REGISTERING A CHARITY IN CANADA IS COMPLICATED.

This answer varies depending on the type of organization you are registering, and whether the application has been prepared by an experienced charity lawyer, or by an individual that may not be familiar with charity law.

If your application is prepared by an experienced charity lawyer, you can anticipate the process to take about 4-6 months from start to finish, including the CRAs review time.

If the application is not completed by an experienced charity lawyer, it may not be completed to the CRA standard, resulting in longer turnaround times. If the application does not provide enough information for the CRA to make their decision, it will result in delays and you will be required to submit the missing information and begin the review process over from scratch. In these cases, the process is closer to 8-10 months to complete the registration.

Yes, there is a difference between Charities and Not-for-Profits.

A large number of registered charities start off by incorporating as not-for-profit organizations. This is because you need a legal entity to complete the charity application, and the not-for-profit acts are typically the most favourable for doing so.

The main difference is that all registered charities have completed an additional application with the Canada Revenue Agency (CRA), and received an approval in response to their application. Once an organization is approved and receives its charity status, it will be defined differently under the Income Tax Act (Canada).

Some other differences are as follows:

1. Issuing Tax Receipts - Registered charities are allowed to issue official donation receipts to donors for income tax purposes. Not-for-profit organizations cannot issue donation receipts.

2. Tax Exemptions - Registered charities are exempt from paying tax. Not-for-profits, on the other hand, are typically exempt from paying income tax only.

3. Purposes - The purposes established for a registered charity must be exclusively charitable. This means that they must fall under one of the CRAs approved heads of charity, or they will not be approved. A not-for-profit, however, can be established for any purpose other than profit.

The four approved heads of charity are:

- relief of poverty;

- advancement of education;

- advancement of religion; or

- other purposes beneficial to the community.

If you need more information on the difference between charities and NPOs, click the button below to read our article on this topic!

At Outsiders Law, we offer fixed-fees for a number of services, including charity registrations. This means that our clients know what they will be paying upfront, and can avoid unexpected and large bills.

Our fixed-fee price points are as follows:

1. Private Foundation - Fixed-fee of $5,000 (price point only applicable for foundations with a single purpose and no activities)

2. Public Foundation - Fixed-fee of $7,500

3. Charitable Organization (Standard) - $7,500

4. Charitable Organization (Complex) - Fixed-fee to be determined after consultation with one of our lawyers. Starting point is $8,500, and may go up depending on level of customization required.

We also offer a 100% money back guarantee on charity registrations, meaning that we will refund you the fixed-fee amount if the application is not approved. With over 50% of charitable applications being rejected every year in Canada, we are confident that our lawyers can guide you to a successful registration.

The CRA sets out very specific guidelines for what they expect to see on a successful charity application, and they also provide information on the factors that could prevent an organization from qualifying as a registered charity. Click the link at the bottom to visit their website for additional information.

To summarize, the most common reasons that an application may be rejected are as follows:

1. the applicant is an organization that was established and resides outside of Canada;

2. the applicant established the organization for the purpose of receiving a profit;

3. the applicant is or will be proving gift funds or resources to non qualified donees;

4. the applicant is or will be providing a private benefit to its members, directors, trustees, or like officials;

5. the applicant is or has established the organization to benefit a particular individual or private group, referred to as private benevolence;

6. the applicant's activities are established to either support or oppose any political party or candidate in Canada;

7. the applicant's activities are illegal or contrary to Canadian public policy.

Registering a charity is a very noble task, but there are some things you should consider before moving ahead with your application. Some of the main considerations are as follows:

1. Do you have a clear vision/mission? Before applying for charity status, you will want to have a clear and established vision and mission statement for your organization. If you aren't quite there yet, that's okay! We just recommend taking some more time to determine exactly what your organization wants to do before you proceed.

2. Is this practical for you? Will you be able to manage the logistics and operations once you are registered?

3. Is this viable for you? R Charities are not excluded from the normal ups and downs that businesses face. Are you confident that your organization will be able to sustain itself through the financial cycles?

4. Are you aware of the compliance obligations you will face? Charities have compliance obligations to the Canada Revenue Agency, as well as the applicable corporate registries in your jurisdiction. Are you familiar with these obligations and do you believe you can manage them?

5. Have you determined who your directors and officers will be? When establishing a registered charity, it is important that your board of directors is made up of likeminded individuals who share the same vision for the organization. If your directors and officers are passionate about your cause, it will be easier to solicit donors as they will recognize that your team takes your mission seriously. Additionally, you will be required to have a minimum of 3 directors on your board. If you do not have three directors, you will want to find other individuals before you begin your application.

While you cannot "own" a charity or not-for-profit, you can establish multiple classes of members that will allow for maintaining control of the organization.

Our standard process is to incorporate a not-for-profit with one class of members and an open membership. This means that the organization is effectively controlled by the members, as all members will have the right to vote at meetings and therefore, the board is determined by the members.

In cases where the founder(s) want to maintain control, we can structure the organization with a "board membership", meaning that at any given time, the individuals on the board will also be the members of the organization. In doing this, it ensures that the original directors cannot be voted out unless they decide to leave themselves.

We can also take it a step further and structure the corporation with two classes of members, one with voting rights and one without. The first class being the members of the board and the latter being members of the general public who have interest in the organizations mission. This would allow for members of the public to join your organization, but it would not give them the power to vote out directors.