Glossary:

  • Non-qualifying security

    A non-qualifying security is, generally, a security where the owner of the security (e.g. a shareholder) is not at arm's length with the issuer of the security (e.g. a private company).  A charity can issue a tax receipt to the donor of a non-qualifying security in some circumstances.  The charity should get professional (legal, accounting or tax) help when someone intends to make this kind of gift.

  • Charity Registration Number

    A charity registration number is 15-digit program account number assigned to a charity by the CRA when it is registered. A complete charity registration number has three parts: the BN (first nine digits), the program identifier (two letters), and the reference number (four digits). The registered charity program identifier is "RR". When you deal with the Charities Directorate always use the 15-digit registration number.

    (CRA : Charities Glossary)

  • Accountability

    The responsibility of a foundation/organization to publicly disclose information on their activities, particularly justification for financial activities and the decisions surrounding them. (Philanthropic Foundations Canada)

  • Official donation receipt

    Registered charities may issue an official donation receipt (or "tax receipt") to acknowledge a gift. An official donation receipt is subject to particular requirements under the Income Tax Act including identification that it is an official receipt for income tax purposes. Registered charities can also issue other forms of receipts to acknowledge receipt of services or other items that are not gifts. These are not tax receipts and should be clearly distinguished from the tax receipts issued to acknowledge gifts.

  • Official donation receipt

    Registered charities can issue official donation receipts (also referred to as "tax receipts") to acknowledge gifts. An official donation receipt is subject to particular requirements under the Income Tax Regulations including identification that it is an official receipt for income tax purposes.

    Note that registered charities issue other forms of receipts to acknowledge acceptance of services or items that are not gifts. These are not tax receipts and should be clearly distinguished from the tax receipts issued to acknowledge gifts. Contributions of services, that is, of time, skills or efforts, are not property and, therefore, do not qualify as gifts for purposes of issuing official donation receipts. Accordingly, a charity cannot issue an official donation receipt for services rendered free of charge.

    (CRA : Charities Glossary)

  • Non-profit organization

    A non-profit organization is an association, club, or society that is operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. It is not a charity. No part of the organization's income can be payable to or available for the personal benefit of any proprietor, member, or shareholder, unless the recipient is a club, society, or association whose primary purpose and function is to promote amateur athletics in Canada.

    (CRA : Charities Glossary)

  • Associated charities

    Associated charities are two or more registered charities that have applied for and received this designation from us. Associated charities can pass funds among themselves without being affected by the usual limitation placed on gift making by charitable organizations.

    The Income Tax Act generally requires that charitable organizations spend no more than half their income as gifts to qualified donees, otherwise they will be re-designated as public foundations.

    For more information, see Asking for associated status.

    (CRA : Charities Glossary)

  • Partisan political activities

    Political activities are partisan if they directly or indirectly support or oppose a political party or candidate for public office.

  • Partisan political activities - examples

    In the following hypothetical examples, the charity is called Healthy Retirement and was formed to promote the health of seniors in Canada. It has received a lot of media attention on its recently released, well-reasoned position on the hazards for seniors of using marked crosswalks. It concludes from its findings that a senior is four times more likely to be involved in a fatal accident with a car at a marked crosswalk than at an intersection with a stop sign or a light.

    Example 1 — Supporting an election candidate in the charity's newsletter

    Healthy Retirement sends a newsletter to all its members that contains an editorial from the managing director of the charity conveying his views on the main issues it is currently facing. Just before an election, the director uses the column to give his personal support to the re-election of a candidate who happens to endorse a policy that the charity also supports. The director uses his personal funds to pay for that edition of the newsletter. In this case, the charity is engaging in a prohibited partisan political activity because although the director paid for that edition of the newsletter, it is an official publication of the charity and is being used to promote a candidate for an election.

    Example 2 — Distributing leaflets highlighting lack of government support for charity goals

    Healthy Retirement decides to distribute leaflets to members of the public during a federal election campaign. The leaflets highlight its research findings that drivers do not respect the pedestrian right-of-way at marked crosswalks. It also states that a private members bill that proposed to increase the penalties imposed on drivers failing to give the right-of-way to pedestrians at marked crosswalks did not become law because government-side Members of Parliament voted against it. In this case, the distribution of the leaflets is a prohibited partisan political activity because it could mobilize public opinion against the current government for failing to enact the private members bill.

    Whatever the issue, a charity is not permitted to directly or indirectly support or oppose any political party or candidate for public office, at any level of government.

    Had the charity merely published a leaflet that showed how all the Members of Parliament voted on the private members bill, CRA would not have viewed this as a partisan political activity.

    Example 3 — Preparing dinner for campaign organizers of a political party

    During a provincial election campaign, Healthy Retirement invites, to one of its monthly "heart smart" dinners, all those involved in organizing the campaign for a political party that promotes policies targeted at increasing health spending on respite care for seniors. The campaign team is treated to a delicious three-course meal that is low in fat and salt, and they receive information about the charity's programs. This is a prohibited partisan political activity because the charity is providing direct support, by way of a free meal, to campaign organizers of a political party.

    Example 4 — Inviting competing election candidates to speak at separate events

    Healthy Retirement invites a candidate in a municipal election, who is in favour of increasing the money available to deliver hot meals to seniors in poor health, to talk about a particular issue on the candidate's electoral platform that is consistent with the charity's goals at its well-attended annual fundraising dinner. At a later date, it invites another candidate in the election to speak at its poorly attended annual general meeting. The charity does not endorse either candidate at either meeting and no political fundraising occurs. Nevertheless, as the charity is not giving an equal opportunity for candidates seeking the same office to speak, it is possible to infer that the charity is indirectly supporting a particular candidate for public office and is therefore engaged in a prohibited partisan political activity. To avoid this assumption, a charity must ensure that in such circumstances, it invites all the candidates in an election to speak at the same time. Furthermore, the charity must give the candidates an equal amount of time to speak on their general platform.

  • Personal use property

    Personal use property refers to items that you own primarily for the personal use or enjoyment of your family and yourself. It includes all personal and household items, such as furniture, automobiles, boats, a cottage, and other similar properties. It also includes listed personal property.

  • Source document

    A source document is an original document that records and reflects a transaction between parties.

    Source documents that support the information in the governance documents and financial information include:

    • e-mails and handwritten memos,
    • supplier invoices,
    • expense reports and receipts,
    • paid cheques and credit card receipts,
    • petty cash chits,
    • major contracts entered into by the charity,
    • employment contracts,
    • work orders,
    • courier slips and bills of lading,
    • purchase orders, and
    • bank deposit slips.
  • Chart of accounts

    The chart of accounts is the master list of account codes (consisting of numbers and/or letters) and account names used to classify, record, budget, and report financial transactions in a general ledger.

  • Planned giving

    Planned giving is a fundraising program that involves arranging donations to serve the interests of the registered charity and that suits the personal, financial, and tax situation of the individual donor. Through a planned-giving program, a registered charity seeks to attract significant gifts by identifying potential donors and helping them with information and advice.

    Examples of planned giving include bequests, annuities, life insurance policies, and residual interests or charitable remainder trusts.

    (CRA : Charities Glossary)

  • Pledges

    A pledge is a promise to make a donation in the future. It is not a gift until the charity actually receives the donation. Therefore, no receipt can be issued until the donor has fulfilled the pledge by making a donation.

    See also 'Pledges' (CRA, 2011)

  • Private foundation

    • is established as a corporation or a trust;
    • has exclusively charitable purposes;
    • carries on its own charitable activities and/or funds other qualified donees, (e.g., registered charities);
    • may have 50% or more of its governing officials not at arm's lengthwith each other;
    • generally receives the majority of its funding from a donor or a group of donors that are not at arm's length; and
    • its income cannot be used for the personal benefit of any of its members, shareholders, or governing officials.

    (CRA : Charities Glossary)

  • Adjusted cost base

    Generally, the adjusted cost base is the amount originally paid for a property, plus the costs (such as legal fees or surveys) associated with the purchase, plus the cost of any improvements to the property.

  • Minutes

    Minutes are a written record of the matters discussed, and decisions made at a meeting. They are based on notes taken - usually by the individual designated as Secretary - and are generally presented to a subsequent meeting of the same group for approval. Once approved, a copy of the minutes is generally signed by the chair of the meeting that the minutes report on and the secretary who recorded them, to indicate their official status. Minutes should be kept as a permanent record, and are often kept in a minute book.

  • Pledges

    A pledge is a promise to make a donation in the future. It is not a gift until the charity actually receives the donation. Therefore, no receipt can be issued until the donor has fulfilled the pledge by making a donation.

    See also 'Pledges' (CRA, 2011)

  • Public foundation

    • is established as a corporation or a trust;
    • has exclusively charitable purposes;
    • generally gives more than 50% of its income annually to other qualified donees, (e.g., registered charities), but it may carry out some of its own charitable activities;
    • more than 50% of its governing officials must be at arm's length with each other;
    • generally receives its funding from a variety of arm's length donors; and
    • its income cannot be used for the personal benefit of any of its members, shareholders, or governing officials.

    (CRA : Charities Glossary)

  • Qualified donee

    Qualified donees are generally organizations that can issue official tax receipts for gifts.

  • Qualifying security

    A qualifying security is a security that is traded on a recognized stock exchange. The donation of a qualifying security is eligible for a tax receipt.

  • Real Property

    Description: Land, and buildings or other structures permanently attached to land.

    Examples: A family home, a cottage, or a vacant piece of land.

    The value of real property for tax receipt purposes is its fair market value. You should almost always get an appraisal or valuation from a professional real estate appraiser to support the gift.

    Real property located in Canada is not subject to the deemed fair market value rule, but property outside Canada is.

    Special case: For gifts of ecologically sensitive land, you should refer to the Canadian Ecological Gifts Program.

  • Official donation receipt

    Registered charities may issue an official donation receipt (or "tax receipt") to acknowledge a gift. An official donation receipt is subject to particular requirements under the Income Tax Act including identification that it is an official receipt for income tax purposes. Registered charities can also issue other forms of receipts to acknowledge receipt of services or other items that are not gifts. These are not tax receipts and should be clearly distinguished from the tax receipts issued to acknowledge gifts.

  • Official donation receipt

    Registered charities can issue official donation receipts (also referred to as "tax receipts") to acknowledge gifts. An official donation receipt is subject to particular requirements under the Income Tax Regulations including identification that it is an official receipt for income tax purposes.

    Note that registered charities issue other forms of receipts to acknowledge acceptance of services or items that are not gifts. These are not tax receipts and should be clearly distinguished from the tax receipts issued to acknowledge gifts. Contributions of services, that is, of time, skills or efforts, are not property and, therefore, do not qualify as gifts for purposes of issuing official donation receipts. Accordingly, a charity cannot issue an official donation receipt for services rendered free of charge.

    (CRA : Charities Glossary)

  • Registered

    An organization has applied to the CRA and received approval as meeting the requirements for registration as a charity, and has been issued a charitable registration number.

    A registered charity is exempt from paying income tax and can issue official donation receipts for gifts it receives. However, if a registered charity is under suspension, it no longer has receipting privileges during the suspension period.

    A registered charity is designated by the CRA as a charitable organization, a public foundation, or private foundation.

    (CRA : Charities Glossary)

  • Bylaws

    Bylaws are part of the governing documents of an organizations, and include rules about the organization's operation. Bylaws often provide the methods for the election of directors, the appointment of officers and the description of their duties, the creation of committees, and the conduct of meetings, etc.

  • Compensation

    Compensation, for persons (employees) working full-time or part-time for a registered charity, includes salaries, wages, commissions, bonuses, fees, and honoraria, plus the value of taxable and non-taxable benefits.

    (CRA : Charities Glossary)

  • Resources

    A charity’s resources include all its financial assets, staff, volunteers, directors, premises, and equipment.

  • Resources

    A charity’s resources include all its financial assets, staff, volunteers, directors, premises, and equipment.

  • Revoked

    Registration as a charity or Canadian amateur athletic association has been cancelled and the privileges that go with it have been taken away. The organization can no longer issue official donation receipts and is no longer eligible to receive gifts from registered charities.

    Registration as a charity or Canadian amateur athletic association is officially revoked when a notice is published in the Canada Gazette.

    Registration may be revoked because the charity or Canadian amateur athletic association:

    • chooses to give up its registration (voluntary revocation);
    • does not file its annual return or does not file it on time (revocation for failure to file); or
    • is found to be non-compliant with the requirements for registration under the Income Tax Act (revocation for cause).

    (CRA : Charities Glossary)

  • Revoked

    Registration as a charity or Canadian amateur athletic association has been cancelled and the privileges that go with it have been taken away. The organization can no longer issue official donation receipts and is no longer eligible to receive gifts from registered charities.

    Registration as a charity or Canadian amateur athletic association is officially revoked when a notice is published in the Canada Gazette.

    Registration may be revoked because the charity or Canadian amateur athletic association:

    • chooses to give up its registration (voluntary revocation);
    • does not file its annual return or does not file it on time (revocation for failure to file); or
    • is found to be non-compliant with the requirements for registration under the Income Tax Act (revocation for cause).

    (CRA : Charities Glossary)

  • Arm's length

    The term "at arm's length" describes a relationship where persons act independently of each other or who are not related. The term "not at arm's length" means persons acting in concert without separate interests or who are related.

    Related persons are individuals who are related to each other by blood, marriage or common law partnership, or adoption. Examples of blood relatives include grandparents, parents, brothers, sisters, and children. Examples of persons related by spousal relationship include the grandparents of a spouse, the parents of a spouse, the brothers and sisters of a spouse, the spouse of a child, and the spouse of a grandchild. Generally, in determining arm's length relationships, common law partners are treated in the same way as legally married spouses. Adopted children are treated in the same way as blood-related children.

    Related persons also include individuals or groups and the corporations in which they have a controlling interest. Persons related to these individuals or groups are also considered related to those corporations.

    For more information on arm's length, see Interpretation Bulletin IT-419, Meaning of Arm's Length.

    (CRA : Charities Glossary)

  • Source document

    A source document is an original document that records and reflects a transaction between parties.

    Source documents that support the information in the governance documents and financial information include:

    • e-mails and handwritten memos,
    • supplier invoices,
    • expense reports and receipts,
    • paid cheques and credit card receipts,
    • petty cash chits,
    • major contracts entered into by the charity,
    • employment contracts,
    • work orders,
    • courier slips and bills of lading,
    • purchase orders, and
    • bank deposit slips.
  • Sponsorship

    Sponsorship occurs when a business makes a donation to a charity and in return receives advertising or promotion of its brand, products, or services.

    Generally, tax receipts cannot be issued for sponsorships. However, the cost of the sponsorship to the business is generally considered a tax-deductible business expense, which is typically as attractive to a business as a donation receipt.

  • Standard A10 Explained

    Definition: Stakeholders1
    A stakeholder is a person, group or organization that has a direct or indirect stake in the organization because he/she/it can affect or be affected by the objectives, actions and policies of the organization.

    Who are my organization’s stakeholders and why do we need to communicate with them? One of the primary tasks of nonprofit and charitable boards of directors is to communicate openly to its stakeholders, including its members and the broader community it serves.2 The effectiveness of an organization depends on maintaining positive relationships with its stakeholders and on meeting their expectations to the extent that this does not compromise the organization’s mission, values, or strategies.3

    An organization’s stakeholders may include:3

    • Members
    • Clients or participants
    • The most senior staff person
    • Employees
    • Volunteers
    • Individual donors
    • Partners
    • Funders
    • Business donors or sponsors
    • The broader community

    From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

    1. “Standards Program Definitions,” Imagine Canada, May 2011.
    2. Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002.
    3. “‘Governance’ in Key Risks & What To Do About Them,” Imagine Canada, 2009.
  • Standard A11 Explained

    What are codes of ethics / conduct and why are they important? Codes of ethics or codes of conduct present the ethical principles that guide behaviour and decision-making within an organization. The purpose of the policy is to provide staff, volunteers and other interested persons with guidelines for making ethical choices in the conduct of their work. It may also outline how the organization intends to treat its volunteers, employees and clients. Principles may include, for example, acting with honesty, accuracy and integrity and respecting privacy and confidentiality.1

    The benefits of creating codes of ethics / conduct include:2

    • Establishing clear expectations for behaviour
    • Building a reputation for credibility
    • Strengthening organizational values
    • Discouraging unethical behaviour
    • Mitigating risks related to conflicts of interest and legal liability

    From "Accreditation Preparation Workbook Section A: Board Governance,"  Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.

    1. “Standards Program Definitions,” Imagine Canada, May 2011.
    2. “Ethics and Nonprofits,” Deborah L. Rhode and Amanda K. Packel, Stanford Social Innovation Review, Summer 2009.

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