CRA releases Guidelines on directed donations
S. 168(1)(f) was amended so as to indicate that a registered charity cannot accept a gift of property where the donor, expressly or implicitly, directs the registered charity to transfer the property by way of a gift to a grantee organization. Can a registered charity accept a gift of property from a donor who provides a letter of wishes expressing the hope that the charity will transfer the property to a named grantee organization?
In its written response, CRA referenced the Guidelines released by it on November 30, 2022 (CG-032), which indicated that, to avoid any concerns regarding conditional gifts, a charity should clearly communicate (e.g., on the giving page of its website) that, although donors can indicate preferences as to how their donations were to be applied, the charity will not return the donation if it does not follow this preference. Furthermore, the charity must ensure it retains authority on the use of its resources.
Those Guidelines also discussed related amendments that permit a registered charity to make a “qualifying disbursement,” by way of a gift or otherwise making resources available, to a “grantee organization” (i.e., a non-charitable organization or entity) provided that the disbursement is in furtherance of a charitable purpose of the charity and the charity ensures that the disbursement was exclusively used to advance charitable activities in furtherance of a charitable purpose of the charity. These Guidelines contain a detailed discussion of the italicized “accountability” requirements.
Neal Armstrong. Summary of 29 November 2022 CTF Roundtable, Q.14 under s. 168(1)(f) and summaries of CG-032, Registered charities making grants to non-qualified donees (draft), 30 November 2022 under s. 168(1)(f), s. 149.1(1) – qualifying disbursement and charitable organization – (a).