FUNDING CHARITABLE WORK OVERSEAS
The Canada Revenue Agency (“CRA”) imposes strict requirements on Canadian registered charities that fund work outside of Canada. The two key requirements are as follows:
1.) The CRA does not allow Canadian charities to simply transfer funds to organizations outside of Canada unless the organizations that receive the funds are “qualified donees” (which include Canadian registered charities). As a result, our territory cannot simply transfer funds to organizations outside Canada, even if these organizations are other Salvation Army territories or ministry units. The CRA takes the position that a Canadian charity can only “work with or through other organizations provided it employs certain structured arrangements that allow it to retain direction and control over the use of its resources.”
2.) The CRA requires Canadian charities to maintain adequate reports and records to document how funds are spent in foreign jurisdictions.
To ensure that all of our foreign activities comply with CRA requirements, our territory entered into a Master Agency Agreement with The Salvation Army International Trustee Company (“SAITCO”). Under this, SAITCO acts as our agent when we engage in charitable work outside of Canada. Senior personnel in the CRA Charities Directorate have confirmed that this Master Agency Agreement satisfies CRA requirements. Essentially, the CRA has accepted that when funding is governed by this agreement, our territory, through SAITCO, exercises sufficient “direction and control” over projects that we fund.
Because of this arrangement, all foreign activity by any ministry unit in the Canadian territory must be coordinated through the World Missions Office at THQ. This includes funding work of the Army, another organization or individual outside Canada, contributions of goods of any kind and undertaking mission trips.
a) No Salvation Army unit may directly or indirectly allocate funds overseas (whether donation receipts have been issued or not), nor can Salvation Army funds be given directly to reinforcement or international personnel who are visiting Canada. All funds must be channeled through territorial headquarters so that they can be handled in accordance with the Master Agency Agreement.
b) No official receipts for income tax purposes may be given to acknowledge any donations for overseas, except for the Partners in Mission (Self Denial Appeal). All other receipts will be issued by territorial headquarters. This gives us the opportunity to ensure that the gift can, in fact, be used as intended by the donor and that it can be brought under the Master Agency Agreement.
c) Corps and other ministry units that are undertaking short-term missions must coordinate their trip with the World Missions Office at THQ.
d) Territorial headquarters will no longer accept individual, specified donations for foreign activities unless they can be allocated to a program or project that can be brought under the Master Agency Agreement. This includes donations intended to support the work of Canadian reinforcement personnel.
Failure to comply with CRA’s requirements will jeopardize The Salvation Army’s charitable registration; as a result, we cannot overemphasize how important it is that all ministry units follow this policy to the letter.
If you have a question about a specific issue or need more information, please contact the office of Major Gillian Brown, Director of World Missions at THQ.