Canadian Budget Act Allows for Expansion of Charitable Activities

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Listen to our podcast that answers your questions on the “Changes to Canada’s Charity Regulation”

7/13/22

The Budget Implementation Act No. 1 (Amended 2022) (the Act), which governs the Canadian national budget and associated matters, was given royal assent on June 23, 2022. Charities across Canada should take note of specific sections included in Part 16 of the Act that expand the types of disbursements exempt entities can make to advance their charitable purposes.

Of particular interest to CAF Canada and other funders in Canada is Part 16 (3), which establishes two critical definitions for charities to note:

1. Grantee Organization includes a person, club, society, association or organization or prescribed entity, but does not include a qualified donee; (organisation donataire)

2. Qualifying Disbursement means a disbursement by a charity, by way of a gift or by otherwise making resources available,

a. subject to subsection (6.‍001), to a qualified donee, or

b. to a grantee organization, if

i. the disbursement is in furtherance of a charitable purpose (determined without reference to the definition charitable purposes in this subsection) of the charity,

ii. the charity maintains documentation sufficient to demonstrate

iii. the charity maintains documentation sufficient to demonstrate

A. the purpose for which the disbursement is made, and

B. that the disbursement is exclusively applied by the grantee organization to charitable activities in furtherance of a charitable purpose of the charity; (versement admissible)

Taken together, these two definitions seem to allow for qualifying disbursements to grantee organizations even when those organizations are not qualified donees, and outside of preexisting project funding models.

Pending further guidance from the Canadian Revenue Agency, this change to Canadian charity regulation seems to significantly expand Canadians’ capacity to fund charitable activities around the world. CAF Canada is closely tracking this matter and urgently awaits further guidance from the Canadian government.