Charitable Status Revocation Continues to Plague Charities

CRA cracking down on questionable charity activities and schemes.

Questionable activities surrounding charities have made legal and financial news recently, with a large crackdown by CRA on inflated charitable receipts and other schemes. The newest discovery has resulted in a revocation of charitable status for a large Vancouver based charity.  

Effective February 9th, the CRA revoked the charitable status of The Voice of the Cerebral Palsied of Greater Vancouver. An audit by CRA revealed that the charity failed to devote nearly enough resources to charitable activities, noting that the charity had devoted less than 15% of its total income and less than 20% of total tax-receipted income to its charitable activities. Also, approximately 93% of funds raised by a third party fundraiser remained with those fundraisers, with the charity seeing a return of only 7.5% on the amounts raised.

A charity’s registered status, which allows for tax deductible receipts to be provided upon donation, can be revoked in three instances: if the charity voluntarily requests this, when the charity fails to file the required T3010 form, and for cause – when the charity does not meet the requirements of registration.

Charitable tax exemptions are quite substantial and are a significant tax expenditure that our government makes, justified of course by the philanthropic and altruistic philosophy of charitable giving. However, instances such as this one remind us that stringent policies must be put in place to protect taxpayers, government revenues, and most importantly, those that require the charitable funds the most.