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CRA Issues Guidance on Umbrella Organizations, Promotion of Volunteerism

(June 2, 2008) The Canada Revenue Agency (CRA) has released two new policy statements related to the registration of organizations that serve a charitable purpose by working with member groups and organizations whose mission is to promote volunteerism.

The CRA’s Guidelines for the Registration of Umbrella Organizations and Title Holding Organizations, which took effect May 1, 2008, outlines the organization’s policy on registering organizations that support the charitable sector by promoting the efficiency and/or effectiveness of registered charities, or that advance a charitable purpose by working with and through member groups. In addition, the policy also addresses registered charities that hold title to property on behalf of other registered charities.

According to the CRA, an organization does not have to work directly with individual charitable beneficiaries in order to be considered to be advancing a charitable purpose. Umbrella organizations can advance a charitable purpose by directing their activities at improving and enhancing the charitable activities of other generally community-level organizations.

However, the CRA makes clear that umbrella organizations must still comply with existing restrictions, including prohibitions from

  • gifting their resources to organizations that are not qualified donees; and
  • operating for, or using their resources for, the private benefit of any person or organization (other than a qualified donee).

The CRA emphasizes that nothing in the guidance “should be construed as to allow registered charities to provide funding for, or to otherwise more than incidentally confer benefits on, organizations that are not qualified donees."

The full text of the guidance can be found on the CRA website.

Promotion of Volunteerism

The second policy statement, Promotion of Volunteerism, was also released on May 1. The guidance outlines the policy the CRA will follow in registering charities whose mission is to promote volunteerism.

In order to be registered, an organization has to clearly promote volunteerism to the community-at-large through broad-based activities. It cannot support only one organization or one particular type of organization that reflects a single interest, unless the beneficiaries are registered charities or otherwise qualified donees.

Examples of activities that qualify include:

  • increasing public awareness and support for volunteerism through, for example, news releases and community newsletters;
  • encouraging residents to volunteer in the social development and social services of their community;
  • providing a means and method for recruiting and referring volunteers; and
  • providing a community information resource on volunteering.

The full text of the guidance can be found on the CRA website.

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