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Policy priority: Direction and Control of partnerships

collage of charities
Policy priority: Direction and Control of Partnerships

Previously rules aimed at protecting public and charitable funds made it difficult for charities to partner with non-charities, resulting in equity-seeking communities having less access to these funds. Thanks to successful advocacy in 2022, the regulations have changed. Charities are now allowed to grant to nonprofits, individuals, grassroots organizations, and other non-charities. The CRA has released the final guidance which registered charities on how to grant to non-charities.

Why it matters
Previous legislation prevented charities from providing funds to non-charities unless they entered into an agreement whereby they exercised “direction and control” over the activities of their non-charity partner. This requirement significantly hindered equitable partnerships between charities and non-charities. Partnerships are key to ensuring that charities are able to respond to complex and ever-changing issues, and to ensuring that communities served by charities are placed on equal footing and are able to co-create solutions. 
Did you know?
  • Charities are able to gift their resources to ‘qualified donees’, a term which includes registered charities, municipalities, and other entities that are able to issue donation receipts. If a charity wants to partner with and provide resources to any entity that isn’t a qualified donee, direction and control rules apply.
  • Having charitable or “qualified donee” status is less common for groups in some equity-seeking communities. This results in many equity-seeking groups having less access to charitable funds.
  • Direction and control requirements exist in tension with Canadian international development policy and contemporary international development values (e.g., local ownership and participative and inclusive decision-making.
Our ask was
  • Amend the Income Tax Act to enable charities to establish equal partnerships with non-charities while still ensuring accountability and transparency. This amendment became law in June 2022 thanks to collaborative advocacy from the sector. In Fall 2022, Imagine Canada will keep the sector informed about the CRA Guidance document with all the new details.
Learn more

Canada Revenue Agency, 2023

Imagine Canada, 2023

The Philanthropist, 2022

Imagine Canada and Philanthropic Foundations Canada, 2022

Imagine Canada, 2022

Special Senate Committee on the Charitable Sector, 2019 - recommendation 30

The Pemsel Case Foundation, 2015 - 2019

Cooperation Canada, 2019

Ontario Nonprofit Network, 2021

Advisory Committee on the Charitable Sector, 2021) - recommendation #1

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