Co-opZone Legal Network Co-ops and Charities Presented by Brian Iler Iler Campbell LLP May 2013

Aren’t Charities and Co-ops Mutually Exclusive?  Co-ops, by definition, provide services to their members  Charities do benevolent work – relief of poverty, advance education or religion, or other acceptable charitable goals – for public benefit, not for benefit of members  Charities with democratic governance – by those who benefit from the charity’s services – can be structured as a co-op

Charity Regulation  Mostly CRA – need registration to issue donation receipt for income tax credit  In Ontario, Public Guardian & Trustee oversees, but has limited resources  Grantors will oversee the use of their funds

Charity Rules  Non-profit: all resources used to further charitable objects  Dissolution: all net assets to qualified donees, which includes other charities  Directors can’t be paid - in Ontario, directors cannot be staff, or be paid in any capacity

Charitable PurposesThat Have CED Aspect  relieving poverty by providing employment  advancing education: employment-related training  benefiting the community in a charitable way by: 1.relieving unemployment 2.relieving conditions associated with disability 3.improving conditions where social and economic deprivation

Exclusively Charitable  A charity must have objects and activities that are exclusively charitable  Exceptions: Administration, fundraising – within limits Ancillary and incidental political activities, very carefully circumscribed – see CRA’s Policy Statement on Political Activities  No unrelated business

Public Benefit Test? Two-part Test 1.Does the activity provide a tangible and socially useful benefit? 2.Is that benefit directed to the public or sufficient section of the public? o Activity must not be concerned with conferring private advantage. o A private benefit may be okay so long as it is only incidental to achieving a charitable purpose (i.e., it’s necessary, reasonable, and not disproportionate to the public benefit delivered).

Registration as a Charitable Organization  Unincorporated organizations, trusts, and non-profit corporations are eligible to apply  Must have charitable objects and non-profit clauses in constituting document  Submit application to CRA – no fee  Examiner will respond in writing, provide comments, will discuss  Timing varies hugely

Annual Requirements  File T3010 Registered Charity Information Return with CRA  In Ontario, that, with the specified worksheets, suffices for notices of change of directors and officers to the Ontario government as well: Charities RC232 – Ontario Corporations Information Act Annual Return Worksheet, T1235, Director/Trustees and Like Officials Worksheet  CRA does not require audit – funders, and members, might

Alternative  Affiliated Charity – e.g. TREC Non-charity is only voting member of charity Non-charity appoints board Non-charitable activities in TREC, charitable activities in charity Grants requiring charitable registration to charity, others to TREC TREC provides services to charity through a services agreement – at or below fair market value

Community Economic Development  CRA’s Guide CG ‑ 014 Community Economic Development Activities and Charitable Registration was released July 26,  “Community economic development (CED) activities can be charitable when they further a charitable purpose.”

What are CED activities?  Many CED activities involve improving economic opportunities and social conditions of an identified community.  CED activities: 1.activities that relieve unemployment 2.grants and loans 3.program-related investments 4.social businesses for individuals with disabilities 5.community land trusts

CED and Charities Key: Regardless of how a CED activity is labelled, it will only be charitable if it directly furthers a charitable purpose, and meets the Public Benefit Test

Resources  Richard Bridge’s Paper on Co-ops and Charities:  Laird Hunter’s presentation on Charities and CEDs:  Policy Statement CPS-024 Guidelines for Registering a Charity: Meeting the Public Benefit Test (March 10, 2006),:  Guidance CG ‑ 014 Community Economic Development Activities and Charitable Registration (released July 26, 2012): eng.html eng.html