Increased Registration Enforcement of the Charitable Fundraising Act (Alberta): What do you need to know?

The Government of Alberta appears to have recently begun enforcing registration requirements under the Charitable Fundraising Act (Alberta)[1] (the “CFRA”) more strictly.

This article will summarize the purpose of the CFRA, when it applies and who it applies to. Additionally, it will outline the registration process under the CFRA and the potential penalties for non-compliance.

If you are an organization that serves a “charitable purpose” and you solicit donations as defined and considered under the CFRA, you may have to register under the CFRA and comply with its requirements.

Importantly, there is no exemption under the CFRA for registered charities. Registration is required by any charitable organization that meets the criteria designated under the CFRA, regardless of that organization being registered as a charity with the Canada Revenue Agency. Thus, some charitable organizations may have an additional registration requirement in Alberta.

Purpose and Interpretation

The purpose of the CFRA is to protect the public and ensure they have sufficient information in making contributions to charitable organizations, and from any fraudulent or other misleading solicitations.

No charitable organization may make a “solicitation” to an individual unless the charitable organization is registered.

A charitable organization is defined under the CFRA “as any incorporated or unincorporated organization that is formed for a charitable purpose” or “a person who makes solicitations for contributions to be used for a charitable purpose and who is not connected to any incorporated or unincorporated organization that is formed for the charitable purpose for which the solicitation is made.”

“Solicitation” includes any

• direct or indirect request for a contribution in which it is stated or implied that the contribution will be used by a charitable organization or for a charitable purpose”; or
• a request for a contribution through a direct or indirect request to buy a good or service in which it is stated or implied that all or a portion of the purchase price will be used by a charitable organization or for a charitable purpose.

A “solicitation” made to an individual does not include a solicitation made to a corporation or a government. However, it would include a solicitation made to an individual operating a sole proprietorship or a partner in a partnership.

Mandatory Registration Criteria

A charitable organization must be registered under the CFRA if it:

• uses a fundraising business (a business that makes, manages, or is responsible for “solicitations” on behalf of a charitable organization in exchange for remuneration and is not an employee);
• intends to raise gross contributions of $25,000 or more in its financial year from individuals in Alberta as result of solicitations; or
• raises gross contributions of $25,000 in its financial year from individuals in Alberta as result of solicitations.

Any party that meets the above registration criteria must register, including:

• an incorporated or unincorporated organization formed for a charitable purpose;
• an organization incorporated under the Societies Act (including those registered as a charity with Canada Revenue Agency (Revenue Canada)); and
• a person asking for contributions to be used for a charitable purpose or charitable organization, even if that person is not connected to any charitable organization.

Registration Exclusions

 A charitable organization does not need to register if it is:

• only asking for contributions from its members or their immediate families;
• only asking for goods not for resale, or services to be used for administrative or non-charitable purposes
• raising funds through events authorized by the Alberta Gaming and Liquor Commission, such as raffles, pull tickets, bingos or casinos; or
• the charitable organization is not incorporated, is affiliated in some manner with another charitable organization, and  the affiliated organization controls the distribution of any contributions the charitable organization receives during its financial year as a result of solicitations made by the charitable organization.
  

Timelines for Registration

A charitable organization must be registered within 45 days, if at any time during its financial year it raises gross contributions of $25,000 from Albertans (as result of solicitations), regardless of the charitable organization’s intent.

However, if a charitable organization intends to raise gross contributions from Albertans in its financial year, it should register at the commencement of the financial year or promptly upon such intention being established in any financial year.

What do you need to do to register?

To register you need to provide:

1. Information about the organization using the Application for a Charitable Organization Registration form, including:

a) its name and address and place of incorporation and incorporation number, if any

(b) the names and addresses of any chapters or branches that will be making solicitations under the authority of the registration applied for,

(c) the objectives or purposes of the charitable organization,

(d) the dates when its financial year begins and ends, and

(e) the names and addresses of its officers and directors

2. a criminal record check

3. a copy of solicitation materials

4. payment of a registration fee ($60)

Penalties for violations of the Charitable Fundraising Act:

The provisions of the CFRA cover rules around registration, reporting, soliciting and more. If you fail to follow the provisions of the CFRA you may be found guilty of an offence.

There are potentially steep penalties for an “offence” or a breach under the CFRA. The minimum fine for an offence under the CFRA is $1000, however fines can reach $100,000 or 3 times the amount that the individual who contravened the CFRA acquired as a result of the offence if that amount is greater, or to imprisonment for not more than 2 years or both.

What does this all mean?

If you are charitable organization, society, a non-profit (including a registered charity) soliciting donations from individuals in Alberta, you may have to register under the CFRA. Once registered, there are numerous record keeping and other requirements that must be followed under the CFRA. Failure to register for or follow the requirements of CFRA may result in fines and other penalties being imposed against your organization.

If you have questions about the CFRA or want to know if the CFRA applies to your organization, contact our Corporate Commercial Law Team for assistance.