Need donations? You'll need to become a charity.

• Author: Bowal, Peter

"WHEREAS Landes Tenements Rentes Annuities Profittes Hereditamentes, Goodes Chattels Money and Stockes of Money, have bene heretofore given limitted appointed and assigned, as well by the Queenes moste excellent Majestie and her moste noble Progenitors, as by sondrie other well disposed persons, some for Releife of aged impotent and poore people, some for Maintenance of sicke and maymed Souldiers and Marriners, Schooles of Learninge, Free Schooles and Schollers in Universities, some for Repaire of Bridges Portes Havens Causwaies Churches Seabankes and Highewaies, some for Educacion and prefermente of Orphans, some for or towardes Reliefe Stocke or Maintenance for Howses for Correccion, some for Mariages of poore Maides, some for Supportacion Ayde and Helpe of younge Tradesmen, Handiecraftesmen and persons decayed, and others for reliefe or redemption of Prisoners or Captives, and for aide or ease of any poore Inhabitants concerninge paymente of Fifteenes, settinge out of Souldiers and other Taxes, Whiche Landes Tenements Rents Annuities Profitts Hereditaments Goodes Chattells Money and Stockes of Money nevertheless have not byn imployed accordinge to the charitable intente of the givers and founders thereof, by reason of Fraudes breaches of Truste and Negligence in those that shoulde pay delyver and imploy the same....."

--The Preamble to the Charitable Uses Act, 1601

Introduction

Today, there are people in our country who don't earn enough to buy food for a month so depend on food banks. There are others who can't afford to live anywhere but in a free shelter. These are problems which our society, and in particular, our governments need to deal with. But governments are not restricted to just one way of approaching such problems.

Instead, governments can further their public policy objectives by various methods. They can spend money to further their objectives. The goal of distributing incomes and wealth is achieved by direct expenditures to qualified persons.

In addition, governments may wish to promote worthy social objectives by creating income tax deductions for taxpayers. In this way, private giving to the charitable sector is encouraged. Donors of goods and services are paid by a tax deduction. This is called a tax expenditure. The charity, once officially registered and able to give receipts for deductions, is entrusted with the power to spend this donated money.

Advantages for a Registered Charity

Two main advantages are enjoyed by a registered charity. The first is the ability to provide receipts to donors, who, if they are individuals, are entitled under the Income Tax Act to claim a tax credit to a maximum of 75% of net income (see page 27 for details)...