To be registered as a charity under the Income Tax Act, Canadian law requires that an organization's purposes be exclusively charitable and define the scope of activities that can be engaged in by the organization. ... An organization's governing document must contain a clear statement of each of its purposes. Charitable purpose should not be broad or vague. If the wording is too broad or vague, it will not be clear that a purpose is charitable (falls within a charitable purpose category and provides a public benefit) and defines the scope of the organization’s activities. Broad means the purpose may allow for both charitable and non‑charitable activities and/or the delivery of unacceptable private benefits. Vague means the wording may be interpreted in different ways. A purpose that is too broad or vague may not be eligible for registration. On the other hand, purposes that are overly narrow or inaccurate may cause problems for an organization as it tries to carry out its mandate.
For example, below are six pairs of purposes. Purpose What Not to Write in each pair is broad and vague because it fails to identify one or more of the three required elements. Purpose What you need to Write in each pair is charitable and eligible for registration since it identifies the three required elements: (What, How, for Whom and Where).
|What Not to Write||What you need to Write|
|Relieving poverty through charitable means.||Relieving poverty by operating a food bank for the poor (mention where location)|
|Providing scholarships.||Advancing education by providing scholarships based on academic achievement to university students (mention where location)|
|Advancing religion in third world countries||Advancing (specify faith or religion) to adherents of the faith (specify the location) by establishing and maintaining a school of religious instruction for children, youths, and adults|
|Building strong communities through social enterprise.||Improving socio-economic conditions in (specify location) by operating social businesses for people with disabilities|
|Promoting health for Canadians.||Promoting health by operating a public healthy-heart program (where-location) to slow the progression of heart disease|
|Empowering youth to achieve their maximum potential||Addressing youth unemployment by providing employment-related skills programs, conferences, and workshops to unemployed youth (where-location)|
A purpose will also be broad or vague if the words used include concepts that go beyond the scope of charity, because it is not clear that the purpose falls within one of the four charitable purpose categories and provides the required public benefit. For example, a stated purpose of “promoting philanthropy by helping the deserving” is broad and vague. The courts have found that philanthropy can encompass purposes and activities that go beyond the realm of charity. In addition, the deserving is not necessarily an eligible beneficiary group.
So, charity applicants must not provide purposes, in their incorporation documents/governing documents, as above in “What to not Write”. Otherwise, CRA will not accept them as being too broad and/or vague.Please see the following links for more details: