Message from the Director General

It is my pleasure to share with you the Report on the Charities Program 2022 to 2023. This report features the work that the CRA does to not only support registered charities and other qualified donees, but also maintain public trust in the Canadian charitable sector.

The Charities Directorate remains committed to applying a People First philosophy to our work. It is a cornerstone of the CRA culture of service excellence and is embedded in our values of integrity, professionalism, respect and collaboration. At the heart of our vision is the spirit of caring – caring for the sector we serve. Our staff is dedicated to the strength and vitality of charities and other qualified donees, as we know these organizations are important to the social fabric of Canada and the well-being of Canadians.

In the Charities Directorate, we take a risk-based, education-first approach to our work and offer a range of services to clients. This includes a call centre, a written enquiries service, guidance products, educational web pages, and charities webinars.

This past fiscal year, we completed over 250 virtual Charities Education Program visits, which are meant to help new charities understand their obligations as a registered charity. We have also exceeded our service standard targets for telephone enquiries and written enquiries, as well as internal expectations and the published service standard for applications for charitable registration. As always, our focus remains on providing the best possible service to the sector and the public, and I continue to be proud of our exceptional standards.

I look forward to more exciting developments in the year ahead.

Sharmila Khare
Director General
Charities Directorate
Canada Revenue Agency

Introduction

The Canada Revenue Agency (CRA) is responsible for all program activities related to the provisions of the Income Tax Act for qualified donees. This includes:

• registered charities
• registered Canadian amateur athletic associations (RCAAA)
• registered national arts service organizations (RNASO)
• registered journalism organizations (RJO)
• other qualified donees (OQD)

Our mission

The Charities Directorate’s goal is to help charities comply with the income tax legislation and regulations by educating them, offering quality services, and enforcing rules responsibly. This helps maintain the integrity of the charitable sector and benefits the social well-being of Canadians.

Our vision

The Charities Directorate strives for integrity, fairness, knowledge and innovative service delivery at the heart of its work, which fosters client-oriented service and compliance. Through these values, it maintains the recognition and respect of charities, stakeholders, and the Canadian public.

Progress made from 2022 to 2023

This report highlights the CRA’s activities and accomplishments from April 1, 2022, to March 31, 2023. Most notably, the CRA:

• implemented a new way for registered charities to work with non-qualified donees by making grants
• began developing changes to Form T3010, Registered Charity Information Return
• decreased processing times to make a final decision on applications for registration by 31%, from an average of 213 days to 147 days
• continued to develop and refine audit support products to respond to changes in legislation and policy, such as the new granting legislation and the disbursement quota changes
• exceeded service standard targets for written enquiries and telephone accessibility by callers, while responding to an increased amount of telephone enquiries

Note: In some cases throughout the report, the data was rounded to the nearest whole number for publication purposes.

The charitable sector by the numbers

Registered charities by designation

The number of registered charities by designation comes from the Charities Directorate’s administrative data for 2022.

Assets, revenue, and expenditures by designation (billions)

Note: These figures come from Form T3010, Registered Charity Information Return, as submitted by registered charities for the 2021 calendar year (self-reported information).

Revenue by type (in billion dollars)

In 2021, the government continued to be the main source of revenue for charities, making up 69% of all revenue. Revenue from the sale of goods and services (7%), tax-receipted gifts (6%), non-tax-receipted revenue (3%), and revenue from other registered charities (3%) also contributed to charity revenue in 2021. Finally, the combined amounts in the “other” category made up 12% of charity revenue.

Note: These figures come from Form T3010, Registered Charity Information Return, as submitted by registered charities for the 2021 calendar year (self-reported information).

Expenditures by type (in billion dollars)

In 2021, 73% of expenditures reported by charities were allocated to charitable activities, 4% on gifts to qualified donees, and 23% on “other” expenditures, such as professional and consulting fees, management and administration, and travel and vehicle expenses.

Note: These figures come from Form T3010, Registered Charity Information Return, as submitted by registered charities for the 2021 calendar year (self-reported information).

Activities outside Canada

Charities reported spending approximately $3.8 billion on activities outside Canada (as per line 200 of the T3010).

Note: These figures come from Form T3010, Registered Charity Information Return, as submitted by registered charities for the 2021 calendar year (self-reported information).

The regulatory process

The CRA is engaged in all steps of the registration process and throughout the life of a registered charity.

Under the Income Tax Act, an organization must meet certain criteria to qualify for registration as a charity.

For more information, go to Factors that will prevent an organization from being registered as a charity.

Once registration is approved, the CRA:

• provides ongoing dialog with registered charities and other qualified donees
• monitors the operations of registered charities for annual reporting and other compliance activities

This ensures that registered charities comply with their obligations under the Income Tax Act.

For more information on operating a registered charity, go to Advantages and obligations of becoming a registered charity.

Registration

During the registration process, the CRA provides ongoing support to applicants and representatives. During the 2022 to 2023 fiscal year, 88.1% of applicants used online services to submit applications, documents, and correspondence.

The CRA received 2,058 applications for registration as a charity and 115 applications for registration in the other qualified donee categories. Application processing times to make a final decision were reduced by 31% from an average of 213 days to 147 days. The CRA made 2,398 decisions on applications for registration.

In recent years, the CRA has increasingly focused on implementing its People First philosophy. This approach fosters a culture that prioritizes both outstanding client service and an effective regulatory presence, which enhances trust in the sector and adjusts scrutiny levels of an application based on complexity. This has resulted in a notable reduction in service complaints.

In its efforts to help charities, the Charities Directorate became the first program area within the My Business Account (MyBA) portal to develop and implement a progress tracker for new applications and annual information returns.

Applications received – fiscal year 2022 to 2023

Applications received – complete versus incomplete upon submission – fiscal year 2022 to 2023

Main reasons for determining if an application is incomplete upon submission:

• missing or incomplete governing documents
• full responses not provided on a paper submission
• missing or incorrect signatures
• missing description of activities and financial information

Applications received by category – fiscal year 2022 to 2023

Application outcomes – fiscal year 2022 to 2023

Approval of registration continued to be the most common application outcome. Denial of registration was the least common application decision made by the CRA, representing 1% of application outcomes from 2022 to 2023.

Approval of registration was also the most common application outcome for other qualified donees from 2022 to 2023. Denial of registration is more common for this group because of the distinctive eligibility criteria for each OQD type.

Common reasons for denial – charities – fiscal year 2022 to 2023

In fiscal year 2022 to 2023, 17 applications were found to be ineligible for charitable registration. The following are the most common reasons that applicants were not granted charitable status:

• Lack of information provided on proposed activities
• Carrying on non-charitable activities
• Acting as a conduit
• Lack of direction and control over the use of resources

Completed registrations by category – a breakdown of registrations completed under the four heads of charity – fiscal year 2022 to 2023

Promoting compliance

The CRA continued to use a risk-based approach to promote and address compliance within the charitable sector. This involves various interventions based on the risk of non-compliance. Balancing the compliance program in this way allows the CRA to promote voluntary compliance and to interact with a greater number of charities overall.

To address lower risk, low complexity non-compliance issues, the CRA proactively connects with as many registered charities as possible using non-audit activities. For instance, Charities Education Program (CEP) visits involve one-on-one interactions with registered charities to better help them understand their compliance obligations. During the 2022 to 2023 fiscal year, the CRA completed 253 virtual CEP visits.

The CRA’s compliance program, which includes the work of the Review and Analysis Division (RAD), uses audits in cases where a charity may be engaging in more serious acts of non-compliance. Audits can result in different compliance measures ranging from education letters to revocation of charitable registration.

Compliance activities by type – fiscal year 2022 to 2023

Non-audit activities are aimed at promoting voluntary compliance outside of the audit process. They include CEP visits, education letters, telephone calls, and requests for information.

In the 2022 to 2023 fiscal year, 222 audits were completed. Common non-compliance findings were:

• Incomplete or incorrect T3010 return
• Incomplete or inaccurate donation receipts
• Inadequate books and records

*such as pre-registration and revocation tax audits

Compliance revocations – fiscal year 2022 to 2023

Revocation is when a charity or OQD's registration is cancelled and the privileges that come with charitable status are taken away. The most common reason for revocation is delinquent revocation, or when a charity or OQD fails to file its annual return when required under the Income Tax Act.

For more information on revocation, go to Types of revocation.

Note: The number of revocations for cause does not match the number of notices of intention to revoke issued during audits, as an audit may be completed in a different fiscal year than when the revocation occurred.

Revocation tax assessments - fiscal year 2022 to 2023

Under the Income Tax Act, a registered charity must pay revocation tax when it voluntarily gives up its registration, or when the CRA revokes its registration. The tax is equal to 100% of the fair market value of all remaining assets after all debts have been paid. The purpose of this tax is to ensure that charitable property is applied to charitable use and does not leave the charitable sector when a charity is revoked.

For more information, go to Revocation tax and the T2046 tax return.

In fiscal year 2022 to 2023, the CRA completed the following revocation tax-related activities:

*Tax return where registration of a charity is revoked

**includes closures for other reasons, such as re-registrations where no T2046 was filed and the organization has no remaining assets

***assessment using the most recent T3010/financial statements on file where no T2046 was filed

Supporting federal assistance programs

The Charities Directorate continued its partnership with several areas of the CRA to administer COVID-19 subsidy programs, such as the Canada Emergency Wage Subsidy (CEWS) and the Canada Emergency Rent Subsidy (CERS).

Supporting federal assistance programs

Charities data as of March 31, 2023.

Note: These figures are approximate and subject to change.

Through these subsidy programs, the CRA provided educational resources, reviewed applications, and responded to applicants’ questions and concerns. The CRA also used a combination of automated queries, data checks, and post-payment audits to ensure that charity and other qualified donee applicants and recipients met the eligibility criteria. The COVID-19 wage and rent subsidy programs ended on November 4, 2022.

Program policy

The CRA establishes its policy priorities in response to factors such as changes in the law, government priorities, and developments in the charitable sector. The CRA also continues to identify policy questions that arise from the operation of the charities program. The CRA addresses these concerns by developing guidance products and providing advice across the charitable sector.

On November 30, 2022, the CRA published draft guidance on registered charities making grants to non-qualified donees and gave the charitable sector until January 31, 2023, to provide feedback. This feedback, along with recommendations from other internal and external stakeholders, was extensively analyzed as the CRA started developing the final guidance product.

The CRA also worked on revising Form T3010 following legislation that introduced a new graduated disbursement quota rate for charities and the Budget 2022 announcement that the CRA would improve its collection of information from charities. These changes included new questions, a new schedule to help charities calculate their disbursement quota, and updates to Form T4033, Completing the Registered Charity Information Return.

Stakeholder engagement

Advisory Committee on the Charitable Sector

The Advisory Committee on the Charitable Sector (ACCS) is a consultative forum for the Government of Canada to engage in meaningful dialogue with the charitable sector. The ACCS was created to improve the Government’s relationship with the charitable sector and modernize the regulatory framework under which charities operate.

Between May and October 2022, the ACCS onboarded 11 new charitable sector members, including a new sector co-chair.

In addition to a welcome session and an onboarding session, the ACCS met five times over the fiscal year. While three of these meetings were held virtually, in-person meetings were gradually brought back post-pandemic, with one two-day meeting held in Ottawa and another in Toronto.

Technical Issues Working Group

The Technical Issues Working Group (TIWG) is a forum created in 2004 to discuss trends and technical issues, explore workable administrative solutions, and expand the CRA’s understanding of the charitable sector.

TIWG membership is refreshed every two years and is made up of key stakeholders from the charitable sector, including umbrella organizations and professional associations, academics, and accounting and legal experts.

The CRA hosted four virtual TIWG meetings, and the committee was consulted on a wide variety of topics including the granting guidance, the CRA’s approach to promoting compliance, and the CRA’s policy priorities.

Federal/Provincial/Territorial Network of Charity Regulators

In May and November 2022, the Federal/Provincial/Territorial Network of Charity Regulators (FPT Network) met to discuss the post-pandemic transition to an in-person work environment and other issues of mutual interest concerning the regulation of charities across Canada. Topics included the 2022 federal budget and regulatory changes in other jurisdictions.

Serving the sector and Canadians

Enquiries received

In the 2022 to 2023 fiscal year, account updates continued to be the most common type of written enquiries that charities made. These included changes to directors, addresses, representatives, legal names, and contact information.

In addition to answering written enquiries, the Charities Directorate’s client service representatives are also available by telephone to:

• respond to routine and complex telephone enquiries
• help clients navigate the Charities and giving web pages and educate them on topics related to registration and ongoing operations
• assist clients seeking to apply for and maintain charitable registration
• provide interpretation and technical advice on common law and legislative requirements, including other federal and provincial requirements

The most common telephone enquiries were related to filing an annual information return (such as Form T3010), applying for registration, and making changes to a charity account. Client service representatives also helped organizations by answering questions about online services and MyBA.

Enquiries received – fiscal year 2022 to 2023

Written service standard

Telephone service standard

Telephone accessibility

Public information

The CRA provides public information, including from Form T3010, Registered Charity Information Return, upon request. Requests may be made for specific lines or sections of the returns or for a list of charities by geographical location, designation, or category code.

As well, the CRA responds to informal requests for charity and other qualified donee documents available to the public under the Income Tax Act. From 2022 to 2023, the Charities Directorate processed 1,359 requests for documents from the public and 154 from reporters (through the Media Relations Section in the Public Affairs Branch). Note that the number of processed requests does not represent the number of individual public documents sent (for example, one request could represent five documents).

The most common types of information requests are for Form T3010, Registered Charity Information Return and financial statements for registered charities or other qualified donees, as well as governing documents and application forms.

For more information, see How to get information about a charity.

Charities webinars

The CRA offers webinars for charities and other qualified donees to provide information on important subjects that will benefit day to day operations and help an organization meet its obligations.

In September 2022, the CRA held interactive webinars, in both English and French, on how to complete the T3010 online. The webinars were attended by approximately 390 individuals and subject matter experts were available to answer any questions that attendees asked during the event.

To be notified when the next charities webinars open for registration, subscribe to the Charities Directorate’s electronic mailing list.

External reviews

Office of the Taxpayers' Ombudsperson review

On March 27, 2023, the Office of the Taxpayers’ Ombudsperson (OTO) released the report Charity Begins with Fairness: More to Explore.

The review focused on:

• the selection of files for charity audit
• the quality of services offered to charities under audit by the Charities Directorate
• the CRA’s efforts to make its employees aware of their potential unconscious biases that could lead to discriminatory behaviours toward charities run by racialized communities

The report found that CRA’s risk assessment criteria is reasonable and that its auditors carried out audits professionally and courteously. Overall, the CRA follows fair processes and the report did not identify any indicators that were problematic or could unfairly affect certain charities.

The report recommended that the CRA:

• create an unconscious bias training course for employees of the Charities Directorate
• target the course to those involved in the audit process
• make the course mandatory for all employees involved in the audit process, including decision makers

The CRA agreed with the recommendation, and developed a three-phased approach that goes beyond the OTO’s recommendation.

Stay connected

To stay informed about program changes and web page updates, to get guidance or advice about maintaining registered status or for general information for the charitable sector, subscribe to the electronic mailing list.