If you look at any organization five, ten or twenty years after it was created, it’s probably going to be very different. Just like people grow and change, companies and corporations evolve. So do charities.
It’s not only expected that some things about your charity will change over time, but also almost inevitable. But, like any changes to a legal entity, there’s a specific process you need to follow for most significant changes to the structure or operations of your charity. Here’s what you need to know.
Who Needs to Know?
When something significant changes about the structure of your charity or how you operate, you will need to report the change to the Charities Directorate at the CRA.
Some minor changes may be possible via your organization’s MyCRA account, but in most cases, you will need to contact the Directorate to find out what you need to submit, and how they need it to be submitted.
Change of Purpose or Activities
When you register a charity in Canada, you have to provide detailed information about the purpose of the organization, and the activities that you will be engaged in. This is required because there is a fairly narrow definition of what qualifies as a charity in Canada.
This also means that if you make substantial changes to either your purpose or activities, you might no longer qualify to be a registered charity. In order to be sure, you need to submit the details of the change to the Charities Directorate.
Remember to do this before you implement the proposed changes. If your revised purpose or activities don’t meet the definitions, you will be advised, and you can avoid putting your charitable status in jeopardy.
Redesignation
There are three designations of charities in Canada: charitable organizations, public foundations, and private foundations.
Sometimes, due to various factors, you might want to change the designation of your organization. If you want to change the way you operate, how you fundraise and the structure, you need to apply to have the designation changed.
A designation change doesn’t stop your organization from being a registered charity or being able to raise funds and issue receipts, but it does allow you to change your internal operations.
Fiscal Year End Changes
Registered charities are tax exempt, but they still have tax reporting obligations, and those obligations are tied to their fiscal year end. Because of this, if you want to change your fiscal year end, you first have to notify the CRA, so that they can update your account accordingly.
Requesting Associated Status
There are rules about how much money charities can give to other organizations, and to which kinds of organizations. Usually, charities can give foundations more than half of their revenue, but if they give the same amount to a charity that is not a foundation, that charity might be redesignated a foundation.
Requesting associated status with the charity that will receive the gift in this case allows them to avoid the redesignation. Essentially, it’s the charitable version of a joint venture, that allows them to have some relaxed rules.
Permission to Accumulate.
Most non charitable organizations work with the specific goal of accumulating profits over time. Charitable organizations, however, are not supposed to do that. They are supposed to follow the rules related to disbursement and give the money they raise away according to that schedule.
However, sometimes, a charity needs to save money for a big purchase. Maybe they need a new vehicle or building. In that case, they can request permission to accumulate funds, which relaxes the disbursement requirements, and allows them to save money until they can make the purchase.
Disbursement Quota Reductions
Disbursement requirements not only govern when charities must give the money they raise away, and to whom, but it also sets a requirement for the amount to be given away.
Sometimes, however, charities don’t meet their fundraising goals, which means that they don’t have enough money available to make those disbursements – or pass the money they have raised on to approved recipients. Of course, this would leave the charity with a negative balance in their bank account, and that’s not really an option.
A disbursement quota reduction allows charities to reduce the amount of money they are required to pay to those recipients.
As Soon As Possible
Now that you know what you need to notify the government of, the next question is when you should do this. The answer is always as soon as possible. Don’t wait until you actually need the change to have been made. As soon as you become aware that it will be necessary, you should start communicating with the Directorate. That way, you won’t be left wondering what to do when deadlines roll around!
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Getting Started
- Review your existing books for needed corrections or back-work
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Ongoing Monthly Bookkeeping
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What We Don’t Do
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We do not offer bill-pay services at this time, nor do we manage Accounts Payable (AP) or Accounts Receivable (AR).
Payroll tax responsibility
Our bookkeepers can assist you in setting up your initial payroll service in QBO or Gusto. We are not responsible for entering payroll hours/salary, accruing payroll taxes, nor the transmittal of payroll taxes to the IRS or the state. Your full-service payroll provider (QBO, Gusto, or whatever other service a client uses) will be the responsible party for payroll and payroll tax compliance.
*Payroll deductions and benefits
We provide assistance with setting up a payroll account in either Quickbooks Online or Gusto, including entry of employee data. We do not assist in state registrations, benefits, or advise on deductions. Those service areas are provided directly by either QBO or Gusto.
Preparation of W2s
Similar to the last item, your full-service payroll provider (QBO/Gusto) is responsible for preparation of Form W2 for employees.
Sales tax reporting
For those nonprofits that sell taxable goods and/or services, your bookkeeper will assist in accounting for sales taxes collected and transmitted, but we do not prepare state sales tax reports.
Donation recording
We do not provide individual donation data entry into your neither your donor CRM nor Quickbooks Online, nor do we prepare year-end donor acknowledgements.
Administrative tasks
We cannot provide administrative services unrelated to our bookkeeping function.
Attend board meetings
Due to the constraints of time and distance, we are unable to be present, physically nor virtually, at a meeting of a client’s board of directors.*May incur additional fee per 1099-NEC or 1099-MISC.
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Northfield & Associates International Corporation is a global consulting firm serving private enterprises, public institutions, not-for-profit organizations, and institutional capital providers. Operating across Cambodia, Canada, and global markets, the firm supports capital deployment, regulatory navigation, and enterprise decision-making in complex economic and geopolitical environments. Northfield & Associates delivers customized, execution-focused advisory solutions that drive measurable transformation, strengthen competitiveness, and enhance long-term highest value opportunities. The firm incorporates consulting, legal, regulatory, financial, and risk expertise to enable disciplined capital allocation, strong governance, and operational resilience. Northfield & Associates upholds a culture of applied insight and innovation, supporting clients across digital transformation, growth strategy, and organizational capability building. The firm advises individual, leading global corporations, midsize enterprises, government agencies, and mission-driven organizations through long-term partnerships. Enterprise-wide risk management, professional ethics, and fiduciary standards are embedded across all operations. Northfield & Associates’ diverse, globally unified teams are committed to execution certainty and sustainable, risk-adjusted returns aligned with ESG and stakeholder objectives.
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