Acknowledge restrictions in donor communications
Report on restricted fund usage in annual reports
Provide regular updates to major donors about fund status
Maintain documentation of all donor communications about restrictions

Releasing Restrictions

Restrictions can be released when:

Purpose is accomplished or becomes impossible
Time restrictions expire
Donor agrees to modify restrictions
Legal process determines restrictions are no longer viable

Fund Balance Reporting

Financial statements must clearly show:

Unrestricted net assets available for general use
Temporarily restricted net assets and their purposes
Permanently restricted net assets (endowments)
Board-designated funds and their purposes

Financial Controls and Internal Auditing

Strong financial controls protect charitable assets and ensure resources are used appropriately for charitable purposes.

Segregation of Duties

Implement segregation of duties wherever possible:

Cash handling: Different people should collect, deposit, and record cash
Check signing: Multiple signatures required for significant amounts
Bank reconciliation: Performed by someone not involved in cash handling
Purchasing: Separate authorization, receiving, and payment functions

Authorization Levels and Limits

Establish clear authorization requirements:

Board approval for expenditures over specified amounts
Executive director approval limits
Program manager spending authority
Petty cash limits and controls

Monthly Financial Review Process

Implement monthly financial management routines:

Prepare and review monthly financial statements
Conduct bank reconciliations and investigate variances
Review accounts receivable and follow up on outstanding items
Analyze budget variances and investigate significant differences

Annual Internal Control Assessment

Regularly assess your control environment:

Review and update financial policies annually
Assess adequacy of current controls and procedures
Identify areas where additional controls are needed
Document control procedures and train staff appropriately

Board Financial Oversight

Ensure proper board involvement in financial oversight:

Regular financial reports to board with variance analysis
Board review and approval of annual budgets
Board oversight of significant financial decisions
Annual review of financial policies and procedures

External Audit Considerations

Many charities benefit from external financial review:

Compilation engagement: Basic financial statement preparation
Review engagement: Limited assurance on financial statements
Audit engagement: Highest level of assurance and internal control assessment

The level of external review needed depends on your charity size, funding requirements, and board preferences. Many funders and insurance providers require specific levels of external financial review.

Preparing for CRA Financial Reviews

The CRA conducts financial reviews as part of compliance monitoring, and being prepared can make the difference between a smooth process and a stressful audit.

What CRA Financial Reviews Examine

CRA reviews typically focus on:

Compliance with charity law requirements
Proper use of charitable funds for stated purposes
Accuracy of T3010 annual return information
Adequacy of books, records, and internal controls
Compliance with receipting rules and donor stewardship

Documents CRA May Request

Be prepared to provide:

Complete financial statements and supporting schedules
General ledger and detailed transaction records
Bank statements and reconciliations
Donation records and receipting documentation
Board minutes and financial oversight documentation
Contracts, agreements, and supporting documentation for major transactions

Financial Areas of CRA Focus

Common areas of CRA attention include:

Fundraising expenses: Reasonable and properly allocated
Administrative costs: Appropriate for organization size and complexity
Related party transactions: Proper disclosure and arm’s length terms
Investment income: Proper reporting and use for charitable purposes
Grant-making: Proper due diligence and qualified donee status

Best Practices for Review Preparedness

Maintain ongoing preparedness by:

Keeping detailed, organized financial records
Documenting all significant financial decisions
Ensuring board oversight of financial activities
Regular review and update of financial policies
Annual assessment of compliance with charity law requirements

Working with Professional Advisors

Consider professional support for CRA reviews:

Experienced charity accountants understand CRA requirements
Legal counsel can assist with complex compliance issues
Professional representation can improve review outcomes
Ongoing professional relationships provide better preparation

Technology Solutions for Charity Bookkeeping

Modern technology can significantly improve the efficiency and accuracy of charity financial management while reducing costs and administrative burden.

Accounting Software Options for Nonprofits

Cloud-based nonprofit accounting software:

QuickBooks Nonprofit: Affordable with good nonprofit features
Sage Intacct: More sophisticated for larger organizations
NetSuite: Comprehensive but expensive enterprise solution
Blackbaud Financial Edge: Designed specifically for nonprofits

Key Features to Look For:

Fund accounting capabilities for restricted funds
Grant tracking and reporting functionality
Donation and pledge management
Integration with donor management systems
Built-in financial reporting templates

Donor Management Integration

Integrate accounting with donor management:

Automatic posting of donations to accounting system
Integrated tax receipt generation and tracking
Donor communication and stewardship tracking
Grant application and reporting management

Banking and Payment Processing

Modern payment processing options:

Online donation processing with automatic recording
ACH/electronic fund transfer capabilities
Mobile payment processing for events
Bank feed integration for automatic transaction import

Expense Management Systems

Streamline expense tracking and approval:

Mobile expense reporting apps
Automated receipt capture and coding
Approval workflows for different expense types
Integration with accounting systems for automatic posting

Financial Reporting and Analytics

Leverage technology for better financial insights:

Automated monthly financial statement generation
Budget vs actual reporting with variance analysis
Dashboard reporting for board and management
Grant compliance reporting and tracking

Security and Backup Considerations

Protect financial data with appropriate security:

Regular automated backups to secure locations
Multi-factor authentication for system access
Encryption of sensitive financial information
Regular security updates and system maintenance

Common Financial Management Mistakes

Learning from common mistakes helps you avoid problems that can affect compliance, operations, and organizational effectiveness.

Mistake #1: Inadequate Cash Flow Management

Many charities struggle with cash flow because they:

Don’t track restricted vs unrestricted cash balances
Fail to plan for seasonal revenue fluctuations
Spend restricted funds for general operations
Don’t maintain adequate operating reserves

Solution: Implement monthly cash flow forecasting and maintain clear segregation of restricted funds.

Mistake #2: Poor Grant Financial Management

Common grant-related financial problems:

Mixing grant funds with general operations
Inadequate tracking of grant expenditures
Missing grant reporting deadlines
Failing to comply with grant terms and restrictions

Solution: Establish separate tracking for each grant with clear policies for compliance and reporting.

Mistake #3: Weak Internal Controls

Many small charities have inadequate financial controls:

Single person handling all financial functions
Lack of proper authorization levels
Missing bank reconciliation procedures
Inadequate documentation of financial decisions

Solution: Implement appropriate controls even in small organizations, including board oversight and segregation of duties where possible.

Mistake #4: Compliance Violations

Common compliance mistakes include:

Issuing inappropriate tax receipts
Poor documentation of donor restrictions
Inadequate books and records maintenance
Missing filing deadlines or incomplete reports

Solution: Regular compliance training and professional support for complex requirements.

Mistake #5: Technology Problems

Technology-related financial management issues:

Using inappropriate software for nonprofit needs
Inadequate backup and security procedures
Poor integration between different systems
Lack of staff training on financial systems

Solution: Invest in appropriate technology and training to support your financial management needs.

Mistake #6: Board Financial Oversight Gaps

Many charity boards provide inadequate financial oversight:

Reviewing only summary financial information
Lack of financial expertise among board members
Infrequent financial reporting and review
Failure to understand restricted fund obligations

Solution: Provide regular, detailed financial reports and ensure board members understand their oversight responsibilities.

Effective charity bookkeeping and financial management provide the foundation for successful charitable operations. Whether you’re dealing with complex fund restrictions or compliance requirements, proper financial systems enable better decision-making and demonstrate accountability to stakeholders.

Good financial management also supports other aspects of charity operations, from annual reporting requirements to insurance and risk management. The investment in proper bookkeeping systems and procedures typically pays for itself through improved efficiency and reduced compliance problems.

Northfield & Associates works with charities to develop financial management systems that support both compliance and operational effectiveness. Professional guidance helps ensure your financial practices meet legal requirements while providing the information you need to pursue your charitable mission effectively.

Ready to strengthen your charity’s financial management and bookkeeping systems? Work with experienced professionals who understand both the technical requirements and practical realities of managing charitable finances in Canada.

Get started now:

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Charity Revocation: What You Need to Know

Post author By Press Secretary
Post date June 11, 2018

Charity Revocation: What You Need to Know

Charity revocation happens when a registered charity loses its official status with the Canada Revenue Agency (CRA).

This means the charity no longer receives tax benefits and must stop issuing official donation receipts.

Revocation can happen for several reasons, including failure to file required forms, non-compliance with CRA rules, or voluntary closure.

When a charity’s status is revoked, the final financial return must be filed.

The revocation becomes public information.

It is important for charities to understand the steps involved and the consequences they face after revocation.

Managing the process properly helps protect their reputation.

Knowing what triggers revocation and how to respond can help charities avoid serious problems.

This article explains what charity revocation means, how it affects the organization, and what actions to consider if revocation occurs.

What Is Charity Revocation?

Charity revocation cancels a registered charity’s status, removing legal benefits and tax privileges.

It happens when a charity no longer meets government rules or fails to comply with requirements.

Understanding what revocation means and why maintaining registered status matters is crucial for any charitable organization.

Definition and Overview

Charity revocation is the formal cancellation of a charity’s registered status by the Canada Revenue Agency (CRA).

Once revoked, the charity loses its privileges, including the ability to issue donation receipts for tax purposes.

The revocation is publicly recorded, often published in official government documents like the Canada Gazette.

After revocation, the charity must file a final return for its last operational year.

It can no longer operate as a registered charity, which affects fundraising and tax benefits.

Revocation can occur voluntarily, through non-compliance issues such as failing to file returns, or as a result of CRA audits.

Difference Between Revocation and Annulment

Revocation and annulment both end a charity’s registered status, but they differ in cause and process.

Revocation usually follows actions by the CRA when a charity breaks rules or fails obligations.

Annulment happens when registration was granted in error or based on false information.

Revocation means the charity once had valid registered status that was later removed.

Annulment cancels registration retroactively, as if it never existed.

The effects on the charity’s operations and reporting can vary, but both result in losing the legal recognition needed to operate as a charitable entity.

Importance of Registered Charity Status

Registered charity status grants legal and financial benefits essential for fundraising and community impact.

It allows a charity to issue official donation receipts, making gifts tax-deductible, which encourages donor support.

It also provides access to certain tax exemptions and government programs.

Losing this status through revocation limits a charity’s ability to operate effectively and damages its reputation.

Registered status also imposes responsibilities such as filing annual returns and following laws related to charitable activities.

Maintaining compliance is necessary to keep these privileges and avoid legal or financial risks.

Why Charities Lose Their Registered Status

Charities may lose their registered status for specific reasons related to their obligations, legal compliance, and how they handle donations.

These causes affect their standing with the Canada Revenue Agency (CRA) and can lead to revocation.

Understanding these reasons helps charities avoid risks and maintain their registration.

Failure to Meet CRA Obligations

The most common reason for losing registered status is failing to file the annual T3010 Information Return.

This form is crucial for the CRA to monitor the charity’s activities and finances.

Even a single missed or late filing can result in revocation.

Charities must also respond promptly to CRA communications and audits.

Ignoring these requests or failing to provide required information can trigger revocation.

The CRA expects full transparency to ensure the charity operates according to the rules.

Maintaining accurate records and submitting all required documents on time is essential.

The CRA uses these reports to verify compliance and confirm that the charity remains eligible for tax-exempt status.

Issues With Donation Receipts

Registered charities must issue official donation receipts that meet CRA standards.

These receipts allow donors to claim tax credits.

If a charity issues improper or misleading receipts, it risks losing its status.

The CRA strictly enforces rules regarding what information must appear on receipts.

This includes the charity’s name, registration number, date, and amount donated.

Inaccurate or incomplete receipts may be considered non-compliance.

Repeated errors or misuse of donation receipts can lead to investigations and eventual revocation.

Charities must track receipts carefully and ensure they align with CRA guidelines.

Non-Compliance With Legal Requirements

Charities must follow all laws related to their registration, including operating within their stated purposes.

Using funds for activities outside their mandate is a common cause of revocation.

The CRA reviews how charities spend their money.

If funds are used improperly, such as for personal gain or unrelated business activities, the charity risks losing its registered status.

Other legal requirements include maintaining proper governance, avoiding political campaigning, and meeting reporting deadlines.

Failure to meet these legal rules signals non-compliance, which can lead to revocation by the CRA.

Types of Charity Revocation

Charity revocation means the official cancellation of a charity’s registration with the Canada Revenue Agency (CRA).

This can happen in different ways depending on the charity’s situation.

Some charities choose to end their registration voluntarily, while others face revocation due to CRA compliance actions.

There is also a formal annulment process that affects the charity’s status.

Voluntary Revocation

Voluntary revocation occurs when a charity requests its registration be cancelled.

This can happen if the charity has finished its work, merged with another organisation, or no longer has the resources to continue.

To start voluntary revocation, the charity must send a signed request to the CRA, usually by a person with signing authority, such as a trustee or director.

The CRA then sends a Notice of Intention to Revoke (T2051A), including the proposed revocation date.

The charity should distribute its remaining assets to eligible donees before the final revocation date.

After this notice, asset transfers must only be made to qualified donees according to CRA rules.

Voluntary revocation does not protect a charity from ongoing compliance reviews or actions.

Revocation by CRA

The CRA can revoke a charity’s registration for several reasons, mainly due to non-compliance.

The most common reason is failure to file the required annual return (T3010) within the specified time.

If this return is not submitted within six months after the fiscal year-end, the CRA sends a warning notice.

The charity has 90 days to respond or object.

If the charity does not respond, the CRA issues a formal revocation notice (T2051B), stating the effective date.

Revocation can also result from audits that find non-compliance with CRA rules, such as improper use of funds, poor record keeping, or loss of control over resources.

The CRA provides a chance to object within 90 days of notification before revoking.

Annulment of Charitable Registration

Annulment is a separate, less common process where registration is declared invalid from the start.

This can happen if the CRA finds a charity never met the requirements for registration.

In such cases, the charity’s status is retroactively cancelled, and they lose any benefits from the time of registration.

The CRA may issue a notice explaining the annulment and the charity’s rights to object.

Annulment stops a charity from operating as a registered charity and affects its tax and reporting obligations immediately.

It typically follows serious issues about eligibility or misrepresentation on the original application.

The Charity Revocation Process

The revocation process involves formal steps taken by the Canada Revenue Agency (CRA) to end a charity’s registered status.

This includes official notices and public announcements.

Charities have chances to respond and communicate with the CRA to address concerns before revocation is final.

Notice of Intention to Revoke

The process usually starts when the Minister of National Revenue sends a Notice of Intention to Revoke (NITR) to the charity.

This notice outlines the reasons the CRA considers revoking the registration.

It includes details of compliance failures or other issues found during audits or reviews.

The charity has 30 days from the date of the notice to file any objections or provide additional information.

This window allows the charity to explain its position or correct mistakes.

If they miss this deadline, revocation may proceed without further input.

Publication in the Canada Gazette

Once the revocation process is underway, the intent to revoke is announced in the Canada Gazette.

This publication serves as an official public notice.

Its purpose is to inform the public and stakeholders about the charity’s changing status.

The Canada Gazette notice includes the charity’s name, registration number, and the effective date of revocation.

This step helps maintain transparency and accountability in the charity sector.

Communication With the Charities Directorate

Throughout the revocation process, the charity can communicate directly with the CRA’s Charities Directorate.

The Directorate manages compliance and enforces regulations for registered charities.

They provide guidance and may offer a chance to resolve issues before revocation.

Effective communication can involve submitting required documents, responding to queries, or requesting extensions for objections.

The Charities Directorate can also explain the consequences of revocation, such as tax implications and reporting requirements during the winding-up period.

Consequences of Losing Charity Status

Losing registered charity status affects a charity’s operations and finances in several important ways.

It impacts the ability to issue official donation receipts, creates financial obligations like revocation tax, and requires adhering to strict rules about what happens to the charity’s remaining assets.

Impact on Donation Receipts

Once a charity loses its registered status, it cannot issue official donation receipts for gifts it receives.

This means donors who give after revocation will not be able to claim tax credits for those donations.

This change can reduce charitable giving since donors often depend on receipts for tax purposes.

It also limits the charity’s appeal to funders and reduces transparency in fundraising activities.

The charity’s loss of ability to provide receipts may also hurt its public reputation.

This makes future fundraising even more difficult.

Revocation Tax and Financial Implications

When a charity is revoked, it must pay a revocation tax on the fair market value of any remaining assets at that time.

The amount of this tax depends on what the charity does with its assets.

If it transfers assets to an eligible donee during the winding-up period, the revocation tax could be reduced to zero.

Failing to pay this tax adds financial strain and legal consequences.

The charity also loses its exemption from income tax and GST/HST status.

This can affect its tax calculations and refund claims.

Asset Distribution to Qualified Donees

After revocation, the charity must transfer all its remaining assets to qualified donees, usually other registered charities or approved organizations.

Using assets for charitable purposes beyond revocation is not allowed without proper transfer.

Improper distribution can result in penalties or increased revocation tax.

This transfer ensures that funds continue to serve the public benefit, aligning with the original purpose of the charity even after its registration ends.

Steps to Take After Charity Revocation

When a registered charity loses its status, it must follow specific steps to properly end its operations and meet legal requirements.

These steps include dissolving the organization, informing donors and stakeholders, and addressing ongoing responsibilities set by the Charities Directorate and CRA.

Dissolving the Organization

Once revocation happens, the charity must complete the winding-up process.

This means paying debts and distributing remaining assets according to the rules set by the CRA.

Assets must be transferred only to qualified donees, such as other registered charities.

The charity must also file a final return for the last operating year.

This includes the T2046 tax return if applicable.

Proper documentation during dissolution is essential to avoid legal or financial penalties.

The board or trustees must approve all steps in the dissolution.

They should keep clear records in case the Charities Directorate audits the process.

Notifying Donors and Stakeholders

The charity has a duty to notify its donors and stakeholders about the revocation.

This keeps communication transparent and maintains trust.

Notices should explain what revocation means and how it affects donations or ongoing projects.

Donors might need information on how their contributions will be handled after revocation.

It is best practice to use multiple methods of communication, like letters, emails, or public notices.

This helps ensure everyone involved is informed promptly.

Complying With Ongoing Obligations

Even after revocation, certain obligations remain. The charity must file the required final tax forms with the CRA, including the T2046 if necessary.

The organization must also settle all legal and financial responsibilities. This includes closing bank accounts and canceling registrations or permits.

Failure to meet these obligations can cause penalties or legal trouble. The CRA may monitor compliance during the winding-up period to confirm all rules are followed.

Conclusion

Charities facing revocation should act carefully to understand the legal and financial effects. Revocation impacts a charity’s ability to operate and may include a revocation tax on remaining assets.

For advice on managing or challenging revocation, Northfield & Associates offers expert guidance. We can help your charity navigate complex rules and plan next steps effectively.

At Northfield & Associates our expert teams guidance on compliance requirements. Our team understands Canadian charity law and can help ensure your organisation follows proper procedures.

Get professional support today

To discuss your specific circumstances and receive expert assistance throughout the reinstatement process with our experienced legal team.

Early professional help can protect your charity’s future let us help you safeguard it.

Frequently Asked Questions

Charities can lose their registered status for several reasons. This can happen voluntarily or because of non-compliance with rules set by the Canada Revenue Agency (CRA).

Revocation has tax and operational effects that charities must understand.

What are the grounds for revoking donations?

Donations are not revoked, but a charity’s registration can be revoked for reasons such as failure to file required returns or non-compliance with rules. Sometimes revocation happens voluntarily when a charity chooses to end its status.

How do you revoke charitable status?

A charity can request voluntary revocation by sending a signed letter to the CRA. In other cases, the CRA can issue a Notice of Intent to Revoke after finding compliance issues.

The charity has a limited period to object or appeal.

What are the consequences of revocation?

Once revoked, a charity can no longer issue official donation receipts or receive gifts as a registered charity. Its name will be publicly listed as revoked.

The charity must transfer remaining assets to qualified donees or pay a revocation tax.

What is the revocation tax in Canada?

The revocation tax is equal to 100% of the value of a charity’s remaining property, unless it transfers assets to qualified donees within the prescribed time. This tax applies when a charity ceases to be registered but still holds assets.

What evidence is needed for revocation?

For involuntary revocation, the CRA provides evidence such as failure to file reports. Non-compliance discovered during audits can also be used as evidence.

For voluntary revocation, a signed letter from an authorized representative of the charity is required.

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Failing to meet this CRA charity disbursement quota can lead to serious consequences, including penalties or revocation of charitable status.

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What Is a Disbursement Quota and How Can Charities Navigate Reductions in Canada?

Post author By Press Secretary
Post date May 17, 2018

What Is a Disbursement Quota and How Can Charities Navigate Reductions in Canada?

Charities are essential to supporting vulnerable communities across Canada. However, meeting financial obligations—especially the charity disbursement quota—can be challenging during economic downturns, reduced donations, or operational disruptions. When a registered charity in Canada is unable to meet its annual disbursement quota, applying for a reduction may be a necessary step toward maintaining compliance and continuing its mission.

What Is the Charity Disbursement Quota?

The disbursement quota is the minimum amount a registered charity must spend each year on its charitable activities or as gifts to qualified donees. This requirement is set by the Canada Revenue Agency (CRA) and is designed to ensure that charitable resources are actively used to support charitable purposes rather than being accumulated indefinitely.

As of recent changes, charities must spend at least 3.5% of the average value of their property not used for charitable programs or administration if that property exceeds $100,000 (or $25,000 for charitable foundations), for charities with revenue under $1,000,000.00. For those voer that amount, the disbursement quota rises to 5%. This calculation is based on the average value of relevant assets over the past 24 months.

When Can a Charity Apply for a Disbursement Quota Reduction?

Charities that cannot meet the Canada charity disbursement quota due to exceptional or unforeseen circumstances may request a disbursement quota reduction from the CRA. However, this is not a first resort.

Before applying, the charity must:

Use any disbursement quota excesses carried forward from the previous five fiscal years.
Consider creating an excess in the current year and carrying it back to offset the shortfall.
Ensure that no other reasonable means of meeting the quota are available.

Only when these options are exhausted will the CRA consider granting a reduction.

Understanding the Approval Process

The CRA typically considers a disbursement quota charity reduction request after the charity has filed its T3010 Registered Charity Information Return for the fiscal year following the shortfall. This delay allows the CRA to assess whether the charity made all reasonable efforts to comply.

If approved, the CRA will inform the charity of the amount by which the disbursement quota has been reduced. This reduction applies specifically to the year in which the shortfall occurred.

How to Amend the Return

Once approval is granted, the charity must file Form T1240 – Registered Charity Adjustment Request to amend its T3010 return for the year with the shortfall. The approved reduction amount should be reported on line 5750 of the amended return.

Submission Options

Charities have several methods to submit the adjustment:

Online via My Business Account (MyBA): Use the “Adjust a return” feature under the RR (Registered Charity) program account.
By Mail or Fax: Send the completed Form T1240 and related documents to the Charities Directorate of the CRA.

It’s important to keep copies of all correspondence and approvals in case of future CRA audits or questions.

Managing a charity disbursement quota shortfall is a serious issue, but not an impossible one. By understanding CRA expectations and the disbursement quota rules, charities can make informed decisions about when and how to apply for a reduction. This process requires careful documentation, transparency, and compliance with specific CRA procedures.

Charities that act early, explore all options, and follow the proper steps can continue serving their communities, even in financially challenging times.

Contact To Action

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By leveraging our regional insight and international expertise, you benefit from a trusted partner dedicated to helping you capitalize on growth potential in Cambodia and beyond.

Book a Consultation with Northfield & Associates

Your Trusted Partner in International Bilateral Relations

Let us help you take the next step with confidence supported by trusted legal and strategic counsel every step of the way.

Take the First Step Today

We serve our clients in English, Cambodian, Vietnamese, Mandarin and Cantonese, especially in Asian clients.

If you or anybody that you know, think that you meet the requirements and wish to receive further information.
We can help you start the application process and confirm eligibility requirements to participate.
We Offer Consultations & Meetings by Phone & Virtually. Affordable Fees.

Disclaimer:

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Contact Northfield & Associates today to schedule a FREE consultation with an experienced Consultant.

Join the community of Northfield & Associates

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This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company.

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What Are the Best Fundraising Strategies for a New Charity in Canada?

Post author By Press Secretary
Post date April 3, 2018

What Are the Best Fundraising Strategies for a New Charity in Canada?

Starting a new charity is a big step toward making a difference in your community or beyond. But once you’ve set up your charity, the next challenge is raising enough funds to keep your operations running and make an impact. Whether you’re just getting started or looking to refine your fundraising efforts, it’s important to implement strategies that will engage donors and sustain your charity’s mission.

This article will explore the best fundraising strategies for new charities in Canada. We’ll cover proven methods that will help you raise funds effectively and build strong relationships with your supporters.

1. Understand Your Charity’s Mission and Vision

Before you begin fundraising, it’s essential to be clear about your charity’s mission and vision. This foundation will guide all of your efforts. A strong, clear message about why your charity exists and what it aims to achieve is key to attracting potential donors.

Mission Statement: Keep it short, clear, and impactful. Your mission should quickly convey the problem you are addressing and the change you aim to create.
Vision: This is where you describe the long-term impact of your charity’s work. It shows potential donors why their contributions matter in the bigger picture.

When your mission and vision are well-defined, it becomes easier to communicate the value of your charity to others, which can inspire people to contribute.

2. Online Crowdfunding Campaigns

Online crowdfunding is one of the most effective fundraising strategies for new charities in Canada. With the rise of digital platforms, it’s now easier than ever to reach a wide audience, tell your charity’s story, and raise funds.

Choose the Right Platform: There are various crowdfunding platforms available in Canada, such as GoFundMe, CanadaHelps, and Kickstarter. Each platform has its strengths, so pick the one that aligns best with your charity’s goals.
Set Clear Goals: Be transparent about how much you need to raise and how the funds will be used. People are more likely to donate when they can see the direct impact of their contribution.
Engage Your Network: Reach out to your network of friends, family, and community members to share the campaign. Social media, email newsletters, and word of mouth are powerful tools for spreading the word.

Crowdfunding can help you reach a wide audience, but it requires careful planning and constant promotion to be successful.

3. Host Fundraising Events

Hosting events is a classic yet powerful way to raise funds while also engaging your community. Whether virtual or in-person, events allow you to directly interact with your supporters and make them feel part of your cause.

Plan Your Event: Choose an event that resonates with your target audience. This could be a gala, auction, benefit concert, or community walk. The key is to offer something that excites and motivates people to donate.
Ticket Sales and Donations: You can sell tickets to the event, provide opportunities for attendees to donate during the event, and even offer incentives for higher levels of giving (like VIP access or exclusive experiences).
Engage Sponsors: Many companies and local businesses are willing to sponsor charity events in exchange for publicity. This can significantly boost your fundraising efforts while keeping costs low.

Events also give you the chance to build long-term relationships with donors and volunteers, which can lead to future donations.

4. Launch a Monthly Giving Program

A monthly giving program is a great way to create a reliable source of income for your charity. This model allows donors to contribute a fixed amount each month, which provides your charity with steady, predictable funding.

Offer Different Tiers: Create giving levels to accommodate different budgets. For example, $10, $25, and $50 per month.
Provide Special Benefits: To encourage people to sign up, offer exclusive updates, reports on how their donations are making an impact or even small tokens of appreciation.
Highlight Convenience: Monthly giving is convenient for donors, and many are happy to set up an automatic payment because it fits into their routine. Make sure the sign-up process is easy.

This strategy not only helps build a stable income stream but also strengthens relationships with your donors by keeping them engaged year-round.

5. Apply for Grants and Government Funding

In Canada, there are numerous grant opportunities available for new charities. Federal, provincial, and municipal governments often offer funding programs to support causes that align with their priorities.

Research Available Grants: Start by looking into government grants and funding programs. Websites like the Canada Revenue Agency (CRA) and the Canadian Government’s Funding Portal are great places to start.
Write Compelling Proposals: Applying for grants involves submitting proposals that outline your charity’s mission, goals, and how you intend to use the funds. Make sure to follow all guidelines and deadlines to increase your chances of approval.
Look for Private Foundation Grants: Many private foundations also provide funding to charities. Research foundations that support causes similar to yours and apply for funding.

While grants can be a bit competitive, they are a great source of funding for specific projects and long-term initiatives.

6. Utilize Social Media for Awareness and Donations

Social media is a powerful tool that can help you spread the word about your charity and encourage donations. By using platforms like Facebook, Instagram, X, and LinkedIn, you can reach a large audience and build a loyal online community.

Share Impact Stories: Post stories of how your charity is making a difference in people’s lives. This could be in the form of videos, photos, testimonials, or success stories.
Use Donation Buttons: Platforms like Facebook allow charities to add donation buttons directly to their profiles and posts, making it easy for followers to donate on the spot.
Run Paid Ads: If you have a budget, running paid ads on social media can help you target specific demographics and get your message in front of more people.

Regular engagement on social media can also help you build a loyal following that will support your charity over time.

7. Collaborate with Corporate Partners

Corporate partnerships can be a highly effective way for new charities to raise funds. Many companies in Canada are committed to supporting social causes and are willing to collaborate with charities through donations, sponsorships, and volunteer efforts.

Corporate Donations: Reach out to businesses for one-time donations or regular contributions. In return, they offer to feature their company on your website or at events as a sponsor.
Employee Giving Programs: Many companies have employee matching programs or payroll giving initiatives, where they match their employees’ charitable donations. Encourage your supporters to take advantage of these programs.
Event Sponsorships: Local businesses may be interested in sponsoring your fundraising events. In exchange for their sponsorship, offer them visibility and recognition during the event.

Corporate partnerships provide both financial support and credibility, which can enhance your charity’s reputation and outreach.

8. Offer Donor Recognition and Appreciation

Acknowledging your donors is crucial for building long-term relationships and encouraging repeat giving. When people feel appreciated, they are more likely to support your charity again in the future.

Thank You Notes: Send personalized thank you notes to donors, expressing your gratitude and explaining the impact of their donation.
Donor Recognition Programs: Recognize large or recurring donors through special mentions, certificates, or exclusive invitations to events. Publicly acknowledging their contributions can encourage others to give as well.
Transparency: Keep donors informed about how their money is being used. Regular updates about the progress of your charity’s work will build trust and loyalty.

When donors feel valued, they are more likely to continue supporting your charity in the future.

‍
Fundraising for a new charity can seem like a daunting task, but by implementing the right strategies, you can build a strong foundation for sustainable growth. Whether through crowdfunding, events, or corporate partnerships, there are many ways to raise funds and engage with your supporters. The key is to be creative, transparent, and persistent.

By understanding your charity’s mission, setting clear goals, and utilizing multiple fundraising channels, you’ll be well on your way to building a successful and impactful charity in Canada.

Contact To Action

Northfield & Associates

Advancing Global Partnerships, Together.

Working with Our Firm

By leveraging our regional insight and international expertise, you benefit from a trusted partner dedicated to helping you capitalize on growth potential in Cambodia and beyond.

Book a Consultation with Northfield & Associates

Your Trusted Partner in International Bilateral Relations

Let us help you take the next step with confidence supported by trusted legal and strategic counsel every step of the way.

Take the First Step Today

We serve our clients in English, Cambodian, Vietnamese, Mandarin and Cantonese, especially in Asian clients.

If you or anybody that you know, think that you meet the requirements and wish to receive further information.
We can help you start the application process and confirm eligibility requirements to participate.
We Offer Consultations & Meetings by Phone & Virtually. Affordable Fees.

Disclaimer:

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Advancing Global Partnerships, Together.

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Contact Northfield & Associates today to schedule a FREE consultation with an experienced Consultant.

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