Canada Revenue Agency
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Other acceptable activities permitted within certain limits
Business activities
A charitable organization or public foundation established for exclusively charitable purposes may engage in related business activities that accomplish or promote those purposes. The fact that a business activity produces income for the charity does not make it a related business activity. The term related business means a business that:
- itself delivers charitable services (for example, providing low-cost housing for the poor);
- is linked and subordinate to the charity's charitable purpose(s) (for example, a hospital parking lot); or
- is unrelated to the charity's purpose(s) but run substantially (90%) by volunteers (for example, weekly bingos).
A private foundation may not engage in any business activities.
Note
The Income Tax Act allows charitable organizations and public foundations to conduct business activities under specific conditions. Provinces, territories, and municipalities may impose other requirements and restrictions. Charities should contact the relevant provincial, territorial, and municipal government departments before engaging in any business activities.
For more information on business activities, see CPS-019 What is a Related Business?
Political activities
A registered charity cannot be created for a political purpose and cannot be involved in partisan political activities. A political activity is considered partisan if it involves direct or indirect support of, or opposition to, a political party or candidate for public office.
However, a registered charity may take part in limited political activities if they are non-partisan and connected and subordinate to the charity's purposes. A connected activity relates to and supports a charity's purposes and represents a reasonable way to achieve them. A subordinate activity is subservient to a charity's dominant charitable purpose or is a minor focus of the charity.
An activity is considered to be political if it:
- encourages the public to contact elected representatives or public officials to urge them to retain, oppose, or change any law, policy, or decision in any jurisdiction;
- communicates to the public that the law, policy, or decision of any level of government in any jurisdiction should be retained, opposed, or changed;
- attempts to incite or organize the public to put pressure on elected representatives or public officials to retain, oppose, or change any law, policy, or decision of any level of government in any jurisdiction; or
- attempts to sway public opinion on social issues.
A registered charity can devote part of its resources to political activities provided substantially all of its resources are devoted to charitable activities. As a general rule, we consider a charity that devotes no more than 10% of its total resources a year to political activities to be operating within the substantially all requirement.
However, we recognize that this administrative guideline may have a negative impact on smaller charities. Therefore, the following thresholds will apply:
- Registered charities with less than $50,000 annual income in the previous year can devote up to 20% of their resources to political activities in the current year.
- Registered charities whose annual income in the previous year was between $50,000 and $100,000 can devote up to 15% of their resources to political activities in the current year.
- Registered charities whose annual income in the previous year was between $100,000 and $200,000 can devote up to 12% of their resources to political activities in the current year.
For a detailed explanation of political activities, see CPS-022, Political Activities.
Social activities
As a rule, social activities are not charitable at law. However, a registered charity that is established for exclusively charitable purposes can devote some of its resources to social activities as long as:
- the activities are held to raise funds for its charitable purposes and are not so frequent to be considered as a primary purpose themselves; or
- the activities are incidental to the charity's charitable purposes. Generally, a registered charity should not devote more than 10% of its resources (funds, personnel, and property) to social activities.
A registered charity that engages in frequent social activities is putting its registered status in jeopardy for failing to devote its resources to charitable activities.
Fundraising activities
The CRA accepts that registered charities may incur costs in their efforts to raise funds for their charitable work. However, our expectation is that these expenses will be reasonable.
Fundraising is not a charitable activity. A registered charity can raise funds to support its charitable purposes, but:
- If the fundraising activity becomes the primary emphasis of the charity, then it is not operating for exclusively charitable purposes; and
- If a substantial portion of the charity's revenues is devoted to the fundraising activity, it is not considered to be devoting its resources to charitable activities.
Spending excessive amounts on fundraising could also result in the charity not meeting its disbursement quota (spending requirement).
A registered charity that engages in fundraising as a primary activity, or that devotes a substantial portion of its revenue to fundraising activities, is putting its registered status in jeopardy.
For more information on fundraising activities, see CG-013, Fundraising by Registered Charities.
Lotteries, bingos, charity casinos, etc.
Charities may choose to raise funds through lotteries, bingos, and charity casinos. However, in addition to following the guidelines above, registered charities should contact the relevant provincial, territorial, and municipal government departments before engaging in these activities, to obtain any necessary permissions, permits, or licenses.
