Using the T3010 Registered Charity Information Return to understand charities

The T3010 Registered Charity Information Return has a wealth of information for the public about charities and their finances. You can access all the T3010s at http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html Even better check out http://www.charityfocus.ca

The T3010s provide information on all 85,000 registered charities, in some cases going back about 10 years, on the following:

  • The name of the charity and whether it is affiliated with other charities;
  • Contact information and website of charity;
  • Ongoing and new program descriptions and also field codes;
  • Business Numbers and fiscal year end information;
  • Revenues of Charities;
  • Expenditures of charities;
  • Detailed financial information and for certain charities more detailed financial information;
  • Information on fundraising activities and fundraising costs;
  • Information on other spending such as political, admin or other;
  • The names and dates of service of Directors/Trustees of the charity;
  • Which if any gifts were made by a charity to another registered charity and the amounts of those gifts;
  • Information on Foundations (if applicable);
  • Information in the Schedule 2 on Foreign Activities (if applicable);
  • Compensation of employees, (if applicable);
  • Information on Non Cash Gifts such as donations of cars, furniture etc to the charity (if applicable);
  • Information on certain investments by private foundations (if applicable); and
  • much more ….

Caveats

While the T3010 provides a treasure trove of information on Canadian charities and can be very helpful as a starting point for understanding some information about a charity there are a number of problems with relying on the information from T3010 Registered Charity Information Return without verifying the information, doing research on the charity and in some cases asking lots of questions. Some of the top concerns include:

  1. Although an important legal document, it is often filled out by volunteers or others who have little understanding of the nuances of the Income Tax Act, may have limited language skills and, in some cases, may not have easy access to the correct information.

  2. People make mistakes when they complete the T3010 and sometimes CRA will make a mistake inputting the form - many of the forms are inputted by hand. Of course if you ever notice a mistake just let CRA know and they will fix it.

  3. People sometimes complete the T3010 in a way that is deliberately incorrect or deceptive - for example putting down inflated values for donations of in-kind items etc.

  4. The CRA raw data includes “charities” that from press reports appear to be abusive tax avoidance schemes or charities that fundraise a lot but there is little verification that they have done anything worthwhile. CRA can only remove them as registered charities and place them under a category such as revocation for cause after they have been de-registered and the Income Tax Act forbids CRA from saying anything about any particular charity while it is registered, except disclosing annual returns and certain documents prepared by the charity.

  5. The biggest problem with relying too much on the T3010 is that it is predominantly financial information and it only captures a small part of what a charity is and is easily subject to manipulation by unscrupulous actors. For example the T3010 does not capture the value added by volunteers. The T3010 does not ask questions on the effectiveness of programs. The T3010 does not ask questions about whether a charity has good governance. If the T3010 is accurately completed and posted I would suggest that all the information contained in that document probably provides you with about 20% of the information one requires to work out whether a charity is deserving of support. There is no substitution for due diligence, getting involved with the charity etc. as discussed in this other note …

To give an example check out the T3010 for The Millennium Charitable Foundation which was revoked by the CRA. See if you could work out any of the problems from the old T3010 form, which is admittedly better now. But suffice it to say that I don’t think you would be able to work out the problems with this charity.

After the revocation you can see the press release from the Canada Revenue Agency about the revocation The Millennium Charitable Foundation (January 12, 2009) which states in part

Our audit has concluded that from January 1, 2003 to December 31, 2006 The Millennium Charitable Foundation issued in excess of $169 million in receipts for cash and property received through tax shelter arrangements. The Charity, in turn, directed $114 million of the cash and property to two other registered charities also participating in these arrangements. The audit revealed that the vast majority of the cash sent to the other participant charities was subsequently paid to the promoters. Of the remainder, the Charity itself paid $33 million in fundraising fees to the tax shelter promoters and retained, but did not disburse, $21 million in net assets. In fact, it appears that beyond these transfers (i.e., those that the Charity is directed to make by the tax shelter promoters), the Charity has only made a single $2,200 gift to another qualified donee.

It is our position that the Charity has operated for the non-charitable purpose of promoting a tax shelter arrangement and for the private benefit of the tax shelter promoters. The Charity has issued receipts for transactions that do not qualify as gifts, issued receipts otherwise than in accordance with the Income Tax Act and its Regulations, has failed to maintain sufficient books and records to support its activities and has used its income for the personal benefit of its trustees. For all of these reasons, and for each of these reasons alone, it is the position of the CRA that the Charity’s registration should be revoked.”

As well after the registration was revoked you could also obtain from CRA a copy of the letter written by CRA to the charity, such as this letter to http://www.globalphilanthropy.ca/images/uploads/The_Millennium_Charitable_Foundation.pdf

To give one example of some of the issues with one question namely question C5 dealing with the list of countries or regions where programs were carried out the form provides only ten boxes. Clearly some charities conduct operation in more than 10 countries or regions. The fact that a charity is allowed to list regions, in addition to or instead of specific countries, will always undercut the accuracy of the statistics on countries. If one even quickly reads the actual data inputted for regions and countries one will find that there are all sorts of inaccuracies either on the T3010 that was filed or on CRA’s inputting of the information.

  • Cities named instead of countries
  • countries spelled incorrectly,
  • former names of countries used such as Czechoslovakia,
  • lack of uniformity in country description (DRC, DROC, The Democratic Republic of Congo, the DRC etc),
  • the field being used for a relevant or irrelevant memo like a particular denominations missionary was supported without reference to a country,
  • some charities listed the same region or country
  • some listed “world” or “worldwide” or “various” which does not really add to our understanding.
  • There were a few “unknown” or “unknown countries”.
  • There were a few in which not applicable or N/A or S/O was listed.
  • There were references to Canadian cities such as Montreal, or Canadian provinces such as Ontario – clearly not outside of Canada.

As well registered charities provide the CRA with a copy of the charity’s financial statements every year. The financial statement is available from CRA upon request although it is not available on their website, unlike the T3010 information.