As a public foundation, the community foundation is restricted by the Income Tax Act to make grants or distributions only to registered charitable organizations. CCRA has recently requested that the relationship between the charity (lead partner) and the non-charitable organization (the agent) be formalized and documented before a grant can be awarded.
An organization that is not a registered charity wishing to apply for funding from the community foundation may consider the following:
1) make formal application to CCRA to become a registered charity, or
2) establish a partnership or agency relationship with a registered charity (RC) who would act as a ‘sponsor’ for the organization and the proposed project.
(i) the relationship must be a formal arrangement set out in writing between the boards of directors of the RC and the org.
(ii) the terms of the agreement should include:
- a full description of the project
- providing responsibility to RC for insuring the project is completed by the org as described
- that RC has responsibility for distribution of funds to the org as work progresses
- that RC has responsibility/accountability to CF for performance of the org
(iii) the relationship must be an appropriate link, not simply one of convenience.
Guidelines for a registered charity acting as a principal or partner are attached on Schedule 1.
An example of a contract provided by CRA is attached as Schedule 2.
Better together guide is another helpful resource in understanding charitable sponsorships.
For further information on becoming a registered charity or on establishing an agency relationship, please contact:
Canada Customs & Revenue Agency