Continuing the discussion from Kamloops Makerspace needs your advice:
Also relevant:
What are the different types of charities in BC?
How are they different in terms of paperwork, volunteer hours, benefits, and management discipline required? Any other factors?
Last time this came up I mentioned BCSME whom we visited in 2013. I’m actively working with them on a project, I think they would be happy to talk to us about this. They are very similar to vhs and have many of the same challenges we have (people stashing stuff around the place, personalities etc etc). They are a registered charity.
Personally I think we should avoid this. The CRA (Revenue Canada) seems to like “auditing” charities that show any inclination of political activity of the left leaning sort. See Here for one story.
“A separate wing”: That sounds to me like creating a Foundation. It will be a long time before VHS should even consider that one.
I don’t think the types of BC societies are relevant here, since you don’t need to become one, for charitable tax purposes.
Becoming, and running a Charity has minimal impact on daily operations. Trust me on this: Turning into a Charity does not auto-magically turn you into a paper monster.
Go to cra.gc.ca/charities , for lots of good info; also have a look at the T3010 form for the required annual info. Not a huge deal, really!
Let’s put it into perspective.
Not all “lobbying” activities need to be classified/declared as political activities. Let’s say that with $10K revenues you report $500 in political activities. Do you think CRA is going to bother?
But if your (reported) political activities would exceed say, (I’m guessing) 25% of revenues, CRA may notice and inquire whether it’s an appropriate activity for VHS.
So, personally, I see no disadvantages for VHS not to become a Charity. What’s the absolute worst that can happen? The charitable status gets revoked (in a few years), and you’re back to where you were before. Also, bear in mind that, if somehow the charitable status is not working out, you can voluntarily give it up.
Let’s try to focus on the why instead of the why not. I don’t see a huge benefit in this, can someone give some details on why we should do this and who is going to do the paperwork?
Based on these:
http://sectorsource.ca/managing-organization/be-charity-or-not/implications-becoming-charity
Pro:
Donation and tax implications
Con:
Requires more stringent record keeping and paperwork
I don’t have a lot of time to research the topic this week, so thanks for
carrying on most of the discussion, Miron.
The tax receipt implication is huge, here’s a hypothetical (based on my
five-minute reading):
If we want a bigger, better laser cutter, we can start a fundraiser. If we
can prove this is only for the space and no advantage for donating members
(unlikely), then donators will get all of their donations back in the form
of tax credits. If we can prove that is a low-advantage(likely), then they
will get a significant portion of their donations back.
Along the same lines, if someone has a waterjet cutter rotting away in
their basement, they can donate it to VHS and get the Fair Market Value in
return in tax receipts. That has enormous implications.
A lot of the rigour in paperwork is also already being satisfied by the
fact that we have to do it as a non-profit anyway.
Forgive me (and correct me) if I am misinterpreting the literature, but I
do think this is an issue that warrants discussion, instead of dismissive
and pithy maxims.
Even just a brief look at this documentation suggests a great deal of work
and a new set of associated obligations:
http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/bscgdlns-eng.html
Basic guidelinesChecklist
Inform the Charities Directorate of any changes to the charity’s mode of
operation or legal structure
http://www.cra-arc.gc.ca/chrts-gvng/chrts/chcklsts/chngs-eng.html. A
registered charity should get confirmation from the Charities Directorate
(the Directorate) before changing its stated objects and/or activities to
make sure they qualify as charitable. A registered charity should inform
the Directorate if it changes its name, telephone number, address, contact
person or governing documents
http://www.cra-arc.gc.ca/chrts-gvng/chrts/glssry-eng.html#govdoc(constitution,
letters patent, etc.) and must obtain prior approval from the Directorate
before changing its fiscal period-end.
Engaging in allowable activities
A registered charity must be created for charitable purposes
http://www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/cpc/wtc-eng.html and
must devote its resources (funds, personnel, and property) to charitable
activities. A registered charity is permitted to carry out its charitable
purposes, both inside and outside Canada, in only two ways: by carrying on
its own charitable activities, and by gifting to qualified donees
http://www.cra-arc.gc.ca/chrts-gvng/chrts/glssry-eng.html#qualdonee.
Checklist
Is the charity aware of the following requirements:
Do not engage in any business activities if the charity is designated as
a private foundation.
Related topics
http://www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/cpc/wtc-eng.html
What is charitable?
To qualify for registration as a charity, an organization must have
purposes that are exclusively charitable and charitable activities that
support those purposes. The purposes (also called objects) describe the aim
or main intent of the organization. The activities describe how the
organization will accomplish its purposes.
The term charitable is not defined in the Income Tax Act, so we consider
common law (court decisions) to determine what is charitable.
Charitable purposes
The courts have identified four categories of charity:
An organization’s purposes must fall within one or more of these categories
to be considered for registration as a charity.
The following examples list what would generally be considered charitable
under each category of charity. Note that these lists are not complete.
Relief of poverty
To relieve poverty in the charitable sense means to bring relief to the
poor. The poor are those who lack the basic amenities available to the
general population. For more information, go to CSP-P03, Poverty
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-p03-eng.html.
Examples:
Advancement of education
To advance education in the charitable sense involves the training of the
mind, advancing the knowledge or abilities of the recipient, raising the
artistic taste of the community, or improving a useful branch of human
knowledge through research. For more information, go to CSP-E01, Education
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-e01-eng.html.
Examples:
Advancement of religion
To advance religion in the charitable sense means to preach and advance the
spiritual teachings of a religious faith, as well as to maintain the
doctrines and spiritual observances on which those teachings are based.
There must be an element of theistic worship, which means the worship of a
deity or deities in the spiritual sense.
Examples:
Other purposes beneficial to the community
This category includes various purposes that do not fall within the other
categories but which the courts have recognized as charitable. For more
information, go to CSP-C10, Other purposes beneficial to the community
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/csp/csp-c10-eng.html.
Examples:
For more information on, and examples of, acceptable charitable purposes,
go to Charitable purposes
http://www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/mdl/menu-eng.html.
Charitable activities
Activities are an organization’s programs or how it accomplishes its
purposes. Charitable activities are activities carried out to fulfill
a charitable
purpose. Without a charitable purpose, an organization cannot have
charitable activities.
To qualify for registration, an organization must show in its application
that it devotes all of its resources (funds, personnel, and property)
to charitable
activities that directly further its charitable purposes. Therefore, it
should explain, in detail, the specific activities it will undertake to
achieve each of the formal purposes stated in its governing document(s)
(its incorporation documents, constitution, trust document, or other
establishing documents). For example, the purpose “to relieve poverty by
operating a food bank for the benefit of the poor,” has to be accompanied
by a statement of activities showing how the organization will accomplish
this purpose.
For more information, go to Describing your activities
http://www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/cpc/dsc-eng.html.
Public benefit test
To be registered as a charity, an organization’s purposes and activities
must also meet a public benefit test. To qualify under this test, an
organization must show that:
An organization that wants to limit its beneficiaries unreasonably, or
offer an unreasonable benefit to a group or individual, will not qualify
for registration.
For more information, go to CPS-024, Guidelines for Registering a Charity:
Meeting the Public Benefit Test
http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-024-eng.html.
Still not sure?
If your organization is still not sure if its purposes, activities, or
public character will qualify it for registration as a charity, we will
review draft governing documents, on a one-time basis, when submitted with
a complete application. For more information, go to Application review
process http://www.cra-arc.gc.ca/chrts-gvng/chrts/pplyng/pprp-eng.html.
Ok, so it seems like we have momentum, would you like me to try to set something up with bcme? It seems the best way to get a handle on this is to talk to someone who is doing it.
What do you mean by set something up?
It would be great if someone involved in that could give us some advice.
Especially if it’s “don’t do it!”
Whether on the forums / in this thread or in person, whichever we can get
them to do.
Andrew:
Yeah, I saw that, but what it mostly seems to boil down to is “don’t give
money to unqualified people”, and don’t do political stuff. That doesn’t
really seem to be any different than what we’re doing now.
Don’t let the bureaucratese scare you; lot of it is about ass-covering. When you break down each component to its essentials, it’s fairly easy to digest. And when you look at it, there’s actually lot of common sense in there.
Remember that the majority of Charities are fairly small, with no (or minimal) staff, and definitely with no army of lawyers & accountants at their beck & call.
The one thing I can see needing doing, is to check/update the bylaws. And that might be a good idea anyway. Are they avl. on wiki, or?
BCSME is mostly retirees, they’re not a group that does much online. I’ll talk to my contact and see what he thinks, would you be interested in visiting (perhaps one weekend) and talking to them. You have to see their metal shop…
@mirong Far be for me to stand in anyones way! As @Jarrett would say it’s a do-ocracy so have at it and get all that paperwork in order and filed away! 
My father in law does something related. He is a member of a non profit that runs a music venue. As a fundraiser they take donations (of say $100) for tickets to a gala concert and issue tax receipts for $50 on the basis that 50% of it is a donation and 50% is for the concert. This idea could be applied to tools perhaps, very interesting.
http://evergreentheatre.ca/events/1970/01/gala-dinner-with-jill-barber-march-15-2015/
“Reservations for the 2015 Evergreen Gala are on sale now at $100 per person which includes an income tax receipt for $50.”
I think that’d work well for workshops as well - it makes it clear that for a workshop that costs $Z (=$X+$Y), $X is the cost of the workshop (materials, time, equipment use profit), and $Y is a donation towards VHS and is what you get a tax receipt for.
If it really isn’t much of a step up admin-wise (remember that this will all fall on one or two of our members who are already heavily burdened), my vote is strongly towards pursuing this.
I think we would need a tax accountant. My father in law is a tax accountant so he does it for the theatre himself. He is in NS and too busy to help us much unfortunately. He might answer a few one off questions though.
Ok, we need to do this. I could have a chance at getting us $1k from my employer just now…