CHARITABLE STATUS
Charitable status is not achievable for most stations, and it will not lead
to the growth in stable revenue predicted by CAB during the hearing.
Stations that do obtain charitable status may have additional funding
opportunities, but they will also have to compete with many other deserving
organizations for grants and donations, and funding sources will continue to
be affected by the economy.
A small number of c/c stations have charitable status (e.g. CFFF, CJSR,
CFRO). CFRO established a separate charitable organization to receive
donations and carry out only certain qualifying station-related activities.
These stations obtained charitable status years ago, before the recent
Income Tax Act amendments and Canada Revenue Agency rule changes. Many
stations have applied since and were rejected (e.g. CJHR, CHUO, CJLY). Some
stations have lost their charitable status after not filing annual
paperwork. They can only re-register now by filing all missing returns
before and since revocation, and they must qualify based on the new rules.
We believe the additional administration required may not be worth the small
increase in revenue. For example, CJSR has considered giving up its
charitable status due to this burden. They have found that generating tax
receipts for donors overwhelms staff during funding drives, and they can’t
afford to issue receipts for donations smaller than $60. Charitable status
also prohibits them from offering promotional items to entice funding drive
donors. Previously, volunteer program hosts created show-specific donor
incentives. Now CRA requires them to observe a *de minimis *threshold for
gifts to donors.
To qualify as a charity, CRA sets out the following requirements, which
would significantly impact how a radio station can be run:
1) There are 4 charitable purposes: relief of poverty, advancement of
education, advancement of religion, and other purposes recognized by the
courts as charitable (e.g. disability services, environmental preservation,
animal shelters, etc.). The only category under which c/c radio station
activities fall is education. Courts have held that simply providing
information is not educational; only training or instruction services
count.
2) None of an organization’s purposes or goals can be political, and
all political activities must be reported. Organizations that tend to
influence public opinion or actions toward one side of a controversial issue
are disqualified. Arguably some stations’ spoken word programming falls
into this category.
3) An organization must devote all of its charitable revenue only to
charitable purposes and activities. Donations cannot be used for basic
station operations.
4) A charity also may not use its income to benefit its members. It
must only be used for charitable purposes.
We believe the only way to obtain charitable status presently is for
stations to set up a separate charitable organization confined to carrying
out a station’s educational activities, like CFRO. CKUT is pursuing this
approach. They have worked on their application for over a year with help
from a high-priced Ottawa law firm, but have not yet achieved success. If
they do, they will have to keep two sets of books, file two tax returns, and
elect two boards of directors - one for each organization.
