Becoming a registered charity is a major milestone for many nonprofit organizations. This designation brings enhanced public credibility, the ability to issue official donation receipts, and access to certain funding opportunities. However, charitable registration also comes with legal obligations, structural considerations, and implications for how your organization operates.
This article explores the essentials of becoming a registered charity, recent changes in the Income Tax Act, and how to approach charitable status in a way that supports long-term impact and accountability.
What it means to be a registered charity
Before diving into the application process, a nonprofit must make a clear, informed decision about whether charitable status aligns with its mission and operations. One of the first things to understand is the distinction between a nonprofit and a registered charity.
While both types of organizations operate for purposes other than generating profit, registered charities are held to a higher standard of public benefit and are governed by more specific regulations under the Income Tax Act.
Registered charities are designated by the Canada Revenue Agency (CRA) as charitable organizations, public foundations, or private foundations, each with specific requirements. Charities are required to devote all their resources to charitable activities and operate exclusively for charitable purposes as defined by Canadian law. Generally, they must comply with stricter regulations from CRA compared to nonprofits.
Eligibility for registration
To qualify for registration, an organization must be established for purposes that are legally recognized as charitable. Charity law in Canada groups charitable purposes into four distinct categories: the relief of poverty, the advancement of education, the advancement of religion, and other purposes that benefit the community in a way the law recognizes as charitable.
When applying for registration, it’s not enough for an organization to state that it promotes a cause such as youth development, cultural awareness, or community empowerment. It must clearly state how its activities fit into one or more of the four categories and how the organization provides a measurable public benefit. When evaluating an organziation’s application, the CRA looks closely at both an organziation’s stated charitable purpose and its planned activities to ensure they align. Certain activities or organizational structures—such as personal financial gain for directors, or activities not aligned with charitable purposes—may cause an organization to be disqualified from registration.
Charities working with nonprofits and other non-qualified donees
Until recently, charities that wanted to work with organizations that weren’t registered charities (known as non-qualified donees) had to follow a model called “direction and control.” This meant the charity had to treat any partnership as if the work was being done on its behalf. The charity had to oversee all decisions and take full responsibility for the activities, which often led to administrative burdens and power imbalances—especially when working with Indigenous, Black, and other equity-seeking community-led groups.
In 2022, the rules changed. A new granting framework now allows charities to fund the charitable work of non-qualified donees, provided the grant supports the charity’s own charitable purposes and appropriate accountability measures are in place. This represents a shift toward more flexible and equitable partnerships.
Under this new model, the charity no longer needs to control the day-to-day activities of the grantee. Instead, it must ensure that the funds are used for charitable purposes and that it can document how the funds were used.
Fundraising: A supporting role, not the main act
Fundraising is a necessary activity for most charities, but it cannot be the primary focus. The CRA considers fundraising to be ancillary—it must support your charitable mission, not replace it. Organizations that focus too heavily on raising money may find their application rejected or risk losing their registered status down the line.
Acceptable fundraising practices must be transparent and truthful. This includes clearly communicating how donations will be used and providing accurate information about compensation for third-party fundraisers. Misleading the public in any way can lead to penalties or revocation of charitable status.
Is charitable status the right move?
Becoming a registered charity in Canada is a significant undertaking that demands foresight, strategic planning, as well as ongoing diligence. It is more than a legal process—it’s a strategic decision about how your organization will structure itself, stay accountable, and pursue its mission.
With the right preparation and understanding of CRA’s application and on-going compliance requirements, a nonprofit can navigate charitable registration with confidence.
Final thoughts
Charitable registration can be a powerful tool—but it isn’t the right fit for every organization. For some organizations, the restrictions may be too limiting, and the reporting requirements too resource-intensive. If charitable status doesn’t align with an organization’s goals, there are alternatives. An organization might operate as a nonprofit society or cooperative, explore fiscal sponsorship with an existing charity, or pursue other structures that offer more flexibility.
Nonetheless, for organizations that are ready to commit to the legal responsibilities, and whose work fits within CRA’s definition of charity, registration can provide long-term stability and access to crucial resources.
Minnie Njeri Karanja (she/her/elle) has more than a decade’s experience working in the charitable and international development sector. She served on the Advisory Committee on the Charitable Sector from Oct. 2021 to Dec. 2024. Minnie is a woman of African descent and lives in the unceded traditional territories of the xʷməθkʷəy̓əm (Musqueam), Sḵwx̱wú7mesh (Squamish), and səlilwətaɬ (Tsleil-Waututh) Nations), otherwise known as Vancouver in British Columbia.
She has several roles in the sector as:
Connect with her on Linkedin: https://www.linkedin.com/in/minniekaranja
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