On October 17, hundreds of charities, foundations and not-for-profit corporations will be dissolved, and registered charities will lose their charitable status, unless they’ve complied with the Canada Not-For-Profit Corporations Act (CNCA).
While the CNCA came into force in the fall of 2011, the federal government set October 17, 2014 as the deadline for all existing federally incorporated not-for-profit corporations to continue into the CNCA.
About 19,000 not-for-profit associations, charities and other groups are affected by this change. Charities (including public and private foundations) that do not make the transition by the deadline will be dissolved and should ensure they have no assets remaining at dissolution.
What Does It Mean to Transition to the CNCA?
The CNCA focuses largely (though not exclusively) on issues around financial accounting and disclosure, and divides charities into two camps: soliciting corporations and non-soliciting corporations.
A soliciting corporation is one that receives more than $10,000 in donations from third parties, government grants, financial assistance or donations from another soliciting organization in a single financial year. Once you’re determined to be a soliciting corporation, the designation will last for three years. Soliciting corporations with more than $250,000 in annual revenues must have their financial statements audited.
A non-soliciting organization is one that has received $10,000 or less in public funds in a financial year. Non-soliciting organizations with more than $1,000,000 in revenues must also have their financial statements audited. A public accountant will generally charge $7,000 per audit.
With the increased scrutiny and costs to comply, as well as the burden of keeping your classifications straight, it’s not hard to imagine a future where an independent, private foundation is not as attractive an option as it once was.
Beyond the new hoops to jump through, the signal is clear: charity is going to get more expensive and more demanding from a legislative and regulatory perspective. Meanwhile, the CRA and the public are becoming more vocal about their disapproval of charity overheads.
An Easier Way to Deal with the CNCA
If you haven’t yet transitioned, before you google the nearest law office to help you get on side, consider the following: there is a better way.
Chimp can save you transition costs and the expense and exposure of an audit and the increased regulation of the CNCA. Opening an account with Chimp takes minutes. You can then transfer your assets to our Donor Advised Fund while retaining the ability to determine where, when and how to disburse the funds to the charities of your choice.
Even if you are planning to wind down, transferring your assets to Chimp’s regulated environment buys you time before the October 17 deadline, while you gain the flexibility of directing the funds to any charity in Canada for years to come.
Failure to do anything will cost you. Transitioning will cost you — now, and in the future. It may be time to reconsider how you manage and amplify your charitable impact.
Jeff Golby works with Chimp Foundation to create a space where creativity, charity, and trust come together to inspire and motivate people to give. If your charity needs to transition and you’d like to learn more about how Chimp can help, contact our client success team at email@example.com or call 1-877-531-0580.