The Charitable Registration Decision Tree Project
By Andy Levy-Ajzenkopf
March 15, 2010
Prospective Canadian charities, listen up. A Nova Scotian legal team specializing in voluntary sector matters is currently in the process of drafting what they believe will become the country's first charitable registration decision tree - a document designed to guide charitable organization hopefuls through the sometimes sticky morass of the Canada Revenue Agency's (CRA) rules on how it makes its decisions before conferring charitable status upon an organization. It also covers what you should know if you're granted charitable status.
Scheduled to be launched online on March 31 courtesy of a joint effort between the Legal Information Society of Nova Scotia (LISNS), itself a charity, and the CRA - the agency is helping to fund the project through its Charities Partnership and Outreach Program to the tune of $90,000. LISNS's Charitable Registration Decision Tree project will help clarify the "requirements and obligations of charitable registration and alternatives to registration," according to the CRA.
Knowing is half the battle
The CRA website dedicated to the Decision Tree lists three main objectives of the project which it hopes prospective charities will use to determine:
- whether their application is likely to be approved;
- whether registration would truly be of benefit to them; and
- the real consequences of being granted status.
According to a CRA spokesperson, the agency will be closely monitoring the documentation LISNS plans to put out later this year "for technical accuracy."
Over in Halifax, LISNS Decision Tree Project Officer Lis Van Berkel told CharityVillage that her organization saw a glaring need for this tree based on feedback it was getting from prospective Maritime charities who had no idea whether they should become registered or how to even begin the process. So last year, LISNS decided to approach the government with the idea.
Though initially aimed at its local clientele, LISNS quickly realized the Decision Tree would be a document of use country-wide, as the CRA's regulations apply from coast-to-coast.
"In many instances, organizations are aware that the step they are contemplating is significant but they fail to grasp the full implications of their decision." |
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"In many instances, organizations are aware that the step they are contemplating is significant but they fail to grasp the full implications of their decision. They don't know what questions to ask let alone the answers," Van Berkel says. "The project is innovative because, to the best of our knowledge, nothing else exists to guide potential applicants through a step-by-step analysis of their situation - either as an online exercise or off-line resource."
Van Berkel explains that the decision tree will be offered as an online, self-implemented learning experience on LISNS's website and will also be available as an off-line experience via a CD-ROM. Her organization also "shares its resources with the other members of the Public Legal Education Association of Canada, which has member organizations in each jurisdiction," she says. She adds that these members have posted much useful information for charities on The Charities File and Charities Central.
Thousands of applications, rejections for nonprofits trying to get charitable status
One way in which a tree would help both prospective charities and the CRA is to weed out organizations who may not realize they're not cut out to be a charity.
Van Berkel says that, according to information from the CRA, approximately 4,000 organizations apply for registered charitable status each year. Half that number also "lose their registered status every year - either by request (e.g., they have ceased to operate) or by failing to meet their regulatory obligations, such as a failure to file their annual returns. The CRA says that many of these organizations are not fully aware of the requirements and obligations associated with becoming a registered charity when they sign up, and it's only later that they find the burden onerous."
According to LISNS and the CRA, the Decision Tree will be a tool that allows prospective charities to "analyze their purpose against the requirements for registration as set out by the CRA; the benefits which would accrue to them as a consequence of registration; and the obligations they would be required to meet. Having worked through the decision tree, the organization would then be in an informed state as to whether their application is likely to be approved, whether registration would truly be of benefit to them, and the real consequences of being granted status."
Though not yet complete, LISNS's proposal to the government states that it intends to communicate the tree's completion to the voluntary sector via a communications plan it has developed through the advice of an advisory panel.
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"A broad communications strategy will be developed to ensure the word gets out to the community that this resource is available. Particular targets will include current registered charities, libraries, lawyers and other professionals who serve the charitable sector, and existing charitable networks such as The Charities File, Charities Central, Imagine Canada, and others," LISNS says.
Van Berkel notes that once the tree is finished, the project "will be essentially complete. As an online resource there is no significant additional cost for maintaining the resource as it would be part of the LISNS website. The only issue would be updating the information should the criteria for organizations seeking charitable status change. This is something that would have to be addressed if and when that happens."
The Charitable Decision Registration Tree will be available in both official languages once launched.
Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.
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