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M I L L E R T H O M S O N LLP
Barristers & Solicitors
Charities & Not-For-Profit Newsletter
In response to reader requests, Miller Change to CCRA Registration or trading of fundraising lists) unless
Thomson is planning to make the the province adopts similar legislation.
Charities and Not-For-Profit Newsletter
Policy
Ontario released the wording of its
available by electronic distribution.
For the last few years, the Canada proposed Privacy of Personal
Unless a subscriber requests other-
Customs and Revenue Agency (CCRA) Information Act, 2002 for consultation
wise, the next issue of the Newsletter is
the last one which will be distributed has been willing to register charities on February 4, 2002. Responses were
in paper form to all subscribers. The effective the earlier of the date of the due March 31, 2002, and it is expected
following issue will be distributed in charity's establishment and the date of that some form of law will be adopted
electronic form only, other than to application for registration. The CCRA in Ontario by the end of this year. We
subscribers for whom we have no has announced that, beginning March 1, are aware of submissions being made
email address or who have requested 2002, it will no longer register a charity by a number of organizations in the
to continue receiving paper newslet- on a date prior to the application date. voluntary sector.
ters. We anticipate moving to an all In fact, unless the applicant charity
While the basic principles of the
electronic format in the near future. If specifically requests otherwise, the
proposed Ontario law are the same as
you do not think that we have your CCRA will date the registration as of the
later of the date of application and the PIPEDA, the Ontario law will not be
email address, please send it to us at: limited to commercial transactions, and
charitieseditor@millerthomson.ca. beginning of the fiscal period during
which registration is granted (which will apply equally to charitable and
could be later than application, given non-profit transfers of personal informa-
the backlog in applications). For more tion. Although it is a general privacy
April 2002 information, see: <http://www.ccra-
adrc.gc.ca/tax/charities/memoran-
law, a large number of provisions
specific to the voluntary sector have
been written into the proposed law.
dum/edreq.html>
Inside Under the proposed Ontario law,
Susan M. Manwaring
Change to CCRA Registration Policy Toronto 416.595.8583 organizations wishing to collect, use, or
smanwaring@millerthomson.ca disclose personal information must
Ontario’s Proposed New Privacy advise the individuals of the intended
Law purposes and nature of such collection,
Ontario's Proposed New Privacy use and disclosure, and obtain their
Bill 95, Ethics and Transparency in Law consent to such activities. They also
Public Matters Act, 2001 must implement appropriate security
Charities, hospitals and all other organi- methods to protect the personal infor-
Congratulations, Charities
zations that collect or use personal mation that they hold, and must give
Directorate
information only in Ontario will soon individuals access to their personal
New Clergy Residence Form have to implement Canada's privacy information about them that is held by
principles. the organization.
When a Non-Profit Organization is
Reguired to Register for GST Because of Canada's constitutional The provisions in the proposed Ontario
structure, developing comprehensive law regarding the nature of the consent
Charitable Giving with Life privacy protection requires both federal required are greatly expanded from
Insurance and provincial initiatives. As discussed PIPEDA. Consent must be "informed",
in our Spring 2001 issue, the federal which is defined to mean that the
Volunteers in a Unionized Personal Information Protection and individual must understand the nature
Environment? Electronic Documents Act ("PIDEDA") and consequences of the consent, must
has been in force for general inter- be aware that the consent can be
Large Gifts Resulting in Private withdrawn at any time, and must have
provincial and international commercial
Foundtion Status other reasonably expected information.
matters for over a year, and as of
Around Miller Thomson January 1, 2002 was extended to Consent may be implied only if the
commercial uses of personal health purpose of the activity is reasonably
information. On January 1, 2004 it will obvious to the individual. Generally
be extended to commercial activities speaking, the proposed Ontario law
Publication Mail Agreement Number - 40026254 within a province (including the selling does not encourage the use of implied
M I L L E R T H O M S O N LLP Tax Notes
Barristers & Solicitors
consent. The Canadian Marketing will increase the awareness of and one broadly for transparency matters
Association takes the position that the compliance with privacy laws, and and one broadly for Ethics.
Bill requires opt-in consent for all Canadian organizations, including
Transparency in the Bill refers to a new
marketing purposes. It is not surprising charities and hospitals, should respond
requirement that meetings of boards of
that it opposes the Bill. appropriately.
directors of DPBs and committees
In addition, personal information about For the text of the proposed law see: thereof would be open to the public,
an individual is to be collected directly < http://www.cbs.gov.on.ca/mcbs/ except in limited circumstances. The
from the individual unless the individ- english/56Y2UJ.htm >. limited circumstances are not very
ual consents, or otherwise certain clearly defined and it would be incum-
limited exceptions apply. Paul Jones,Toronto bent upon a DPB to "deliberate"
416.595.2639 whether such circumstances would
There is a specific provision regarding apply.
the use of personal information for pjones@millerthomson.ca
fundraising. Further provisions are to The Bill would also require that DPBs
be specified in proposed regulations, make all minutes of their meetings
the wording of which is not yet avail-
Bill 95, Ethics and Transparency publicly available and make rules
able. in Public Matters Act, 2001 respecting how public notice and
minutes of meetings would be given.
Finally, the Ontario law, like the The Liberal Member for Sarnia-Lambton
European Union's Data Directive of The second Part of the Bill, pertaining
in the Legislative Assembly introduced
1995, contains a provision prohibiting to ethics, would require members of
this Private Member's Bill in late June,
disclosure of personal information DPBs to disclose any personal interests
2001. The Bill received second reading
outside Ontario unless similar provi- that would raise a conflict for the
on October 11, 2001, was referred to
sions would apply, and out of province member in accordance with the terms
the Legislature's Standing Committee of the Bill. The intersection between
organizations are required to appoint
on Public Accounts which held public the Bill's conflict of interest provisions
representative agents in Ontario. This
hearings about the Bill on November 22 and the declaration provisions govern-
has the potential to be an onerous
and 29. A number of organizations ing directors of corporations under the
burden for charities from other
made submissions to the Committee, Corporations Act (Ontario) is unclear,
provinces which fundraise in Ontario
including the Ontario Hospital except that the Bill purports to trump
and we again suggest that such charities
Association. The Committee scheduled all other legislation or regulation.
should consider making submissions on
clause-by-clause review of the Bill on Passage of the Bill would therefore
the issue.
February 20, 2002. require that boards of directors recon-
Ontario is proposing to enforce its sider the conflict of interest provisions
Essentially, the Bill is designed to
proposed law in a way that is substan- in their corporate bylaws.
require open meetings and more strin-
tially different from PIPEDA, and that
may make it easier for individuals to gent conflict of interest rules for certain A breach of the duties and responsibili-
launch complaints and obtain orders specified provincial and municipal ties under the transparency part of the
against an organization. Federally, the councils, boards, commissions and Bill may create personal liability for
Privacy Commissioner has no power to other public bodies ("Designated Public members of a DPB (up to a maximum
make binding decisions, and unresolved Bodies", or "DPBs"). Designated Public fine of $1,000.00 for improper exclu-
disputes must be settled in Federal Bodies include, at the outset, a number sion of an individual from a meeting) or
Court. But Ontario's Information and of specific government agencies and trigger remedial intervention and
Privacy Commissioner will have the boards, as well as professional colleges, forced compliance by the Attorney
public library boards, hospital boards General. A failure to disclose a conflict
power to make orders regarding behav-
and medical advisory committees, etc. of interest under the ethics part of the
iour, but not to award damages. For an
The Bill however also gives Cabinet the Bill may result in a maximum fine of
award of damages, individuals will have
authority to prescribe additional DPBs $1,000.00.
to prove actual damages in court.
Ontario's provision may make it easier by regulation, but if the Bill passes, it is There is considerable scope under the
to enforce compliance in a cost effec- unlikely that Cabinet would apply the Bill for Cabinet to make regulations
tive manner. Act beyond the broader public sector regarding a wide variety of matters
into the private sector. The Bill is provided for under the Bill.
Although Canada has had PIPEDA in modeled on Michigan's Open Meetings
force for over a year now, compliance Act, which has been the source of The Bill is emblematic of an important
with privacy policies in Canada is still public and legislative impulse for
litigation and frustration for many
well below compliance in the United greater accountability and transparency
organizations in that state who fall
States, where although there is no in public institutions. However, given
within its ambit.
general privacy law, there is a fear of the possible cost implications for
class action suits. Ontario's new law The Bill breaks down into two parts, affected organizations, the Bill may not
CHARITIES AND NOT-FOR-PROFIT
receive government support to proceed are clearly charitable and which can Prior to the new CCRA form, the clergy
to third reading in the Legislature. therefore be registered quickly. residence deduction was a taxpayer
Nevertheless, as the Bill is clearly issue, requiring no direct employer
We also note some recognition of the
designed to encourage public accounta- involvement. However, the Income Tax
fact that it is absolutely inappropriate to
bility and transparency, it may receive Act was amended effective for the 2001
complete an audit type review at the
the government's support if amend- year to provide that the deduction is
time of registration. Most applicants
ments are made to the Bill to make it only available to an individual if the
have not commenced operations and to
more acceptable to government individual's employer certifies that the
subject them to review for certainty of
members. employee meets the requirements for
activities, simply cannot work.
the deduction.
In the interim, it should be noted that if Obviously, we are very supportive of
the Bill passes into law, the Bill would Now that employers will have to certify
the CCRA auditing operating charities entitlement to the deduction, they have
require affected organizations to to ensure that their activities meet the a duty to issue accurate certificates.
consider a broad range of amendments objectives for which they were estab- Issuing false certificates can result in a
to their corporate bylaws, their opera- lished. We would just like to see those penalty applicable to both the
tional guidelines and policies, their audits take place after the charity has employer and the individual signing the
access to information and records an opportunity to commence opera- certificate. Religious employers should
policies, and their conflict of interest tions. therefore be considering whether they
rules.
In any event, I think we should all note require legal opinions with respect to
Alan Belaiche,Toronto the good work and improvement in the entitlement of some of their staff to
416.595.8511 service. We should also continue to the deduction. This is particularly so
abelaiche@millerthomson.ca support and assist with the Future where the employer had suggested to
Directions Initiative. the staff person at the time of hiring
that the clergy residence deduction
Congratulations, Charities Susan M. Manwaring,Toronto would be available.
416.595.8583
Directorate smanwaring@millerthomson.ca The new CCRA form (available at
http://www.ccra-adrc.gc.ca/E/pbg
In our Spring, 2001 newsletter, I wrote /tf/t1223eq/README.html) asks a
an article commenting on the frustra- New Clergy Residence Form number of questions about the
tion that we were having on behalf of employee. It is important that the
our clients, in dealing with the Charities The CCRA has introduced a new form questions (particularly those dealing
Directorate of the CCRA and, in particu- which must be completed by all with religious order status) be
lar with the process for registering new religious employers in order for their answered properly. For example, if the
charities. staff to claim a clergy residence deduc- form indicates that members of the
tion for the 2001 taxation year. This alleged order are permitted to earn
I am very pleased to now write to new requirement will be of interest to outside income or are subject to the
suggest that we should take our hats off all religious organizations. same restrictions as other employees,
to those members of the Charities the CCRA will assume that the individ-
The clergy residence deduction (or
Directorate working on the Future ual and the alleged order do not qualify.
manse allowance) is a tax deduction
Directions Initiative and in particular, to
equal to the value of housing for The form indicates that it need not be
the new Director General, Maureen
religious workers who are either filed with the individual's return, but
Kidd. We are all well aware of the finan-
members of the clergy, regular minis- should be kept for later review.
cial constraints and limitations that the ters of a religious denomination or However, it is important that the form
government offices have been dealing members of a religious order (the status be completed and in the hands of an
with and their large volume of work. test) and who minister to a congrega- individual prior to that individual claim-
That said, it appeared that the Charities tion or who are appointed by a ing the deduction in a year.
Directorate had forgotten that in order religious order or denomination to do
to ensure the effective and efficient Miller Thomson lawyers are nationally
administrative service (the function
functioning of charities, they had to be recognized experts on the clergy
test). The Courts have interpreted these
responsive and helpful in dealing with residence deduction. We have litigated
requirements quite broadly. For a more
members of the public. This has clearly dozens of cases over two decades of
detailed discussion of the tests for the
changed. In particular it is our experi- involvement with the issue and
deduction, see CCRA Interpretation
ence that the turn-around time for new continue to deal with clergy residence
Bulletin IT-141R (Consolidated) Clergy
applications for registration is much issues daily.
Residence Deduction (available at
better. The Directorate appears to have http://www.ccra-adrc.gc.ca/E/pub/tp Robert B. Hayhoe,Toronto
instituted streamlined processes for /it141r-consolid-eq/it141r-consolid- 416.595.8174
those applications of charities which e.html). rhayhoe@millerthomson.ca
M I L L E R T H O M S O N LLP
Barristers & Solicitors
When a Non-Profit Organization is sales persons are volunteers and the by the organization in the nature of
consideration for each item sold does conciliating or settling disputes or
Required to Register for GST
not exceed $5.00 in value. complaints involving members;
- The right to vote at or participate in
This article reviews the application of 2. Gambling Activities - Where the
meetings;
GST to non-profit organizations. For principal activity is the placing of bets
purposes of the GST, a non-profit organ-
- The right to receive or acquire
or the placing of games of chance, no
property or services supplied to the
ization does not include a registered GST applies if the administrative
charity. The application of GST to regis- member for consideration that is not
functions and other functions
tered charities will be discussed in a part of the consideration for the
performed in operating the game and
future article. membership and is equal to the fair
taking the bets are carried out exclu-
market value of the property at the
sively (90% or more) by volunteers and
An entity is a non-profit organization if time the supply is made;
in the case of a bingo or casino the
it was organized and operated solely for - The right to receive a discount on
game is not conducted in premises that
non-profit purposes and it does not the value of the consideration for a
is used principally for the purposes of
distribute or otherwise make available supply to be made by the public
conducting gambling activities (princi-
for the personal benefit of any member sector body where the total value of
pally means more than 50%).
any of its income unless the member is all such discounts to which a
an association which has as its primary 3. Nominal Consideration - A supply member is entitled by reason of the
purpose and function the promotion of made by a non-profit organization of membership is insignificant in
amateur athletics in Canada. tangible personal property is exempt relation to the consideration for the
from the GST if the consideration for membership; or
A non-profit organization is required to
the supply is equal to the usual charge - The right to receive periodic
register for GST if it is providing
by the non-profit organization for such newsletters, reports or publications
"taxable" goods and services in Canada
a supply of tangible personal property the value of which is insignificant in
in the course of a commercial activity;
and does not exceed its direct costs. relation to the consideration for the
and its worldwide revenues from
taxable sales is equal to or more than 4. Amateur Performances and membership or that provide informa-
$50,000.00 in the current calendar Events - For amateur performances tion on the activities of the non-profit
quarter and over the preceding four and events the supply of tickets to organization other than newsletters
consecutive calendar quarters. spectators for a performance, athletic or reports that are of significant value
event or competitive event is exempt and for which a fee is ordinarily
A non-profit organization may voluntar- charged to non-members.
from GST if all or substantially all of the
ily register for GST purposes even if it is
performers, athletes or competitors are
not required to do so. If a non-profit Sandra Mah, Calgary
not remunerated, directly or indirectly
organization is registered, it is entitled 403.298.2466
for their participation.
to claim input tax credits for GST it has smah@millerthomsom.ca
incurred on expenses to provide 5. Recreational Services - The supply
taxable goods and services. made by a non-profit organization of a
membership in, or services supplied as
Charitable Giving with Life
In most circumstances, a non-profit Insurance
part of a program that consists of
organization will be providing exempt
classes or activities involving athletics,
supplies (goods and services that are The donation of a life insurance policy
outdoor recreation, music, dance, arts,
exempt from GST). If a non-profit offers an opportunity to leave a signifi-
crafts and other hobbies or recreational
organization provides non-exempt cant legacy to a favourite charity for a
pursuits if the program is primarily
supplies, it is liable for GST on inputs relatively small annual payment.
available to children 14 years of age or
related to such supplies. A person who
under or the recreational program is The tax savings desired by the donor
makes only exempt supplies is not
provided primarily for under-privileged
required to register for the GST and will often dictate the structure of the
or mentally or physically disabled
accordingly is not entitled to claim life insurance donation.There are two
individuals.
input tax credits on GST it paid towards basic scenarios:
expenses. Exempt supplies include the 6. Memberships - The supply of a
I. In one, where the donor wants an
following: membership in a non-profit organiza-
immediate tax break, he or she transfers
tion is exempt from the GST where
1. Certain Fund Raising Activities ownership of an existing policy to the
there is no benefit to each member
by Volunteers - Supplies made by non- charity; the charity, in turn, becomes the
other than:
profit organizations which provide sales beneficiary of the policy. If the donation
of tangible personal property are - An indirect benefit that is intended to is a permanent life insurance policy
exempt from GST if the non-profit be available to all members collec- with accumulated cash, the charity
organization does not carry on the tively; would issue a tax receipt in the amount
business of selling such property, all the - The right to receive services supplied of the cash surrender value of the
CHARITIES AND NOT-FOR-PROFIT
policy at the date of transfer, which in the calculation of the income of the of charities as beneficiaries of RRSPs
would offset tax arising on the transfer. charity and subject to the charity's and RRIFs.
Depending upon the type of policy and annual disbursement quota. If this is
The new legislation means that the
the arrangements made, the charity may the case, the donor should be asked to
proceeds of the insurance policy are
be able to withdraw some or all of the complete a direction that the charity is
not included in the deceased donor's
cash surrender value. Further, the to hold the property for at least ten
estate for probate purposes, or available
charity would issue a receipt for any years.
premiums paid by the donor following to most creditors of the estate. The
the transfer. Note, however, that no II. In the second scenario, the donor proceeds go directly to the charity;
receipt is issued for the death benefit expects a large tax bill on death, distribution is not held up by estate
that is paid to the charity on the death perhaps due to the deemed disposition litigation. By not being in a will, which
of the life insured because the charity, of shares of a successful family business becomes a public document once
rather than the donor, is the owner of that arises on death. In this situation, it probated, the donor can remain anony-
the policy. may be preferable for the donor to mous. Further, if the donor has a
retain ownership of the life insurance change of heart, it's simpler, quicker and
In a variation of this first scenario, the policy throughout his or her lifetime cheaper to change a life insurance
donor purchases a new policy and and to donate the insurance proceeds beneficiary designation than a will.
donates it to the charity. Generally, it is that are paid on death to the charity.
preferable for the donor to be the origi- In light of the new legislation, charities
Where the large tax bill will arise on
nal owner of the policy and transfer it may want to review their records for
the death of a surviving spouse, joint
to the charity once the policy is in recent donations of life insurance
last-to-die life insurance on the two
force. This procedure ensures the proceeds and advise the executors of
spouses should be considered.
donor's privacy during the underwrit- the donors' estates that the donors may
ing process. Again, the donor is entitled Prior to the February 2000 Federal be eligible for additional tax relief.
to a tax credit (or deduction, if the Budget, this was a cumbersome and
donor is a corporation) for the amount inefficient strategy, that could easily fail. Rachel Blumenfeld
of the premiums paid following the In order to obtain the tax credit for the 416.596-2105
transfer of the policy to the charity. As insurance proceeds, the Income Tax Act rblumenf@millerthomson.ca
above, a donation receipt is issued for required the donor to designate his or
the premiums paid following the trans- her estate as beneficiary of the policy This is a modified version of an article
fer, but no receipt is issued to the donor and to gift the proceeds to the charity which first appeared in the September
for the death benefit. in his or her will. Donors weren't 14, 2001 Lawyers Weekly.
always aware of this requirement, and if
In either case, the charity would want set up incorrectly, their estates lost
to ensure that sufficient premiums are
Volunteers in a Unionized
access to a significant tax credit.
paid throughout the lifetime of the life Environment?
Moreover, the requirement that the gift
insured so that the policy does not be made through a will attracted
lapse. To keep track of the payments, As a not-for-profit organization the use
probate taxes and defeated the desire
some charities prefer to have the donor of volunteers can be a vital part of your
for privacy that some donors sought.
send the annual premium payment to operation, particularly where shrinking
them. They, in turn, remit the payment Lobbying by charitable organizations budgets and funding compel manage-
to the insurance company. Other chari- and other interested parties were ment to rethink the efficiency in which
ties require the donor to remit the successful. The legislation implement- a service is delivered. In other words,
premiums directly to the insurer. ing the February 2000 Federal Budget, how can we deliver more for less?
which received Royal Assent on June
If the donor defaults, the charity could The opportunity to use volunteers
14, 2001, addresses the difficulty of
consider paying the premiums to keep creatively and freely in a unionized
obtaining a donation tax credit for life
the policy in force until the death of environment will be governed by the
insurance proceeds donated to a
the life insured. Alternatively, the terms of the collective agreement.
charity. Under the new rules, when a
charity could collapse the policy and Consequently, any initiative you take in
donor designates a charity as the
obtain any cash surrender value. deploying your volunteers may be seen
beneficiary of the insurance proceeds
Provided that the policy remains in as an invasion of bargaining unit work
directly in the policy itself, the donation
force until the death of the life insured, and lead to the labour relations difficul-
tax credit in the amount of the
the charity would receive the death ties that are now emerging across
proceeds is available to offset the
benefit directly from the insurer. Canada.
deceased donor's taxes that arise on
The charity may require that a life insur- death. The new legislation applies Although you may currently be fortu-
ance donation be designated as a "10- retroactively to deaths that occurred nate enough to share an amicable past
year gift," to ensure that the value or after 1998. Similar provisions were history with the union, this could
proceeds of the policy are not included implemented for the direct designation change the minute you seek to intro-
M I L L E R T H O M S O N LLP
Barristers & Solicitors
duce a new volunteer program. The there was no loss of work to the not view their use as a threat to the
union may choose to file a grievance employees. survival of their bargaining unit.
and ultimately proceed to a full arbitra-
In another recent case, the Board of If you would like some ideas on how to
tion to preserve the integrity of the
Arbitration prefaced their decision by start thinking in such terms, please feel
bargaining unit or it may be trying to
asking the following question: What is free to contact us by email. Many of the
widen and expand what is referred to
the proper role of volunteers in a changes can be made without any
as the "work of the bargaining unit" by
unionized hospital, which is struggling significant cost, but as with any worth-
taking away work now being done by
to maintain vital health services to the while project, advance planning is
volunteers.
public? essential.
In a recent case that was decided last
The hospital and the union had entered Nicholas Pavlov, Health Industry Labour
year, the Canadian Blood Services
into an agreement about the use of Advisor, Markham
(successor to the Red Cross) began to
volunteers. The parties agreed that 905.415.6747
use volunteer drivers to transport
volunteers would not be used in such a npavlov@millerthomson.ca
donors. The employer was faced with a
policy grievance from the union. Up way as to cause a reduction in hours, or
the elimination of any bargaining unit Robert Hickman, Markham
until the negotiation of a recent collec-
position. A dispute arose when the 905.415.6755
tive agreement, the driving of people
hospital started to use volunteers to rhickman@millerthomson.ca.
who required transportation to donate
blood was assigned to volunteers. It remind patients about their upcoming
was only after a new collective agree- ultrasound appointments. With the Large Gifts Resulting in
ment was signed that the union began assistance of the volunteers the missed
appointments were drastically reduced. Private Foundation Status
objecting to this long-standing practice.
The panel of arbitrators reviewed the The union filed a grievance alleging Registered charities which are either
case law on the issue and enumerated there was a violation of the collective charitable organizations or public
the following principles: agreement and asking that the hospital foundations are able to provide better
stop using the volunteers. The hospital donation tax treatment to their donors
1. Generally employers will have the led evidence to show that it had no
right and discretion to assign work than could a registered charity which is
choice but to use the volunteers a private foundation. For example, the
within the workplace, so long as it is because the waiting list for an ultra-
done in good faith. capital gains tax inclusion rate for
sound was being unduly prolonged by donations of publicly listed securities to
2. Employees do not have a proprietary missed appointments. The volunteers a charitable organization or public
interest in a particular bundle of duties reduced the missed appointments from foundation is only half of the normal
or responsibilities. 21.4% to 4.1%. The hospital asserted rate which applies for donations to a
that they had a duty to ensure that such private foundation.
3. Therefore, a union will have the a valuable resource was utilized as fully
burden of establishing that an assign- as possible. The Income Tax Act (the "Act") defines
ment is contrary to any provision in the both charitable organization and public
collective agreement. The grievance was denied. The Board foundation to require that not more
found that in the absence of clear limits than 50% of the capital which has been
4. If such language exists, the arbitrator in the collective agreement, there was a contributed to the organization or
must determine if the disputed work great benefit to the public in using the foundation has been contributed by
falls within the definition of "bargaining volunteers. The union attempted to rely one person or by members of a group
unit work." on language in the collective agreement of persons who do not deal with each
The Board went on to comment that that stated volunteers could only be other at arm's length. Charities which
where the collective agreement lacks used to enhance and complement staff, fail this 50% of capital contributed test
an express provision for this issue, job but could not do any bargaining unit are private foundations.
classifications and job descriptions work. The Board of Arbitration did not
interpret the language in that way. While the 50% of capital contributed
should be reviewed. The Board decided
restriction appears to have been added
that the policy grievance should be
The challenge facing many organiza- to the Act to catch the typical private
dismissed.
tions presently will be to address the family foundation, it can also catch
This case strongly indicates that the utilization of volunteers. To successfully other types of situations. For example,
assignment of volunteers to work that manage such an exercise will require most newly incorporated and registered
is clearly "work of the bargaining unit", the cooperation of the union and the charities would be in danger of falling
may survive a union challenge in implementation of a long-term strategy. afoul of this rule in their first year of
certain circumstances. The Board was The goal should be to ensure that the operations if they received any one gift
careful to observe that volunteers had use of volunteers becomes as unfet- which amounts to more than 50% of
done the driving previously and that tered as possible, and that unions do their capital. Even a more mature
CHARITIES AND NOT-FOR-PROFIT
charity which has the good fortune to appropriate situations (like a commu- Rachel Blumenfeld joined our
obtain one very large gift could be in nity foundation fund) so we asked that Toronto office in September of 2001.
danger of being reclassified as a private the reference to a donor controlling an She has a particular interest in planned
foundation. One example which has activity of the donee be clarified. The giving, having most recently practised
been reported in the media was a Department of Finance indicated that with a large life insurer where she
donation of Red Hat Inc. stock received the narrow interpretation would be an devoted significant time to the design
by the Hamilton Community unintended result. Hopefully the imple- and management of planned giving
Foundation from an individual donor. menting technical bill will simply drop vehicles and strategies.
This donation, which was reported to this requirement.
have been worth approximately $40 Ms. Blumenfeld is on the programming
million on the date of the gift, was more Robert B. Hayhoe,Toronto committee of the Canadian Association
than the existing capital of the 416.595.8174 of Gift Planners and is a member of the
Hamilton Community Foundation. rhayhoe@millerthomson.ca Charities,Tax and Estates sections of the
Ontario Bar Association. She is also
While the Act does provide the Minister * This article originally appeared in the
very involved in the voluntary sector as
of National Revenue with discretionary November, 2001 issue of Charitable
a volunteer and past board member of
authority to re-designate a registered Thoughts. REENA, an organization for the develop-
charity which technically meets the mentally disabled.
definition of private foundation as
either a public foundation or a charita- Around Miller Thomson She can be reached at 416.596.2105 or
ble organization, this re-designation rblumenfeld@millerthomson.ca.
must be applied for. The need for this NEW LAWYERS Sandra Enticknap joined our
application introduces substantial delay Miller Thomson is pleased to welcome Vancouver office in March 2002. She
and uncertainty to registration applica- has practiced in Vancouver since 1975
the following new lawyers to our
tions and attempts to finalize very large and specializes in Wills, Estates and
Charities and Not-for-Profit Group:
gifts. Trusts, Estate Disputes and Charitable
As part of our January, 2002 merger Gift Planning. She advises major chari-
The Department of Finance recently
with the Waterloo Region firm of Sims ties, trust companies, and government
issued a comfort letter indicating that
Clement Eastman LLP, Richard as well as individuals. She is a frequent
this result was not appropriate with
Meunier, Q.C., Stephen Cameron, writer and speaker on these matters
respect to a charitable organization and
William Greenwood, John Griggs, and is a contributing author of the B.C.
that the Department of Finance
Thomas Jutzi and Daniella Tisi have Probate Practice Manual. She also has
intended to recommend that the Act be
joined Miller Thomson. Sims Clement mediation training and uses mediation
amended to provide that the 50% of
Eastman and its lawyers have a long in her practice to resolve disputes.
capital test be replaced with a require-
history of serving charities and not-for-
ment that the large donor be at arm's She can be reached at 604.643.1292 or
profit organizations as lawyers and as
length with the recipient charity after senticknap@millerthomson.ca.
volunteers. All of the above lawyers
the donation and not control the
have developed expertise in charity and Jacqueline King joined our Toronto
charity or any activity of the charity. We
not-for-profit law by their representa- office in February, 2002. As part of her
were concerned that the Department of
tion of local and national organizations. litigation practice, she represents chari-
Finance had limited its comments to
charitable organizations and did not They can be reached at 519.579.3660 or table and religious organizations on
appear to have acknowledged that the by email: various issues across Canada. She
same difficulty applies with respect to frequently assists them with policy
public foundations. As a result, we Richard Meunier, Q.C./ development and conducts training
wrote to the Department of Finance rmeunier@millerthomson.ca sessions on various legal issues, includ-
asking that the same change be made Stephen Cameron ing litigation risk reduction strategies.
applicable to public foundations. The Jacqueline is frequently asked to speak
scameron@milerthomson.ca
Department of Finance agreed that to the media on behalf of her clients
public foundations should not be William Greenwood and has had numerous speaking
treated differently from charitable wgreenwood@millerthomson.ca engagements at the request of clients
organizations and indicated that our across Canada.
John Griggs
request will be included in a future
jgriggs@millerthomson.ca She can be reached at 416.595.2966 or
technical bill.
jking@millerthomson.ca.
Thomas Jutzi
We were also concerned that the
tjutzi@millerthomson.ca PROFESSIONAL ACTIVITIES
requirement that the donor not control
an activity of the charity could be inter- Danielle Tisi Robert Hayhoe spoke on "How to
preted narrowly to apply to entirely dtisi@millerthomson.ca Survive a CCRA Charities Audit" at the
M I L L E R T H O M S O N LLP
Barristers & Solicitors
September 2001 Annual Conference of Estates" and Sandra Enticknap spoke on Markham
the Canadian Council of Christian "Threats to Gifts - Creative Solutions and Peter D.Lauwers 905.415.6470
Charities. Strategies for the Gift Planner". Brenda Taylor (Corporate Services) 905.415.6739
Kathryn Frelick spoke at the Annual Robert Hayhoe is the new Canada
Conference of the Hospice Association Regional Coordinating Editor for the Waterloo Region
of Ontario in September, 2001 on the Richard Meunier,Q.C. 519.579.3660 x350
International Journal of Not-for-Profit
"Legal Implications of Volunteers in the Stephen Cameron 519.579.3660 x340
Law.
Home". William R.Greenwood 519.579.3660 x347
Robert Hayhoe is now a member of the John Griggs 519.579.3660 x357
Susan Manwaring's article in the last Thomas Jutzi 519.579.3660
editorial board of the Journal of the
Miller Thomson Charities and Not-For- Danielle Tisi 519.579-3060 x372
Church Law Association of Canada.
Profit newsletter entitled "Recent
Trends in Charitable Giving" was Susan Manwaring has joined the Note:
republished by invitation in the Government Relations Committee of the Miller Thomson’s Charities and Not-For-Profit
International Journal of Not-for-Profit Canadian Association of Gift Planners. Newsletter is provided as an information service to our
Law in September of 2001 as "Recent clients and is a summary of current legal issues of
Robert Hayhoe was elected as the 2001- concern to business persons and their advisors. These
Trends in Charitable Giving in Canada"
2002 Vice-Chair,Tax of the Ontario Bar articles are not meant as legal opinions and readers are
Robert Hayhoe and Susan Association Charity and Not-For-Profit cautioned not to act on information provided in this
Manwaring made a joint presentation newsletter without seeking specific legal advice with
Law Section. Jasmine Sweatman contin-
respect to their unique circumstances. Your comments
in October 2001 on "Cross-Border Gifts" ues to serve as the Continuing Legal and suggestions are most welcome and should be
at a seminar of the Canadian Education Coordinator for the Section. directed to:
Association of Gift Planners Conference
hosted by Rachel Blumenfeld.
The Editor, Miller Thomson LLP Charities and Not-For-
Sandra Enticknap lectured to the Profit Newsletter at the Toronto office at
students in the Planned Giving Course charitieseditor@millerthomson.ca.
at the British Columbia Institute of
Technology on the topic of "Working
with Financial and Estate Planning Miller Thomson LLP Charities and
Professionals" in November, 2001.
Not-For-Profit Group
Sandra Enticknap co-authored (with
Keith Hazell of the United Way) an Vancouver
article entitled "Charitable Remainder Sandra L.Enticknap 604.643.1292
Martin N.Gifford 604.643.1264
Trusts" which was published in the
Alan A.Hobkirk 604.643.1218
December 2001 issue of The Scrivener,
Donald H.Risk 604.643.1207
a magazine published by the Society of
Notaries Public in British Columbia. Calgary
Hugh Kelly spoke at the Ontario William J.Fowlis 403.298.2413
Catholic School Trustees Association Sandra M.Mah 403.298.2466
Seminar for Board Chairs and Vice- Greg P.Shannon 403.298.2482
Chairs and Directors of Education in
Edmonton
January, 2002 on "Governance in the
Bruce N.Geiger 780.429.9774
Non Share Capital Environment".
Susan Manwaring spoke on "Recent Toronto
Developments in the Law Effecting Jennifer E.Babe 416.595.8555
Charitable Donations" at an Insight Alan Belaiche 416.595.8511
Conference entitled Innovative Rachel L.Blumenfeld 416.596.2105
Mark R.Frederick 416.595.8175
Strategies for High Net Worth Clients.
Kathryn Frelick 416.595.2979
Robert J.Fuller 416.595.8514 Miller Thomson LLP
Robert B.Hayhoe 416.595.8174 TORONTO, VANCOUVER, CALGARY, EDMONTON,
Miller Thomson was a plenary sponsor Hugh M.Kelly 416.595.8176
of the 2002 Annual Conference of the MARKHAM, WATERLOO REGION, WHITEHORSE AND
Jacquline L.King 416.595.2966
Canadian Association of Gift Planners WASHINGTON D.C.
Susan M.Manwaring 416.595.8583
held in Winnipeg. Susan Manwaring www.millerthomson.com
Rosanne T.Rocchi 416.595.8532
spoke on "Private Foundations, Rachel M.Jasmine Sweatman 416.595.8623
Affiliations worldwide
Blumenfeld spoke on "Wills and Michael J.Wren 416.595.8184
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