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  • Board Terms of Reference - Standard A17 Explained

    Definition: Board Terms of Reference1
    A document approved by the board that specifies the stewardship responsibilities of the board of directors and their accountabilities to the organization’s members and stakeholders.

    Why are terms of reference important? Board and committee terms of reference describe the purpose and operating structure of a nonprofit or charitable organization’s board of directors. By setting clear expectations, terms of reference guide behaviour and provide a framework for board decision-making. Terms of reference should be written in clear, concise language so that they are easy to understand and follow.2 Board terms of reference should describe the purpose of the group and outline board members’ responsibilities.

    The scope of responsibilities included in the board terms of reference (sometimes called ‘mandate’ or ‘job description’) usually includes:1

    • setting the strategic direction (approving strategies and goals),
    • managing the most senior staff person,
    • monitoring the organization’s performance (overseeing the conduct of the business of the organization),
    • overseeing risk management,
    • approving policies appropriate for the business of the organization, and,
    • establishing procedures for good governance.

    Committee terms of reference should include:1

    • The name of the committee
    • The committee’s purpose
    • Important duties and responsibilities
    • The committee’s composition and roles
    • Meeting details
    • Resources, including financial resources and staff support
    • Annual objectives
    • Reporting details
    • Process for review and evaluation of the committee
    • Approval date and review date of the terms of reference

    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. “Board Development: Committees,” Board Development Program, Voluntary Sector Services Branch, Alberta Culture and Community Spirit, 2009.
  • 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)

  • Accrual

    Accrual accounting is the method of recording transactions, where revenues and expenses show in the results for the period in which they were earned and/or incurred, whether or not cash has changed hands for the transaction.

  • 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.

  • Advantage

    An advantage is the total fair market value of all property, services, compensation, or other benefits that a donor receives or is entitled to receive in return for making a gift. The benefits may be contingent or receivable in the future, by either the donor or any person or partnership not dealing at arm's length with the donor.

    Determining the fair market value of an advantage is similar to determining the fair market value of a gift in kind. However, while only property is a gift in kind, all types of advantage (for example services, accommodation, use of property) must be valued.

    An advantage also includes any limited-recourse debt in respect of the gift. However, the calculation of an advantage does not include taxes such as GST, PST, or HST. As well, it does not include gratuities, unless they are included in the cost and are not discretionary.
    For more information, see Pamphlet P113, Gifts and Income Tax.

    (CRA : Charities Glossary)

  • Advocacy

    The act or process of defending or maintaining a cause or proposal. An organization may have advocacy as its mission (or part of its mission) to increase public awareness of a particular issue or set of issues. (from

  • Allocating indirect costs

    Example Ways of allocating the cost
    A charity's newsletter promotes an event The newsletter's cost could be allocated based on ...
    • the number of pages used to promote the event compared to the total number of newsletter pages (for example, if a charity publishes an eight-page newsletter each month and uses one page to promote an event, then one-eighth of the cost of the newsletter could be recorded under“event promotion”), or
    • the number of words in the promotion compared to the total number of words in the newsletter, or
    • the staff time spent to write the promotion compared to the total staff time to write the newsletter.
    The charity's telephone system is used by staff to provide counselling services The phone system's cost could be allocated based on ...
    • the number of staff providing counselling compared to the total number of staff (for example,if a charity has ten staff members and two of them provide counselling services, then one-fifth of the cost of the phone bill could be recorded under “counselling services”), or
    • the staff time spent on counselling compared to the total staff time, or
    • the floor space of counsellors' offices compared to the charity's total floor space
    The executive director travels across the country, teaching education programs, visiting funders, and meeting with regional managers. The executive director’s travel cost could be allocated based on ...
    • the time the executive director spent on each activity (for example, if the executive director is away for three days and spends one day teaching, one day meeting with funders, and one day meeting with regional managers, then one-third of the cost of the travel bill could recorded under each of these activities), or
    • the direct costs incurred by each activity (for example, if the total direct costs of the education program were $30,000, fundraising direct costs were $5,000, and regional managers’ salary direct costs were $65,000, then education would be charged 30% of the travel, fundraising 5%, and the regions 65%). or
    • the revenue associated with each activity (for example, if the education program generated $50,000 in revenue, fundraising $75,000, and the regions $375,000, then education would be charged 10%, fundraising 15%, and the regions 75%).
    A laboratory is used sometimes by several researchers and is sometimes rented out to other organizations. The laboratory's cost could be allocated based on ...
    • the amount of time the lab is used in each of the activities (for example, if researchers from three different programs in the charity each use the lab one day a week, with the other two days rented out, one-fifth of the cost of maintaining the lab can be recorded under each of the three program areas, and two-fifths recorded as a cost of earning rental income), or
    • the number of researchers involved in each activity, or
    • the direct costs incurred for each activity (for example, if the lab's direct costs were $5,000 for program A, $25,000 for program B, $25,000 for program C, and $45,000 for the times when the lab is rented out, then 5% would be recorded for program A, 25% for B, 25% for C, and 45% as a cost of earning rental income).
  • 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)

  • Artworks donated by the artist

    Artworks that are donated by the person who created them.

    Examples: Paintings, sculptures, jewellery, etc., produced by the artist. Artworks or cultural property donated by the artist are considered to be donated from the artist’s inventory. Inventory is normally valued at fair market value.

    In this case, the charity issues the tax receipt for the fair market value. However, the artist can choose to report a lower value for his or her tax purposes, if the cost of creating the property is less than fair market value. In this case, the value must be:

    • no less than the cost of the property to the donor; 
    • no less than the value of any advantage; 
    • and no more than fair market value.

    This rule lets artists choose how much income they recognize for tax purposes on the donation of the artwork.

    For further information see CRA's IT-504.

  • 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)

  • Barry Kwasniewski

    Barry Kwasniewski joined Carters' Ottawa office in October 2008 to practice in the areas of employment law, charity related litigation, and risk management. Called to the Ontario Bar in 1990, Barry has a wide range of litigation experience, including in commercial disputes, personal injury, long-term disability, employment, insurance defence, and professional liability. Barry has also been retained by various law firms to provide legal opinions pertaining to matters arising in insurance and other litigation matters.

    Born in Montreal, Barry graduated from the University of Prince Edward Island with a BBA in 1984. He studied law at McGill University and received his LL.B. in 1987. In addition to his legal experience, Barry has also been involved with a number of charitable and not-for-profit organizations. He is a volunteer lawyer at Reach Canada, an organization that assists people with disabilities with their legal problems, is on the Board of directors of the Vista Centre, an Ottawa based not-for-profit organization that provides support to persons living with the effects of acquired brain injury, and has assisted in several United Way campaigns.

  • Bequests

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

    (CRA : Charities Glossary)

  • Bill Schaper

    Director, Public Policy and Community Engagement, Imagine Canada.

    In past lives Bill was a political staffer on Parliament Hill, the senior policy advisor to a federal cabinet minister, a policy analyst and GR practitioner with the Association of Universities and Colleges of Canada, an independent policy consultant, and a value for money auditor with the United Kingdom’s National Audit Office.

  • Brittany Fritsch

    Manager, Public Policy and Community Engagement, Imagine Canada

    Brittany FritschBrittany has developed an expertise in social innovation, particularly as it applies to Canadian charities. While at Imagine Canada, Brittany co-authored the Earned Income Framework: Mainstreaming the key concept for charities and nonprofits. She is also a Research Associate for the Carleton Centre of Community Innovation and a co-founding board member of JustChange, a micro-granting initiative in the city of Ottawa. 

  • 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.

  • Capital Property

    Description: Capital property includes depreciable property, and any property that, if sold, would result in a capital gain or a capital loss. Capital property does not include the trading assets of a business, such as inventory.

    Examples: The following properties are generally capital properties:

    • securities, such as stocks, bonds, and units of a mutual fund trust; and
    • equipment you use in a business or a rental operation.

    Capital property is normally valued at fair market value for tax receipt purposes. In some cases, however, the donor (not the charity) can choose a lower value. The donor can do this where their cost of the property for tax purposes (the "adjusted cost base") is less than fair market value. In this case, the donor may choose which value to use so long as it is:

    • no lower than the donor's adjusted cost base;
    • no lower than the value of any advantage; and
    • no higher than the fair market value.

    This rule lets donors choose how much capital gain (if any) they recognize for tax purposes on the donation of the capital property.

    Note: If the fair market value is less than the adjusted cost base, the donor does not have a choice: the fair market value must be used.

    For further information, see CRA's IT-288.

  • Charitable activity

    A charitable activity is an activity carried out by a registered charity to further its mission.

  • Charitable activity - 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 — 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.

  • Charitable organization

    • is established as a corporation, a trust, or under a constitution;
    • has exclusively charitable purposes;
    • primarily carries on its own charitable activities, but may also gift funds to other qualified donees, (e.g., registered charities);
    • 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)

  • 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)

  • 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.

  • Community foundation

    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)

  • 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)

  • Connected activity

    An activity that relates to and supports a charity's purpose and is a reasonable way to achieve it.

  • Constitution

    A legal document that sets out the fundamental principles and structure of an organization that is not a corporation.

  • David Lasby

    Director of Research, Imagine Canada

    David LasbyDavid has been with Imagine Canada for 13 years. Over this time, he has been involved with a number of surveys, most notably the Canada Survey of Giving, Volunteering, and Participating (CSGVP) and the National Survey of Nonprofit and Voluntary Organizations (NSNVO). He has also worked extensively with data from the T3010 returns that charities file with CRA.

    Most recently he has been leading Imagine Canada's Sector Monitor Program which regularly surveys charity leaders to assess the current "state of the sector" and explores key emergent issues of interest to the sector.

  • Depreciable property

    Depreciable property is a type of capital property, usually used to earn income from a business or property. It is property that is expected to decline in value, or be used over a number of years, such as vehicles, machinery, etc. The cost of this property can be "depreciated" (or "amortized") over a number of years.

  • Directors/trustees

    Directors and trustees are persons who make up the registered charity's elected or appointed governing body. This generally means persons who hold positions identified in the registered charity's governing documents, such as chair, treasurer, secretary, or past president. The registered charity's governing board includes all its directors and trustees.

    (CRA : Charities Glossary)

  • Disbursement quota

    The disbursement quota (or DQ) is the minimum amount a registered charity has to spend on charitable activities or gifts to qualified donees to keep its registered status.

  • Donations directed to specific individuals, families, or non-qualified donees

    A donor cannot specify the ultimate beneficiary of a gift, and the gift generally cannot benefit the donor or anyone who is not at arm’s length from the donor. That is, there can be no private benefit. If either of these conditions apply to the gift, CRA does not allow the charity to issue a tax receipt.

    Example 1: A donor gives $1,000 to a charity for the specific purpose of funding Jean David’s attendance at a music course given by the charity. For a donation to be eligible for a tax receipt, the charity must be able to freely apply the funds within a program (the music course) or within other similar programs at its discretion. In this case, the donor has directed specific individuals on whom the funds must be spent. Therefore no tax receipt can be issued.

    Example 2: A donor gives $1,000 to a charity specifically to help reduce the cost of offering a music program. The charity is then able to lower the fees it charges its students. Because the donor has not directed that the donation is to be used for a specific individual, it is eligible for a tax receipt.

    Example 3: A donor gives $1,000 to a charity specifically to fund a bursary program to help disadvantaged youth participate in a music program. The charity sets the criteria and selects the students to be supported. Because the donor has not directed that the donation is to be used for a specific individual, it is eligible for a tax receipt.

    Example 4: A donor gives $10,000 to benefit the family of a specific victim of a traffic accident. Because particular individuals have been identified by the donor, it is not eligible for a tax receipt. If the donation was instead intended to benefit any victim of a traffic accident, it would be within the charity’s discretion as to how to apply it, and therefore a tax receipt could be issued.

  • Donations for the benefit of the donor

    Donations that are primarily intended to benefit the individual making the donation are not eligible for a tax receipt. Benefits to the donor can include:

    • admission fees to concerts or other performances;
    • tickets to attend events where a meal is served or entertainment is provided;
    • events that include auctions, lotteries, or draws;
    • provision of services, such as the use of a charity’s premises or meeting facilities; and
    • recognition for sponsors.

    In some conditions, however, a receipt can be issued for a part of the payment (see Split Receipting for more information and examples).

  • Donations of non-qualifying securities

    A charity may generally not issue a tax receipt for the gift of shares or securities of a corporation unless they are publicly traded on a “prescribed stock exchange” or if the donor is at arm’s length from the charity and each of its director and officers. This is a complex area of the regulations, however. You should get professional advice or ask CRA if you are in this situation.

  • Donations of services

    Contributions of services (for example, time, labour, skills) are not transfers of property and therefore are not gifts. No tax receipt may be issued for the contribution of services.

    See 'Gifts of Services' (CRA, 2011)

    However, if the charity pays for the services provided, the service provider may then donate that payment to the charity. In this case, this is considered to be a cash donation and the charity can issue a tax receipt to the donor. This is sometimes called a cheque swap.

    Example 1: A charity maintains a roster of volunteers to drive seniors to various appointments, to shopping, etc. The volunteers’ time is a gift of services. Therefore no tax receipt can be issued.

    Example 2: A gardener offers to voluntarily take care of a charity's lawn and garden. No tax receipt can be issued for the provision of this service. But if the gardener decides to invoice the charity at her normal prices for such work and the charity pays this invoice, the gardener may then choose to donate all or part of the payment to the charity. The charity can then issue a tax receipt for this cash donation. Of course, the gardener would have to declare the amount invoiced as income for tax purposes, so there is likely no net benefit to her in doing so.

    Caution: For a donation to qualify for a tax receipt, there must be an actual cash donation. Funds must actually change hands.

  • Donations received as a result of an obligation or inducement

    Charities cannot issue tax receipts for donations when:

    • the donor was required to make the donation (for example, as the result of a court order) or
    • the donor was induced in any way to make a donation that he or she otherwise would not have made.

    In these cases, the donation is not considered voluntary, and therefore is not a gift.

    Example 1: As part of a settlement in a court case, the loser in the case is required to make a donation to charity. Because the donation did not meet the definition of a gift (it was not voluntary), no tax receipt can be issued.

    Example 2: A charity contacts a potential donor and proposes the following: Consistent with its charitable objects, the charity is able to provide relief to farmers, although it has no program set up to do so. The charity knows that the potential donor is interested in helping a specific farming family, so it offers to provide a program for which only this family would qualify if the donor donates to the charity. Although the donor does not receive any personal advantage for his donation, he has been induced to make his gift. Therefore no tax receipt can be issued.

  • Donee

    A donee is the recipient of a gift. See also "qualfied donee" and "eligible donee".

  • Donor

    A person, foundation, or corporation that makes a gift.


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