I know we all like to focus our time on the things that we love the most - usually in a small nonprofit that means the work we’re doing to change the world. Especially for managers and Executive Directors, there are so many things going on, that it’s hard to pay any attention to the things we don’t want to think about. And let’s face it, most of us don’t want to think about the legal ins and outs of our organization.
Maybe we’ll find a lawyer to sit on our board to help, which is great, but it’s not a “get out of jail pass” - so to speak.
You still need to be responsible for understanding the legal side of our organization.
We’ve asked legal expert Mark Blumberg for his help in identifying where organizations go wrong and how to fix those mistakes.
nonprofit vs. charity
Mark is quick to point out the difference between a nonprofit and a charity. We often interchange the two, but those are legal designations and have different implications. You should know which your organization is, but if you don’t, please find out. For the purpose of this information, we’ll focus on charities specifically.
T3010s - get it right!
T3010s are a legal filing requirement for charities in Canada and a lot of organizations are not set up to make this an easier process for their organizations.
Yes, there are a good number of charities that just don’t file them (please, please, don’t be one of those - you will risk your charitable status), but according to Mark, there are also many who either don’t file properly. Add that to the fact that many organizations scramble at filing time to get these in order, instead of setting up systems throughout the year, so that filing is a breeze.
The Good Partnership’s COO, Aine McGlynn suggests organizing your files and documents throughout the year so that everything is ready to go for filing time.
According to Mark, a big issue, obviously, as the adequacy, the appropriateness, the accuracy of the filing. And as a few years ago, CRA now has the power to essentially, for example, suspend your receding privileges if you are filing a T3010 form your annual forum with incorrect information.
other common mistakes
According to Mark, there are a bunch of other things that are legally questionable but have been practiced by charities, in one form or another, for a while. These, he agrees, should not be happening. Some of them are minor things that charities are consistently doing wrong all the time, while others happen less often but are bigger infractions. Here are some examples:
Not keeping records for enough time
Issuing receipts on behalf of a different organization or nonprofit (without a fiscal sponsorship agreement)
Board member conflicts of interest
Paying board members for work
Not having the required information on tax receipts (check CRA for up-to-date requirements)
Issuing receipts for sponsorship (sponsorships are tax deductible for companies without the charitable receipt)
Take the time to do things properly the first time so you don't get in trouble, whether it's your T3010 or your donation receipts, really take the time to learn how to do it and build processes and systems in your organization.
Mark is clear - start now. Don’t worry too much about going back, use today as the starting point to get it right this time. And always remember the front page test - how would you feel if your organization ended up on the front page of a local paper for any of these actions? If you’re unclear on anything, CRA has tons of information or consult a lawyer.
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Resources from this Episode
Want more information? Be sure to check out Mark’s top resources on his blog or on his website and sign up for his FREE monthly newsletter for the latest information on Canadian charity law and compliance. Have a question that didn’t get answered in the episode? Feel free to email Mark directly at firstname.lastname@example.org or send off a tweet to @canadiancharity
As mentioned in the episode, you can call the Canada Revenue Agency (CRA) directly at 1-800-267-2384 for general questions about your nonprofit.
The Small Nonprofit podcast is produced by Eloisa Jane Mariano