Like any First World country, Canada supports a massive charity industry. Also like most First World countries there are constant debates about whether money raised by charities from the population should in fact be coming from central government. Bearing this in mind it’s worth mentioning that the charity industry in Canada supports the employment of around 2 million people and contributes 7% of GDP. One could argue that the charity industry actually creates enough indirect revenue to negate the arguments.
Canada definition of charity is derived from an English court case referred to as Pemsel (the full title is Commissioners for Special Purposes of Income Tax v Pemsel) and defines charity in Canada as the following:
- The relief of poverty
- Advancement of education
- Advancement or religion
- Of benefit to the community
Canada has just under 86,000 registered charities, all of which are regulated under the Income Tax Act. Historically charities registered themselves as one of three types of organisation – charitable organisations, public foundations and private foundations. Although different in the past these organisations are now similar in structure and regulation.
All Canadian charities are overseen by the Charities Directorate which, as you would expect, makes sure the various charities are complying with their legal obligations. It keeps the public informed on charitable donations and, importantly, decides which organisations will be granted charitable status. As well as the directorate, the various charitable organisations will also be accountable to the state in which they are located and must abide by the local regulations in that state. Charities focused on different areas of industry (hospitals, education, etc.) may also be liable to regulation from that industry. Despite the comprehensive regulation, it’s not unknown for charities to be rightly or wrongly accused of offences such as tax evasion and money laundering.
Elsewhere on this site we will introduce some of main Canadian, charities and voluntary organisations.