Please note this is information only and not legal advice. If in doubt, please consult the CRA web site (link below) or contact a lawyer.
In order to assist registered charities to comply with Canada Revenue Agency requirements and protect their charitable numbers, the Foundation modified its application requirements in 2018. Organizations applying for a grant from the Foundation that are non-charities/non-qualified donees must collaborate with a registered charity/qualified donee. Collaboration means a meaningful partnership where the charity/qualified donee receiving the grant is involved in the administration and management of the project for which funding is granted. While non-charities/non-qualified donees may complete Letters of Intent and Grant Applications, they must identify a charity/qualified donee with whom they will collaborate on the project. If the Foundation’s Grants Committee selects the project of a non-charity/non-qualified donee to proceed to a full application, the the applicant will need to provide written documentation that a registered charity will take responsibility for the grant and for completing the project final report.
As a registered charity, Sunshine Coast Community Foundation can make grants only to other registered charities and qualified donees. Registered charities to whom we make grants are also restricted in how they can spend those grants. They can:
1. use the grant directly for their own purposes according to their constitution, bylaws, and charity application,
2. enter into a written agreement with another charity to grant the funds to that charity,
3. use the grant to contract with another entity to fulfill their own purposes (for e.g., to hire a facilitator to deliver a workshop relevant to the charity’s mission), or
4. use the grant in a collaborative project, evidenced by a written agreement, where the charity is involved in the management and administration of that project to a degree proportionate to their financial contribution. For example, if the non-charity’s project budget is $10,000 and the Foundation’s grant to the charity is $2,500, the charity should plan to be involved in ~25% of the project’s management and administration. This involvement should be approved by the charity’s Board and documented in Minutes of meetings or emails, as this documentation will be essential if the charity is audited by the CRA.
The collaboration arrangement between the non-charity/non-qualified donee and the charity/qualified donee should be written in the form of a contract to clarify the responsibilities of each party. From the CRA web site (link below):
"1.2. Direction and control when using intermediaries The Canada Revenue Agency (CRA) requires that a charity take all necessary measures to direct and control the use of its resources when carrying out activities through an intermediary [i.e., non-charity/non-qualified donee]. When carrying out activities through an intermediary, the following steps are strongly recommended:
· create a written agreement with the intermediary, and implement its terms
· communicate a clear, complete, and detailed description of the activity to the intermediary
· monitor and supervise the activity
· provide clear, complete, and detailed instructions to the intermediary on an ongoing basis
· arrange for the intermediary to keep the charity’s funds separate from its own, and to keep separate books and records
· make periodic transfers of resources, based on demonstrated performance.
A charity must maintain a record of steps taken to direct and control the use of its resources, as part of its books and records, to allow the CRA to verify that all of the charity's resources have been used for its own activities."
A guidebook to assist charities and non-charities in establishing healthy and responsible collaborations is available here.
See also the CRA’s web site on Using an Intermediary to Carry Out a Charity’s Activities.