Guidance

Reference number
CG-019

Issued
July 25, 2013 (Revised May 5, 2026)

Summary

A registered charity must be constituted exclusively for charitable purposes and operated exclusively for charitable purposes. An organization’s purposes are stated in its governing document.

Charitable purposes are defined by the common law and the Income Tax Act.^{Footnote 1} This guidance explains how to write:

• purposes charitable at common law
• purposes to make qualifying disbursements

This guidance also explains the requirements that apply to both types of charitable purposes, as well as how the CRA determines whether purposes stated in a charity’s governing document are exclusively charitable.

Purposes charitable at common law

A purpose charitable at common law must:

• fit within one of the four categories of charity
• be for the benefit of the public

To ensure these requirements are met, a purpose must:

• identify, explicitly or implicitly, the category or subcategory of charity in which it fits (What)
• define the scope of activities (How)
• identify, explicitly or implicitly, the eligible beneficiary group (Who)

Tip: When writing a purpose charitable at common law, we recommend that you include all three elements directly in the wording in order to avoid confusion or misinterpretation.

Purposes to make qualifying disbursements

In addition to purposes charitable at common law, the Income Tax Act considers that charitable purposes include making qualifying disbursements. Qualifying disbursements consist of:

• making gifts or otherwise making resources available to qualified donees
• making gifts or otherwise making resources available to grantee organizations in a way that meets the requirements of the Income Tax Act (commonly known as making grants to grantee organizations)

Note: To be a qualifying disbursement, a disbursement made to a grantee organization must further a stated purpose charitable at common law for which the charity is constituted.

Requirements for purposes charitable at common law and purposes to make qualifying disbursements

1. Introduction

1. To be registered as a charity under the Income Tax Act, an organization must be constituted exclusively for charitable purposes and operate exclusively for these charitable purposes.^{Footnote 2} An organization’s purposes (objects, goals, or ends) are stated in its governing document.

2. A purpose is charitable^{Footnote 3} if it is:

• charitable at common law; or
• making qualifying disbursements as defined in the Income Tax Act

Each type of charitable purpose has its own requirements.

3. To meet the requirement of having exclusively charitable purposes (the exclusivity requirement), every purpose stated in the charity’s governing document must be a charitable purpose. There is one exception to this requirement, which is explained in the section How the CRA determines whether a charity has exclusively charitable purposes.

Note: In this guidance, the term charity means a charity registered under the Income Tax Act or an organization applying to be a registered charity.

2. Purpose charitable at common law

4. To be charitable at common law, a purpose must:

• fit within one of the four categories of charity
• meet the public benefit requirement

For more information on the public benefit requirement, see Policy statement CPS-024, Guidelines for registering a charity: Meeting the public benefit test.

5. To meet the exclusivity requirement, the purpose must also limit the charity to use its resources only to further its charitable purpose and not any other non-charitable purpose.

6. To ensure these requirements are met, the wording of a purpose must:

• identify, explicitly or implicitly, a category or subcategory of charity (What)
• define the scope of activities carried on by the charity to further that purpose (How)
• identify, explicitly or implicitly, the eligible beneficiary group (Who)

When drafting a purpose, we recommend you clearly state all three elements. Each of these elements are explained in more detail below.

2.1. Three elements of a charitable purpose

2.1.1. Category or subcategory of charity (What)

7. To be charitable at common law, a purpose must fit in one of the four categories of charity and be for the public benefit. The public benefit requirement applies differently depending on the category or subcategory of charity a purpose falls under.

8. The four categories^{Footnote 4} of charity are:

• relief of poverty
• advancement of education
• advancement of religion
• other purposes beneficial to the community in a way the law regards as charitable

9. The fourth category includes a wide range of purposes that do not fit within the first three categories, but which the courts have recognized as charitable. These recognized purposes are grouped into several subcategories, including the promotion of health and the protection of the environment. See Appendix A - List of subcategories of other purposes beneficial to the community in a way the law regards as charitable.

10. To fit within one of the four categories of charity, the wording of a purpose must identify, implicitly or explicitly, a category or subcategory of charity. To do so, the category or subcategory of charity may simply be stated in the purpose, or it may be inferred^{Footnote 5} from one or both of the other two elements in the wording of the purpose:

• the scope of activities (How)
• the eligible beneficiary group (Who)

Note: A charity can be constituted for purposes that fit in different categories or subcategories of charity. However, each purpose should identify only one category or subcategory of charity.

2.1.2. Scope of activities (How)

11. To meet the requirement to be constituted and operated for exclusively charitable purposes, a charity must state its purposes in a way that ensures its resources can only be used to further charitable purposes, and not for any non-charitable purpose. The purpose must clearly define the scope of the activities the charity can carry out, and that scope must be limited to charitable activities only.^{Footnote 6}

12. When drafting a purpose, defining a scope of activities generally means outlining the range of activities that the charity can carry on to further the purpose. However, it does not require listing every possible charitable activity the charity can carry out.

For example, if a charity’s purpose is “to promote health by operating a hospital,” the following activities would fall within that scope, even though they are not listed individually in the purpose:

• establishing and maintaining a hospital facility
• hiring and training medical personnel
• providing an emergency room and diagnostic services
• conducting a residency program for physicians

13. A charitable purpose can be stated broadly, as long as it limits the charity to carrying out only charitable activities.^{Footnote 7} However, if a purpose authorizes the charity to carry out both charitable activities and non-charitable activities, it is too broad and therefore not charitable. A purpose that does not define a scope of activities is vague and therefore also not charitable. See Purposes that are too broad or vague.^{Footnote 8}

14. A charitable purpose can also define a scope of activities that is narrow. However, a purpose that is narrowly worded may not authorize all the charitable activities a charity carries on or plans to carry on. This can reduce the charity’s flexibility to respond to changing needs or pursue other activities to further its purposes. For this reason, we generally do not recommend drafting purposes that are overly narrow.

2.1.3. Eligible beneficiary group (Who)

15. For a purpose to be charitable at common law, it must meet the public benefit requirement. The public component of the public benefit requirement requires the benefit of the purpose to be directed to the public or a sufficient section of the public. To determine this, we look at who benefits from the purpose, meaning the group of individuals who is eligible to receive the benefit – this is the eligible beneficiary group.

For more information on what constitutes a sufficient section of the community, see Policy statement CPS-024, Guidelines for registering a charity: Meeting the public benefit test.

16. The public benefit requirement varies depending on the category of charity. There are different requirements to determine if an eligible beneficiary group constitutes the community or a sufficient section of the community, depending on the category of charity in which the purpose fits.

17. Sometimes, restricting eligible beneficiaries is justified, or even required, based on the nature of the purpose. Other times, benefits must be available to the community as a whole. For example, poverty relief purposes must be restricted to people experiencing poverty; a women’s shelter may justify restricting its eligible beneficiaries to women; and health organizations addressing a particular disease may restrict eligible beneficiaries to people afflicted with that disease. On the other hand, general hospitals and community centres should usually be available to the community as a whole.

18. To meet the public component, we must be able to identify an eligible beneficiary group (Who) from the wording of a purpose, and this group must be the community or a sufficient section of the community. To do this, the eligible beneficiary group may simply be stated in the purpose, or it may be inferred^{Footnote 9} from one or both of the purpose’s other two elements:

• the category or subcategory of charity (What)
• the scope of activities (How)

19. A purpose that does not identify (implicitly or explicitly) an appropriate eligible beneficiary group does not meet the public component of the public benefit requirement and therefore is not charitable.

2.2. A purpose cannot be too broad or vague

20. A purpose that is too broad or vague is not charitable.

21. A purpose is too broad when it allows both charitable and non-charitable activities.^{Footnote 10} In other words, the purpose may allow the charity to use its resources to further charitable purposes, but it is stated so broadly it may also allow activities that further non-charitable purposes.

22. A purpose is vague when:

• it is ambiguous or uncertain;
• it does not fit within one of the four categories of charity; or
• it does not define a scope of activities^{Footnote 11}

2.3. Special topics

2.3.1. Public policy dialogue and development activities

23. A charity can carry on public policy dialogue and development activities (PPDDAs) to further its charitable purposes. ^{Footnote 13} However, PPDDAs do not themselves constitute charitable purposes. This is because political purposes are not charitable at law,^{Footnote 14} and PPDDAs are only permitted as a means of furthering a charitable purpose. As such, a charity should avoid stating PPDDAs in its purposes.

For more information on PPDDAs and examples of charitable purposes, see Guidance CG-027, Public policy dialogue and development activities by charities.

2.3.2. Related business activities

24. A charity designated as a charitable organization or a public foundation can carry on a related business. A related business is a business that is linked and subordinate to a charitable purpose, or a business that is run substantially all by volunteers.^{Footnote 15} However, carrying on a business is not a charitable purpose in itself. Accordingly, if a charity intends to carry on a related business, it should avoid stating it in its purposes.

For more information about carrying on a related business see: Policy statement CPS-019, What is a related business?

3. Purposes to make qualifying disbursements

25. In addition to purposes charitable at common law, the Income Tax Act considers that charitable purposes include making qualifying disbursements.^{Footnote 16} Purposes to make qualifying disbursements consist of:

• making qualifying disbursements to qualified donees (commonly known as gifts to qualified donees)
• making qualifying disbursements to grantee organizations (commonly known as grants to grantee organizations)

Note: Any disbursement made to a grantee organization must be made in furtherance of a purpose charitable at common law that is stated in the charity’s governing document.

3.1. Making qualifying disbursements to qualified donees

26. Making qualifying disbursements to qualified donees is a charitable purpose under the Income Tax Act.^{Footnote 17}

27. Making a qualifying disbursement to a qualified donee means making a gift or otherwise making resources available to a qualified donee.

28. A charity can draft a purpose to make qualifying disbursements to qualified donees in many ways, as long as the recipients are limited to organizations that are qualified donees. The purpose may be restricted to gifting to specific qualified donees, like registered charities for example, or include all qualified donees. Charities should, however, look into the requirements of their corporate registrars, where appropriate, as some jurisdictions may have specific rules for how such purposes must include in their wording.^{Footnote 18}

3.2. Making qualifying disbursements to grantee organizations (non-qualified donees)

29. Making qualifying disbursements to grantee organizations^{Footnote 19} is a charitable purpose under the Income Tax Act. However, such a purpose does not, on its own, authorize a charity to make qualifying disbursements to a grantee organization. That is because a disbursement made to a grantee organization must further a charity’s stated purpose that is charitable at common law in order to be a qualifying disbursement.^{Footnote 20} As such, to make a qualifying disbursement to a grantee organization, a charity must be constituted for a purpose charitable at common law.

30. A stated purpose that is charitable at common law can explicitly refer to making qualifying disbursements to grantee organizations but doesn’t need to. Including wording that expressly refers to making qualifying disbursements limits how a charity can further its charitable purpose. A charity constituted for a purpose charitable at common law is fully authorized to make qualifying disbursements in furtherance of that purpose.

For more information on qualifying disbursements to grantee organizations, see Guidance CG-032, Registered charities making grants to non-qualified donees.

4. How the CRA determines whether a charity has exclusively charitable purposes

31. To determine whether a charity is constituted for exclusively charitable purposes, the CRA will examine each purpose stated in the charity’s governing document and determine if they are charitable, in accordance with the common law and Income Tax Act requirements set out in this guidance.

32. To meet the “exclusively” requirement, each of the charity’s purposes must be a charitable purpose and only allow it to use its resources towards activities that further charitable purposes.

33. However, there is a limited exception to this rule, that we refer to as the common law incidental purposes doctrine. If a stated purpose or part of a purpose is not charitable in itself, the charity may still be considered to be constituted for exclusively charitable purposes if that purpose is incidental to a charitable purpose of the charity. A purpose is incidental when it is only a way to support, facilitate or contribute to a charity’s ability to further its other purposes that are charitable. In other words, if the purpose is better understood as an activity that the charity carries out to further its charitable purposes, the CRA will not consider the charity to have a non-charitable purpose.^{Footnote 21}

34. Therefore, the CRA will consider that a charity’s stated purposes are exclusively charitable if each of them is one of the following:

• a purpose charitable at common law
• a purpose to make qualifying disbursements
• a purpose that is incidental to the furtherance of a charitable purpose of the organization

35. To confirm the organization is constituted for exclusively charitable purposes, the CRA will also look at the organization’s activities to confirm that it does not have any unstated non-charitable purposes.^{Footnote 22}

5. Other considerations

5.1. Updating your charity’s purposes

36. You can update the purposes stated in your charity’s governing document to:

• amend a purpose
• delete a purpose
• add a purpose

37. Common reasons for updating purposes include:

• your charity carries on or plans to carry on activities that are not authorized by its current purposes.
• your charity plans on making qualifying disbursements to grantee organizations but is constituted only for a purpose to make gifts to qualified donees.

38. After updating your charity’s purposes, we recommend you send your charity’s updated governing document to the Charities Directorate. This keeps your charity’s file with the CRA accurate and up to date. We may review these changes at a later date and contact you if we have concerns or need further information.

For more information on how to report updates to your purposes, go to Change purposes and activities.

5.2. Powers clauses

39. Powers clauses generally set out an organization’s authority to manage its affairs or grow its property and income. Powers clauses often follow an organization’s stated purposes in its governing document.

40. Examples of powers clauses include the authority or power to:

• buy, hold, and sell property
• employ and pay staff, and appoint intermediaries
• make investments
• borrow money
• enter into contracts

41. The Income Tax Act does not require a charity to include powers clauses in its governing document. A powers clause poses no concerns unless it:

• explicitly allows the organization to further a non‑charitable purpose
• requires the organization to operate in a way that contravenes the Income Tax Act

5.3. Requirements from other sources

42. In addition to meeting the requirements of the Income Tax Act, a charity, or its governing document, may also be subject to requirements set out in its incorporating statute, and other federal, provincial, or territorial legislation.

43. For example, some incorporating statutes may recommend or require standard purposes that are not charitable. An organization constituted with such a purpose is not eligible for registration as a charity.

For more information, consult your corporate registrar or other authority responsible for incorporating your organization.

6. Version history

Appendix A – List of subcategories of other purposes beneficial to the community in a way the law regards as charitable

There are a number of subcategories of other purposes beneficial to the community in a way the law regards as charitable. Examples of these subcategories include purposes to:

• protect the environment
• uphold human rights
• promote health
• promote the welfare of animals
• advance the public’s appreciation of the arts
• provide relief to the victims of natural disasters or other emergencies
• address or prevent specific problems faced by children, youth, or families
• provide certain public works, amenities, services, or facilities
• preserve property of outstanding significance or national importance
• promote volunteerism in the community
• address the needs of Indigenous peoples of Canada
• protect human life and property
• promote the moral and ethical improvement of the community
• promote industry, trade, and commerce
• promote the efficiency and effectiveness of other registered charities
• relieve conditions attributable to being aged
• relieve conditions attributable to being a person with a disability
• promote the efficiency of the Canadian military
• uphold the sound administration of the law
• promote racial equality
• rehabilitate those involved in the criminal justice system

References