Factors that will prevent an organization from being registered as a charity
Purposes that are not charitable at law
Gifting to organizations that are not qualified donees
Activities that are illegal or contrary to Canadian public policy
To qualify for registration as a charity, an organization must:
- be resident in Canada;
- be established and operated for charitable purposes; and
- devote its resources (funds, personnel, and property) to charitable activities.
The term charitable is not defined in the Income Tax Act, so we consider common law (court decisions) to determine what is charitable at law.
During the review process, we examine both the purposes and activities of an organization. The following factors will prevent an organization from being registered as a charity:
Organizations established and resident outside Canada will not qualify for registration.
Purposes that are not charitable at law
Organizations established for the purpose of making a profit will not qualify for registration. To qualify for registration, an organization must be non-profit and have purposes (also called objects) that are charitable at law.
To be charitable at law, an organization must have purposes that fall under one or more of the four heads (categories) of charity:
- the relief of poverty;
- the advancement of education;
- the advancement of religion; and
- certain other purposes that benefit the community in a way the courts have said is charitable.
The last category is limited to purposes that have been determined by the courts to be charitable at law.
For more information and examples, see Charitable purposes.
Organizations that gift funds or resources to organizations that are not qualified donees will not qualify for registration. A registered charity can only use its funds and resources in two ways:
- It can carry on its own charitable activities (activities conducted under the charity's direction and control).
- It can make gifts to other organizations that are qualified donees (usually other registered charities).
Individuals and most organizations outside Canada are not qualified donees. For more information, see Canadian Registered Charities Carrying Out Activities Outside Canada.
Organizations that provide personal benefits (directly or indirectly) by making any part of their income payable to or available to any of their members, shareholders, directors, or trustees will not qualify for registration. This does not include providing benefits to such persons who qualify as legitimate recipients of a charitable program.
Examples of personal benefits
- an organization that only awards scholarships to its members (direct)
- an organization run by a group of artists who want to promote only their own work (indirect)
An organization may be permitted to pay for services provided by its members, shareholders, directors, or trustees, or to incur and pay other expenses that are associated with the normal operation of the organizaton.
Organizations established to benefit a particular individual or a private group, are considered to be established for private benevolence and will not qualify for registration. To qualify for registration, an organization must show that its purposes and activities provide a tangible benefit to the public as a whole or a significant section of it.
Examples of private benevolence
- an organization establishes a fund to help a specific family that has lost its house in a fire
- an organization establishes a fund to cover the travel and hospital expenses for a particular child's surgery
For more information, see CPS-024, Guidelines for Registering a Charity: Meeting the Public Benefit Test.
Organizations with political purposes will not qualify for registration.
The courts have determined political purposes to be those that seek to:
- further the interests of a particular political party; or support a political party or candidate for public office; or
- retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.
For more information, go to Resources for charities about political activities and Policy Statement CPS-022, Political Activities.
Organizations established to primarily operate a commercial activity (revenue-generating) with the intent to earn a profit will not qualify for registration.
Charitable organizations and public foundations may carry on related business activities that accomplish or promote their charitable purposes. A related business activity is a commercial (revenue-generating) activity that is either related to a charity's purposes, or substantially run by volunteers.
Private foundations cannot carry on any business activities.
For more information and examples, see Policy Statement CPS-019, What is a Related Business?
Organizations that undertake illegal activities (e.g., fraud, or money laundering) will not qualify for registration.
Organizations with activities contrary to Canadian public policy will not qualify for registration. A public policy is a definite and officially declared and implemented policy (i.e., found in an act of Parliament, or a regulation).
Organizations that make their resources available either directly or indirectly to further terrorism will not qualify for registration. This is according to the Charities Registration (Security Information) Act that was enacted as part of the Anti-terrorism Act in 2001.
For more information, see Charities in the International Context.
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