Charities know they’ve got strict rules to follow, and they know there are stiff penalties for non-compliance. They should also know that the Charities Directorate and the Canada Revenue Agency will work with organizations to help them maintain their charitable status, if necessary through a compliance agreement which both the CRA and the charity accept. Such an agreement “identifies the problems, the steps the charity will take to bring itself into compliance, and the potential consequences to the charity of not abiding by the agreement.”
However, the CRA may see a compliance agreement as a last chance, and penalties for non-compliance can be severe. Charities lawyer Adam Aptowitzer writes:
According to the guidelines which attempt to make sure the punishment fits the crime, compliance agreements fall somewhere between a “slap on the wrist” and jail time.
Often, the alternative to signing a compliance agreement is revocation of the charity’s status, and so signing the agreement, if offered, is generally a foregone conclusion.
Aptowitzer notes that the CRA has even used non-compliance with an agreement as a reason not to renew a charity’s status.
So, know that if you have trouble managing your charity, you have options, but those options aren’t an excuse to continue to avoid your duties. You should also know that the CRA is keeping an increasingly close eye on charities.
Charities take note
Here’s a list of changes that affect registered charities and other qualified groups that accept gifts in the federal government’s 2011 budget.
I wrote about what the budget will mean for business in June. At that time, Aptowitzer provided a detailed look at how the budget would affect charities.
First Reference Internal Controls, Human Resources and Compliance Editor