{"id":30097,"date":"2025-03-26T08:11:00","date_gmt":"2025-03-26T12:11:00","guid":{"rendered":"https:\/\/www.millerthomson.com\/?p=30097"},"modified":"2026-01-16T19:21:58","modified_gmt":"2026-01-17T00:21:58","slug":"new-golden-age-canada-charitable-sector-proposal","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/social-impact\/new-golden-age-canada-charitable-sector-proposal\/","title":{"rendered":"A new \u201cgolden age\u201d for Canada\u2019s charitable sector? A proposal"},"content":{"rendered":"\n<p><em>\u201cNever let a good crisis go to waste\u201d<\/em> \u2013 Winston Churchill<\/p>\n\n\n\n<p>In an increasingly uncertain world, Canada could be an attractive destination and a safe haven for the biggest international charities \u2013 if our leaders think big and make the right changes.<\/p>\n\n\n\n<p>Canada has many qualities that make it the ideal headquarters for an international charity, including relative political stability, access to international markets, a highly-educated and multicultural workforce, leading world-class universities, a generally progressive immigration system, ties to both the Commonwealth and the Francophonie, and a positive global reputation.<\/p>\n\n\n\n<p>Despite these advantages, current Canadian tax rules make it effectively impossible for international charities to set up their head offices in Canada. Under the current rules \u2013 particularly the \u201cown activities\u201d regime \u2013 registered charities in Canada face restrictions in how they can distribute their resources, particularly when transferring funds outside of Canada.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The burden of current rules<\/h2>\n\n\n\n<p>Under the \u201cown activities\u201d regime, a Canadian charity can make its resources available to a foreign non-qualified donee (i.e., a person or entity that is not a Canadian registered charity, such as a non-Canadian affiliate or subsidiary) if it uses the foreign entity as the charity\u2019s intermediary to carry out the charity\u2019s \u201cown activities.\u201d Not only must the parties maintain the fiction that the funded activity is the Canadian charity\u2019s \u201cown,\u201d but also the Canadian charity must exercise direction and control at all times over how the foreign entity uses the Canadian charity\u2019s resources.<\/p>\n\n\n\n<p>Alternatively, as a result of recent changes, Canadian charities can now send funds to the foreign entity in the form of a \u201cqualifying disbursement,\u201d which must fulfill certain conditions. Under one such condition, the charity must ensure that the foreign entity applies the charity\u2019s funds exclusively on charitable activities that further at least one of the charity\u2019s purposes. In many cases, the administrative burden required to administer a qualifying disbursement can be so great that it would be not much different from the red tape required under the \u201cown activities\u201d regime.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">A missed opportunity<\/h2>\n\n\n\n<p>These rules pose a significant hurdle for international charities and organizations that need to operate an international treasury function and transfer funds to non-Canadian affiliates or subsidiaries. In effect, by making it hard to transfer resources overseas (compared to other jurisdictions), the law in Canada disincentivizes global charities from setting up their HQs here despite our country\u2019s many strengths. Over the years, we have been approached by a number of international charitable organizations looking to set up their headquarters in jurisdictions other than their home country. On learning about Canada\u2019s restrictions, these charities decide to look elsewhere. This is a missed opportunity, given Canada\u2019s other strategic advantages.<\/p>\n\n\n\n<p>It does not have to be this way, and there are good reasons to make changes. Making Canada a friendlier venue for the HQs of international charities would grow both Canada\u2019s charitable sector and the Canadian economy. It would create good-paying jobs (associated with C-suite, management, and head office functions), resulting in more income tax revenue for Ottawa. There would also be positive downstream effects to other sectors of Canada\u2019s economy, as large international charities bring their overseas revenues and personnel to Canada.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Possible solutions<\/h2>\n\n\n\n<p>One way to make Canada more hospitable for international charities is to relax the qualifying disbursement rules. For example, adjusting the risk thresholds and accountability tools in the Canada Revenue Agency\u2019s <a href=\"https:\/\/www.canada.ca\/en\/revenue-agency\/services\/charities-giving\/charities\/policies-guidance\/charities-making-grants-non-qualified-donees.html\" target=\"_blank\" rel=\"noreferrer noopener\">current administrative guidance<\/a> could give charities more flexibility in making qualifying disbursements to affiliates or subsidiaries in other countries without having to amend the <em>Income Tax Act<\/em> itself. However, we do not believe that this is likely or even sufficient to allow the operation of an international charity headquarters in Canada.<\/p>\n\n\n\n<p>In the alternative, the Government of Canada could introduce a new category of \u201cqualified donee,\u201d specifically aimed at large international charities. Amendments to the <em>Income Tax Act<\/em> would allow entities falling into this new category to transfer resources to non-Canadian charities in its corporate family, without having to comply with the \u201cown activities\u201d regime or qualifying disbursements rules.<\/p>\n\n\n\n<p>By creating this new category of qualified donee, Ottawa could help pave the way for global charities and organizations to run their international operations from within Canada, while still ensuring that their resources are used exclusively for charitable purposes. This change could make Canada both a beacon and a beachhead for large global charities, particularly those based in the United States, which face an increasingly uncertain and unstable regulatory environment and which might be convinced to move to Canada if our own regulatory environment was more favourable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Time to seize the moment<\/h2>\n\n\n\n<p>Canada is at a crossroads. The world order is changing. Allegiances are shifting. Economic nationalism is rising. Uncertainty is the new certainty. The new Prime Minister has resolved to make Canada the strongest economy in the G7. The appetite and will of Canadians to accomplish big things \u2013 once thought improbable \u2013 is increasing, from removing interprovincial trade barriers to building pipelines. Meanwhile, a growing number of countries, including <a href=\"https:\/\/www.theguardian.com\/global-development\/2025\/mar\/02\/this-will-cost-lives-cuts-to-uk-aid-budget-condemned-as-betrayal-by-international-development-groups\" target=\"_blank\" rel=\"noreferrer noopener\">the US and the UK, have slashed their foreign aid budgets<\/a>, reducing their global impact and influence.<\/p>\n\n\n\n<p>Canada has an excellent opportunity to herald in a new \u201cGolden Age\u201d for its own charitable sector. By adopting a more flexible regulatory framework for global charities to carry out their worldwide operations from Canada, Canada could position itself as a leader for international charitable activity, strengthening both the Canadian charitable sector and the Canadian economy. Canadians should not let a good crisis go to waste.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Contact Miller Thomson\u2019s Charities Law Group<\/h2>\n\n\n\n<p><strong>Miller Thomson\u2019s <\/strong><a href=\"https:\/\/www.millerthomson.com\/en\/industries\/charity-not-for-profit\/\" target=\"_blank\" rel=\"noreferrer noopener\">Charities Law Group<\/a> is a leading advisor and advocate to Canada\u2019s charitable and nonprofit sector, helping entrepreneurs and organizations navigate and succeed in Canada\u2019s regulatory environment. Contact us today to discuss the proposals presented in this article or to develop solutions on how to increase your organization\u2019s impact.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cNever let a good crisis go to waste\u201d \u2013 Winston Churchill In an increasingly uncertain world, Canada could be an attractive destination and a safe haven for the biggest international charities \u2013 if our leaders think big and make the right changes. Canada has many qualities that make it the ideal headquarters for an international [&hellip;]<\/p>\n","protected":false},"author":86,"featured_media":14389,"parent":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[535],"insight-format":[416],"class_list":["post-30097","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-social-impact"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A new \u201cgolden age\u201d for Canada\u2019s charitable sector? A proposal | Miller Thomson<\/title>\n<meta name=\"description\" content=\"Canada has the potential to become a global hub for international charities. 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