Glossary:

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.

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 — Distributing the charity's research

Healthy Retirement distributes the results of its research to the media, its members, other charities that specialize in promoting the health and welfare of seniors, the general public, and anyone interested in its findings. It also publishes its report in medical association journals and on its Web site, and highlights its release in a newsletter sent to subscribers. In these cases, all the resources devoted to the research and distribution of the findings are considered resources devoted to charitable activities because:

• the activities are connected and subordinate to the charity's purposes;
• the activities do not contain a call to political action; and
• the activities are based on a well-reasoned position.

This is information that seniors can use to improve their safety and that decision-makers can use when deciding where and whether to use crosswalks or other traffic controls when considered in combination with other issues.

Example 2 — Distributing a research report to election candidates

Healthy Retirement decides to send its report to all candidates in a municipal election to inform them about the hazard marked crosswalks pose for seniors. This is a charitable activity because it is connected and subordinate to the charity's purpose and because no one candidate is favoured over another.

Example 3 — Publishing a research report online

A major finding of the report was that many motorists fail to respect the right-of-way at marked crosswalks. When Healthy Retirement publishes its report online, it highlights this fact and urges motorists to observe the law. This is still a charitable activity because it is encouraging people to respect the existing law on an issue that relates to its purposes.

Example 4 — Presenting the research report to a Parliamentary Committee

The research director of Healthy Retirement presents the charity's findings to a Parliamentary Committee formed to hear representations on whether there should be stiffer penalties in the Criminal Code for dangerous operation of a motor vehicle. She ends her representation with a recommendation (based on a well-reasoned position) that a driver failing to observe the pedestrian right-of-way at a marked crosswalk should be automatically subject to a charge of dangerous operation of a motor vehicle, as a deterrent.

Even though the charity explicitly proposed a political solution to the problem, this activity is charitable because it is a communication to an elected official based on a well-reasoned position.

Example 5 — Giving an interview about the research report

Following her representation, as the research director of Healthy Retirement is leaving Parliament, she is stopped by the media and interviewed for television and radio about what she said and the report. She outlines her representation and repeats the conclusion that on the basis of the research the charity has done, the charity thinks that the number of pedestrian deaths involving seniors might be reduced if drivers who failed to recognize the right-of-way of pedestrians at marked crosswalks faced stiffer penalties. This interview is not a political activity because the research director did not arrange a media campaign to publicize the charity's conclusion that the law should be changed; she simply explained what she had said to the elected representatives.

Example 6 — Distributing the research report to all Members of Parliament

A bill is being debated in Parliament. The bill proposes a change to the Criminal Code that would allow a driver who fails to observe the pedestrian right-of-way at a marked crosswalk to be charged with dangerous operation of a motor vehicle. Healthy Retirement gives Members of the House, for use in debate, a relevant well-reasoned position regarding how such a charge might encourage drivers to uphold the law and thereby save lives. This is a charitable activity because Healthy Retirement is informing elected representatives about its work on an issue that is connected and subordinate to the charity's purposes and based on a well-reasoned position.

Example 7 — Participating in an international policy development working group

The research director of Healthy Retirement is asked to join a working group of the World Health Organization that is gathering together government policy makers, academics, and voluntary sector representatives from around the world to develop a charter to promote the health of senior citizens. Such an activity is connected and subordinate to the charity's purpose. Although the research director is taking part in an initiative organized by an international body, this kind of activity is considered to be like communicating with a public official because government policy-makers are also invited (whether or not they actually attend). Therefore, as long as the research director's contribution is based on a well-reasoned position, the resources of the charity devoted to developing such a charter are viewed as resources devoted to a charitable activity.

Example 8 — Joining a government advisory panel to discuss policy changes

A provincial government launches a Health Sector Initiative to look at ways of improving its service delivery to residents of the province. Healthy Retirement is asked to join an advisory panel with other health charities and public officials to discuss possible policy changes. Based on a well-reasoned position, Healthy Retirement suggests that the province should increase its number of long-term hospital care beds for the elderly. Although the charity is recommending a change in provincial health policy, the charity's involvement in the advisory panel is a communication to a group of public officials based on a position that is well-reasoned. Therefore, the resources devoted to the activity are resources devoted to a charitable activity.

A fiscal period is the 12 months (or, for incorporated charities, a period of up to 53 weeks) covered by the charity's financial statements. Many registered charities have a fiscal period that is the same as the calendar year (that is, their fiscal period is from January 1 to December 31); others have a different fiscal period (for example, ending August 31 or March 31).

The fiscal period end is always stated as month and day only (for example, March 31). The year is not included because, unless formally changed, the fiscal period stays the same year after year. The phrase "fiscal period ending" does include the year because it identifies one specific fiscal period that ends in that year.

(CRA : Charities Glossary)

A community foundation is an organization established to manage a community endowment fund, the income from which is distributed to registered charities within a community. A community foundation can qualify for registration as a charity.

(CRA : Charities Glossary)

• 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)

• 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)

The general ledger is the main financial record for summarizing all of an organization’s financial transactions, and is the basis for preparing all of its finanical statements and reports.

Fair market value is usually the highest dollar value that can be obtained for a property in an open and unrestricted market and between a willing buyer and a willing seller, both of whom are knowledgeable, informed, and acting independently of each other.

The Canada Revenue Agency generally considers “substantially all” to mean 90% or more.

A bequest is property a registered charity receives from the will of a deceased person.

(CRA : Charities Glossary)

President and CEO, Imagine Canada

Marcel has also served as Deputy Chief Executive of the Ministry of Social Development in New Zealand, as President of the Canadian Council on Social Development, as Special Advisor to the President of the Social Sciences and Humanities Research Council of Canada and as Founding Executive Director of the Canadian Federation for the Humanities and Social Sciences.

Marcel Lauzière is a recipient of the Queen Elizabeth II Diamond Jubilee Medal for his contribution to philanthropy in Canada, and has a Masters degree in Canadian Social History from the University of Ottawa.

The eligible amount is the part of a gift for which a charity can issue a tax receipt. Generally, this is the amount by which the fair market value of the gift exceeds the amount of any advantage given in respect of the donation.

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)

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)

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 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)

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.

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.

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 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.

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)

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.

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)

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, 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)

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

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)

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)

Vice-President, Strategic Communications & Business Development, Imagine Canada

Prior to Imagine Canada, Stephen served as the Executive Director of Second Harvest, an organization which collects fresh, perishable food and distributes it to more than 200 social services agencies throughout Toronto. He also worked in management capacities with Operation Eyesight; Scarborough Community Care Access Centre; Schizophrenia Society of Canada, and a number of other nonprofit organizations.

Stephen holds a certificate in marketing for nonprofit organizations from Carlton University and a diploma from Centennial College in radio and television journalism.

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.

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.

• Tangible property (property that a person can touch)
  • real property (land and attached buildings)
  • capital property (property that is purchased with the intention of holding or using it, rather than reselling it)
    • depreciable property (property that is expected to be used, generally in a business, over a number of years)
    • personal use property (property generally used by a person, not in a business context)
      • listed personal property (specifically identified property that is expected to increase in value over time, such as various types of collections)
      • other personal use property
    • other capital property
  • non-capital property (inventories of goods held for resale)

• Intangible property (that is, property that has no physical form)
  • securities and investments
    • qualifying securities (generally, securities that are traded on a stock exchange)
    • non-qualifying securities (securities that are not traded on a stock exchange)
  • interests in tangible property
    • leasehold interests (the right to possess and use a property for a period of time, through a lease)
    • residual interests (the remaining rights to a property after the current owner continues to possess and use it; these rights are usually created in a will)
  • intellectual property (trademarks, patents, licenses, and so on)
  • other legal rights and intangibles

What is a mission statement and why is it important? A mission statement is a short, written statement that describes the core purpose of the organization including what it does, for whom and why. The mission statement should be sufficient to guide the strategies and actions of an organization, describe its overall goal, provide a sense of direction, and guide decision-making. ¹

In order to effectively govern a nonprofit organization, the board of directors must have a clear understanding of the organization’s mandate. This is provided by the mission statement, which presents an organization’s primary purpose or goals. A mission statement tells the world why your organization exists. ² Everything an organization does should align with its mission. Boards must review their organization’s mission statement regularly to ensure that it continues to express the organization’s highest aims and commitments. ³ Effective reviews of the mission statement should always involve the full board as well as the Executive Director or most senior staff person.³

A great mission statement:

• is concise and easy to understand
• distinguishes your organization from others with a similar mandate
• inspires others to support your organization’s important work

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. “Strategic Planning: Train the Trainer Workshop Handout,” Cathy Brothers, 2012 
3. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada, 2002

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 the nonprofit and charitable board 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.

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.