Updated April 2016
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At this time of year, non-profit organizations and charities may be extra busy implementing programs to serve their communities and members, raising funds, planning and holding events, writing grant applications, managing volunteers and employees, and on top of it all, complying with and completing CRA requirements. You’re probably also planning for a full 2016!
I want to highlight a couple of issues you may want to think about this busy season.
All non-profit organizations with employees should be aware of how employment contract law has changed recently. Employers of all types and sizes will want to understand how the changes affect them, what to review in their contracts and how to update them without breaking the law.
All commercial contracts should receive the same level of care to avoid risk to your finances and reputation. You can read more below.
Also, with the updated rules on political activities for registered charities, you’ll have to be extra careful if any of your organization’s activities might be construed as partisan.
Registered charities and political activities
If you direct or work for a charity, you’re probably aware of the Canada Revenue Agency’s changes to public advocacy rules. One of the highlights is new penalties for charities that exceed the limits on political activities or that fail to provide complete and accurate information on their annual return.
In 2013–2014, the CRA also increased its charity monitoring and enforcement efforts. The agency conducted 845 audits and issued 36 notices to revoke charitable status. In 2014–15, the CRA conducted fewer audits (781), but issued more notices to revoke (45).
Jeffrey Sherman wrote in depth about the rule changes in 2014:
An organization established for a political purpose cannot be a registered charity.
However, the definition of “political purpose” is not always so clear. It can include seeking to oppose or change the law, policy or decision of any level of government in Canada or a foreign country.
The CRA says:
A charity may not take part in a partisan political activity. A partisan political activity is one that involves direct or indirect support of, or opposition to, any political party or candidate for public office.
It will be interesting to see whether the new enforcement trend will continue, but the message for charities is clear: you must assess whether your activities are political, understand the rules around partisan activities, and—most importantly—report on any political activities to the CRA on your annual Registered Charity Information Return (T3010).
Read Jeffrey’s article, “What is the CRA policy on political advocacy activities carried out by registered charities?” for details.
Employment contract law is changing
Recent court decisions have changed how the law applies to employment contracts, most importantly terminations, but also off-duty conduct, consideration and restrictive covenants. All types of organization need to appreciate the value of an enforceable contract.
In light of these changes, and the increased risk of financial and reputational damage, employers should review their employment contracts.
In “Contract administration – beyond the handshake agreement,” Jeffrey writes:
Unfortunately, it is not unusual for not-for-profit organizations to find they have entered into a contractual relationship that did not receive the required level of oversight, discussion and approval. Such contracts dramatically increase the risk of harm to your organization.
Clear language, carefully outlining the specific terms of a contract is essential.
In short, organizations must fully understand the agreements they enter. But in order to do that, they’ll probably need expert help. Read Jeffrey’s post for more on reducing the risk of bad contracts.
Have a safe, happy and compliant new year!
You may not consider it priority number one, but fully understanding your legal obligations and complying with them will protect your finances, your reputation, your directors and donors—even your organization—from many risks.
That’s our wish for you this new year!
What kind of expert help?
Jeffrey Sherman is the author of Not-for-Profit PolicyPro®, co-published by First Reference and CPA Canada. Twenty-year non-profit veteran Apolone Gentles JD, CPA, CGA, FCCA, writes the quarterly updates.
Not-for-Profit PolicyPro® contains clear and current commentary on legal compliance and non-profit best practice, along with dozens of ready-to-use policies, procedures and forms. This essential resource will help assure that you and your board fulfil all of your compliance requirements, from governance, financial management and corporate administration, to advocacy, public policy and human resources.
You can try it free for 30 days!
As an added bonus, not-for-profit organizations receive 20% off when they subscribe. Best of all, you can start your free 30-day trial today with no commitment!
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