If your goal is to operate a specific kind of program or activity to achieve your charitable aims, there are various ways of doing this without creating a separate registered charity. Consider the following.
Working with an existing charity
With some 85,000 charities in Canada, it is very likely that a registered charity already exists that is working to achieve the charitable aims that you have in mind. It is also very likely that this charity would be delighted to hear from you.
Whether you are bringing volunteer talent and skills, money, or just a great idea about how to achieve your goals, it is very possible that another charity with similar goals would be in a good position to work with you to help bring your ideas to life. In fact, by working together, you may be able to improve even further on your good idea! And the existing charity will already have charitable registration, as well all the infrastructure in place to meet CRA obligations and properly manage and control operations.
These other charities may or may not:
- operate in your community (or region or province);
- operate a program or activity the same as or similar to your own;
- have charitable objects or purposes that are worded the same as yours.
In fact, a charity with different programs, or operating in a different part of the country, may be the ideal organization to partner with - they may be looking to increase their range of services or area served.
How can you find possible charities to work with? You can start by searching the charities listings through CRA's website. Using the advanced search feature, you can identify charities by name, location, or category of charity. You can also use a more broadly based Web search to find the websites of Canadian charities. Or you can ask other experienced people in the sector for referrals to organizations that they know.
When approaching a charity to discuss the possibility of working together, understand that most charities are already frantically busy. To be taken seriously, you should be prepared to share your own work, plans, and budgets, rather than simply talking about your great idea. Understand as well that most organizations have their own internal review and approval processes, and their own priorities. However, if you have a well-thought-out plan that addresses how you will accomplish your programming goals, including how you intend to resource it, and it is within the core mission and objects of the other organization, you have a good chance at getting a fair hearing.
Operating as a nonprofit
If what you want to do is partially charitable (according to the legal definition) and partially not, operating as a nonprofit is the likely solution. (If your activities are exclusively charitable, however, you must be a registered charity.) Many great charitable works are done by nonprofit organizations without registered charitable status.
Although nonprofits are not able to issue tax receipts, they have somewhat greater latitude as to how they can raise funds and operate. For example, CRA limits on the political activities of charities do not apply to nonprofits. Nor do CRA rules on the disbursement quota or its fundraising guidelines.
If you plan on raising most of your funds from activities such as fundraising events where no receipts need to be issued and from user fees, there may be little or no advantage (and several disadvantages) to operating as a registered charity.
Operating as a business
You may also consider operating your program or activities as a business. For example, if you expect user fees to more than cover all of the costs of offering a program, it may be that a for-profit business model is the best approach. The service or activity you offer may still be "good" and may benefit participants or the community at large, even though it pays for itself. This is often referred to as carrying on a social enterprise.
In such a case, you will have to pay income taxes on any profits, but if profits are small or are reinvested in growing the organization and its programs, the amount of tax may actually be small, and paying them may be easier -- and cheaper -- than dealing with the many constraints of charitable registration. As well, businesses can donate up to 75% of their net income to charity, thereby reducing the amount of tax that needs to be paid.
Finally, businesses are treated far more favourably when it comes to GST/HST/QST than are charities: businesses generally get back, through input tax credits, all of the GST/HST/QST that they pay, while charities only get about half of that tax rebated to them. A charity's GST/HST/QST tax burden can be significant, and may be much greater than the income taxes that would be owing if the organization were simply a business.
Some activities that are designed to be social enterprises (that is, combining activities that are good for the community with modest profits) could be better suited to a for-profit business model than to registered charitable status.