RC14. Is there only one kind of “registered charity”?

RC14. Is there only one kind of “registered charity”?


Short answer

No. There are three types of registered charities under the Income Tax Act: charitable organizations, public foundations, and private foundations. This designation is issued by the CRA at the time of registration. Different rules apply to each type.

Long answer

A registered charity is designated as a charitable organization if:

  • it devotes its resources mainly to charitable activities carried on by itself
  • more than 50 per cent of its directors, trustees, officers, or similar officials deal with each other and with each of the other directors and/or trustees at arm’s length
    and
  • in general (there are some exceptions), not more than 50 per cent of the funds that the charity has received have come from one person or organization or from a group of people or organizations that do not deal with each other at arm’s length.

A registered charity is a public foundation if:

  • it is constituted and operated exclusively for charitable purposes
  • it is a corporation or a trust
    and
  • it gives more than 50 per cent of its income annually to qualified donees.

A registered charity is a private foundation if:

  • it is constituted and operated exclusively for charitable purposes
  • it is a corporation or trust
    and
  • it is not a charitable organization or a public foundation.

Generally, charitable organizations focus on carrying out charitable activities, while public foundations focus on raising funds to support operating charities. An entity is designated as a private foundation rather than a charitable organization or a public foundation because those who fund or control it are not necessarily operating at arm’s length.