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Our take on the new CRA guidance about funding non-charities

Our take on the new CRA guidance about funding non-charities

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If you’ve been active in nonprofit sector policy, you’ve likely heard the phrase “direction and control” used quite frequently over the past few years. Previously, charities were only legally able to operate in two ways: by carrying out their own charitable activities or by making gifts to other qualified donees. Qualified donees include charities and several types of organizations, such as registered Canadian amateur athletic associations. Organizations that are not registered charities or qualified donees are referred to as non-qualified donees by the Canada Revenue Agency (CRA). In this post, we will refer to them as non-charities for simplicity. 

Unless a charity entered into an agreement whereby they exercised “direction and control” over the activities of their non-charity partner, legislation prevented charities from providing funds to non-charities. This requirement significantly hindered equitable partnerships between charities and non-charities, which led Senator Ratna Omidvar to introduce Bill S-216 in November 2021. This Bill aimed to create a robust and transparent accountability system that did not require charities to exert operational control over non-charities. In June of 2022, continued advocacy from the sector led to these changes being adopted in Bill C-19, marking the end of direction and control requirements and the beginning of transformative partnerships between charities and non-charities.

On November 30th, 2022, the CRA released draft guidance for registered charities making grants to non-qualified donees. This guidance is intended to provide a framework for the grant-making process, with guidelines on how to assess risk and tools to ensure accountability when granting to non-charities. With a two-month period for feedback on the guidance, many organizations in the sector submitted comments to encourage the CRA to improve the guidance, so it captures the spirit of Bill C-19 and Bill S-216. On January 19th, 2023, Imagine Canada hosted a convening with over 20+ charitable and nonprofit organizations to identify opportunities to strengthen the guidance. Following discussions with our members and organizations in the sector, Imagine Canada submitted comments on January 31st, 2023.

Here’s a summary of what we heard: 


The term “risk” is mentioned 62 times throughout the Guidance without being defined. The immediate assumption of risk being high when working internationally implies the continued application of direction and control in the relationships between Canadian organizations and international colleagues. Usage of this term is also problematic because “risk” in this Guidance is often conflated with equity-seeking groups. We’ve asked the CRA to reassess the use of the term “risk.”

Clarity and Accessibility

The document lacks clarity and conciseness. We’ve asked the CRA to refine the guidance and create a summary document no longer than 1-2 pages so charities have step-by-step directions on how to comply.

Inconsistencies with Terms, Definitions and Concepts

Terms, definitions, and concepts that are inconsistent with other regulatory documents have been identified. These terms and concepts include: 

  • Qualifying Disbursements and Grants
  • Charity
  • Otherwise Making Resources Available
  • Non-Monetary Resources
  • Resources 
  • Public and Private Benefit
  • Directed Donations and Acting as A Conduit
  • Non-Qualified Donees 
  • Risk

Accountability Tools to Combat Risk

We’ve asked the CRA to ensure the effort required to administer the accountability tools (due diligence review, written agreement and regular monitoring and reporting) is proportionate to the value of the grant. We’ve also asked the CRA to consider alternative accountability tools such as verbal and video applications, mid-way check-in calls and simplified final reports.

Failure to Address Charitable Purposes of Charities that Make Gifts to Qualified Donees

Many charities, including foundations, have charitable purposes of making gifts to Qualified Donees. However, some charities would like to provide grants to non-charities, but doing so may cause them to operate outside of their charitable purposes. We’ve asked the CRA to clarify whether charities need to modify their charitable purposes to include non-charities and qualified donees.

Working With A Non-Qualified Donee as an Intermediary and Grantee

Many charities work with non-charities in varying capacities, which may require them to administer different reporting requirements depending on the program’s needs (e.g. own activities v.s. qualifying disbursements). We’ve asked the CRA for clarification as to whether charities can work with non-charities as intermediaries and grantees when delivering a program.

Qualifying Disbursement Limit

We’ve asked the CRA to develop clear guidance for determining how qualifying disbursements by way of gifts differ from qualifying disbursements by “otherwise making resources available.”

Granting Real Property to a Grantee or Another Non-Qualified Donee

We’ve asked the CRA to clarify how risk is determined when granting property to annon-charity. Current applications provided in the guidance may confuse readers. 

The Guidance is intended to be an evergreen document that can be adjusted. If you’d like us to provide further feedback to the CRA, please contact us at

For a more detailed look at our comments, you can review our submission here

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