Our Issue Alert of December 4, 2013, reported on the exemption granted to registered charities using electronic messages to raise funds.
In light of questions that have been raised with us as to how broadly this exemption applies to charities’ activities, we have obtained clarification on a number of issues from the Industry Canada officials responsible for the law and regulations.
As a reminder, the regulations exempt a commercial electronic message “that is sent by or on behalf of a registered charity as defined in subsection 248(1) of the Income Tax Act and the message has as its primary purpose raising funds for the charity.”
Industry Canada has advised us that they interpret this to mean:
- all activities that fall under the Canada Revenue Agency definition of fundraising, and which registered charities use to calculate their fundraising ratio, are exempt from the regulations;
- a number of other activities, that lie beyond the CRA fundraising definition, and which charities do not have to report when calculating their fundraising ratio, will also be exempt.
What this means
Charities have been concerned that some of their activities that generate significant funds for the organization would not be exempt from CASL. Industry Canada advises us that, in addition to activities covered by the CRA fundraising definition, they deem the following types of activities to be exempt:
- newsletters that promote upcoming fundraising events, even where mention is made of corporate sponsors of those events;
- promoting charitable activities that may involve a cost-recovery element (charging participants for materials, for example); and,
- the promotion of events and the sale of tickets by organizations such as those of performing arts or cultural institutions, where the proceeds flow directly to the charity.
- By way of reminder, CASL only applies to commercial electronic messages. Newsletters and purely informational items are exempt if they do not contain commercial material.
Action on this file
With the implementation date for CASL approaching, we have heard from many of you seeking clarification about parts of the regulations, and what it means for your organization. We have been working over the last several months to obtain clarification from Industry Canada.
We have prepared two FAQ documents. The first of these will be of particular interest to registered charities as it outlines the circumstances under which they are exempt from the regulations. The second document is intended for nonprofits, as they are not exempt from the regulations, and for registered charities that may carry out activities that fall beyond the exemption.
The information we provide, while not constituting legal advice, sets out our best policy understanding of the regulations and their requirements, and has been shared with and commented on by the Industry Canada officials responsible for the regulations. With the help of our anti-spam rapid response team, we will continue to monitor the implementation of the new regulations and will update the sector as new information or issues come to light.
We hope you find this information helpful. Please do not hesitate to contact us at firstname.lastname@example.org.