Nonprofit Financial Management and T3010 Compliance | Insight Accounting CPA

ByManan Patel

Nonprofit Financial Management and T3010 Compliance: Complete Guide for Ontario Charities

By Bader A. Chowdry, CPA, CA, LPA | Insight Accounting CPA

Running a registered charity or nonprofit organization in Ontario comes with unique financial management challenges and strict compliance requirements. The T3010 Registered Charity Information Return is the cornerstone of your annual reporting obligations to the Canada Revenue Agency (CRA), and errors can jeopardize your charitable status.

Whether you’re managing a small community organization in Mississauga, a provincial charity across the GTA, or a national nonprofit headquartered in Ontario, understanding nonprofit financial management and T3010 compliance is critical to maintaining your registration and public trust.

Understanding the Canadian Nonprofit Regulatory Landscape

Registered charities in Canada operate under a strict regulatory framework administered by the CRA’s Charities Directorate. This framework ensures that organizations genuinely operate for charitable purposes and maintain public accountability.

Key Regulatory Requirements

T3010 Information Return: All registered charities must file annually within six months of their fiscal year-end. This detailed return reports your financial activities, programs, governance structure, and charitable activities.
Books and Records: Charities must maintain complete financial records for at least six years, including donation receipts, expense documentation, board minutes, and program records.
Disbursement Quota: Most charities must spend a minimum percentage of their property on charitable activities or gifts to qualified donees annually (currently 3.5% for property exceeding $100,000).
Political Activities: Charities face strict limitations on political activities, which must be non-partisan and incidental to charitable purposes (generally limited to 10% of resources).
Receipting Rules: Official donation receipts must follow CRA requirements precisely, including proper valuation of non-cash gifts, accurate donor information, and authorized signatures.

For nonprofits operating in Mississauga, the GTA, and across Ontario, staying compliant with these requirements while focusing on mission delivery requires dedicated financial expertise and systems.

T3010 Filing Requirements: A Step-by-Step Guide

The T3010 Registered Charity Information Return is a comprehensive document that provides the CRA and the public with a complete picture of your organization’s activities and finances.

T3010 Filing Deadlines

Your T3010 must be filed within six months of your fiscal year-end. For example, if your fiscal year ends December 31, your T3010 is due June 30. Late filing can result in warnings, penalties, loss of receipting privileges, or even revocation of charitable status.

Required Information

Part A Identification: Basic information including legal name, operating name, business number, address, and website. This section also includes fiscal period dates and contact information for authorized representatives.
Part B Directors/Trustees: Complete list of all board members with their names, addresses, and positions. Changes in board composition must be reported.
Part C Compensation: Detailed disclosure of compensation for the 10 highest-paid positions, including employees and contractors earning over $40,000 annually. This includes salaries, benefits, bonuses, and other remuneration.
Part D Financial Information: Complete financial statements including statement of financial position (balance sheet), statement of operations, and statement of changes in fund balances. This must reconcile with your audited or review engagement statements.
Part E Programs and General Ledger: Detailed breakdown of all charitable programs, including descriptions, beneficiaries, locations, and allocated costs. You must also provide a summary of your general ledger accounts.
Part F Compensation and Activities: Information about political activities (if any), foreign activities, gifts to qualified donees, and related party transactions.
Part G Other Information: Additional details about fundraising activities, professional fees paid, and any changes in your charitable purposes or activities.

Common T3010 Filing Errors to Avoid

Financial Statement Reconciliation: Ensure your T3010 financial information perfectly matches your year-end financial statements. Discrepancies trigger CRA reviews.
Program Description Quality: Vague program descriptions like “charitable activities” are insufficient. Provide specific details about who benefits, where programs operate, and measurable outcomes.
Disbursement Quota Calculation: Miscalculating your disbursement quota can result in penalties. This complex calculation includes charitable programs, gifts to qualified donees, and certain administrative costs, but excludes capital asset acquisitions and some administrative expenses.
Incomplete Compensation Disclosure: All compensation over $40,000 must be reported, including contractors and related party transactions. Failing to disclose can appear as intentional concealment.
Political Activity Misclassification: Many charities incorrectly categorize advocacy or public awareness as political activity. Understanding the distinction is critical to accurate reporting.

At Insight Accounting CPA in Mississauga, we prepare hundreds of T3010 returns annually for charities across the GTA, ensuring accuracy, compliance, and timely filing that protects your charitable status.

Nonprofit Financial Management Best Practices

Effective financial management for nonprofits goes beyond complianceit builds donor confidence, enables strategic decision-making, and ensures mission sustainability.

Chart of Accounts and Fund Accounting

Nonprofits typically use fund accounting to track resources based on donor restrictions and organizational purpose.

Unrestricted Funds: General operating funds with no donor-imposed restrictions. These support day-to-day operations and can be allocated at board discretion.
Restricted Funds: Donations with specific donor-imposed restrictions on use (e.g., “for youth programming only”). These must be tracked separately and used only for the specified purpose.
Endowment Funds: Capital that must be preserved permanently, with only investment income available for use (subject to any donor restrictions on that income).

Your chart of accounts should enable clear tracking of revenue sources, program costs, administrative expenses, and fundraising costsall required categories for T3010 reporting.

Revenue Recognition for Nonprofits

Nonprofits must apply Canadian accounting standards for not-for-profit organizations (ASNPO) for revenue recognition.

Donation Revenue: Recognized when received or receivable if collectability is reasonably assured. Pledges are generally not recognized until received unless they meet strict criteria for recognition as receivables.
Deferred Revenue: When donations include restrictions requiring future performance (e.g., funding for next year’s program), revenue must be deferred and recognized as restrictions are satisfied.
Government Grants: Revenue recognition depends on grant terms. Performance-based grants are recognized as milestones are achieved; time-based grants are recognized over the grant period.
In-Kind Donations: Non-cash donations (goods or services) should be recorded at fair value when that value can be reasonably estimated and the goods/services would otherwise have been purchased.

Internal Controls for Nonprofit Organizations

Strong internal controls protect against fraud, errors, and misappropriation while ensuring reliable financial reporting.

Segregation of Duties: No single person should control all aspects of a transaction. For example, the person who opens mail and logs donations should not be the person who makes bank deposits.
Dual Signatures: Require two authorized signatures on all checks or electronic payments over a specified threshold (commonly $1,000-$5,000 depending on organization size).
Donation Documentation: Implement systems to accurately track all donations, issue proper receipts immediately, and maintain complete donor records for at least six years.
Board Oversight: The board should review financial statements quarterly, approve annual budgets, and conduct annual reviews of internal controls and financial policies.
Vendor Management: Maintain approved vendor lists, require purchase orders or approvals for expenditures over thresholds, and compare vendor invoices to contracts before payment.

For nonprofits in Mississauga and across Ontario, implementing robust internal controls appropriate to your size and complexity is essential for protecting charitable assets and maintaining stakeholder confidence.

Auditor Requirements and Financial Review Options

Not all nonprofits require audited financial statements, but many benefit from professional assurance services.

When Audits Are Required

Provincial Incorporation Requirements: Ontario nonprofits incorporated provincially may require audits based on annual revenue thresholds and member voting (Ontario Corporations Act requirements vary by corporation type).
Federal Incorporation: Federally incorporated nonprofits (under the Canada Not-for-profit Corporations Act) generally require audits unless members vote to waive the requirement and revenue is below $500,000.
Funding Requirements: Many government funders and major private foundations require audited financial statements as a condition of funding, regardless of legal requirements.
Organizational Bylaws: Some organizations have bylaw provisions requiring annual audits regardless of legal thresholds.

Review Engagements vs. Audits

For organizations not legally required to have audits, a review engagement provides a middle ground between an audit and a compilation.

Review Engagement: The accountant performs inquiry and analytical procedures to obtain limited assurance that financial statements are plausible and free from material misstatement. Less extensive (and less expensive) than an audit.
Audit: The accountant obtains reasonable assurance through extensive testing, confirmation, and verification procedures. Provides the highest level of assurance.
Compilation (Notice to Reader): The accountant simply compiles financial information provided by management without performing any assurance procedures. Lowest cost but provides no assurance to users.

Many funders and stakeholders now accept review engagements for small to mid-sized charities with revenue under $1 million, while larger organizations typically require full audits.

Choosing the Right Accountant for Nonprofit Work

Nonprofit accounting has unique requirements that many accountants lack experience with. When selecting a CPA for your charity in Mississauga or the GTA, consider:

Nonprofit Specialization: Does the firm regularly work with registered charities and understand T3010 compliance, disbursement quota calculations, and CRA charity regulations?
Sector Experience: Do they have experience with organizations similar to yours in size, complexity, and mission (e.g., social services, arts and culture, healthcare, education)?
Year-Round Support: Can they provide ongoing advisory services for complex transactions, not just year-end statements and T3010 preparation?
Technology Integration: Do they work with modern nonprofit accounting software (QuickBooks Nonprofit, Aplos, Sage Intacct for Nonprofits) and can they help you leverage technology for efficiency?

At Insight Accounting CPA, we specialize in nonprofit financial management for organizations across Mississauga, Toronto, and the broader GTA, providing year-round support that goes beyond compliance to strategic financial guidance.

Budgeting and Financial Planning for Nonprofits

Strategic budgeting is essential for nonprofits to align financial resources with mission priorities and demonstrate accountability to funders and donors.

Annual Budget Development Process

Program-Based Budgeting: Build budgets from the ground up by estimating costs for each program and initiative, then allocating shared costs (rent, utilities, executive salaries) based on reasonable allocation methods.
Revenue Forecasting: Project revenue conservatively, distinguishing between committed funding (signed contracts), likely funding (strong historical patterns or applications in final stages), and aspirational funding (applications pending or not yet submitted).
Cash Flow Projections: Nonprofits often experience significant cash flow fluctuations due to grant payment timing, seasonal donation patterns, and program cycles. Monthly cash flow projections help identify periods requiring draw on reserves or lines of credit.
Board Approval: The board should review, discuss, and formally approve the annual budget before the fiscal year begins. Significant variances during the year should be explained and require board approval for budget amendments.

Multi-Year Financial Planning

For nonprofits with complex programs, significant capital needs, or strategic growth initiatives, multi-year financial planning provides critical context for decision-making.

Capital Campaigns: Major fundraising campaigns for building projects, endowments, or program expansion require multi-year planning to model cash flows, pledge payment patterns, and program phasing.
Strategic Plan Integration: Your strategic plan’s goals should have corresponding financial plans. What will it cost to achieve each strategic priority? Where will funding come from?
Scenario Planning: Model multiple scenarios (optimistic, realistic, pessimistic) to understand your financial sustainability under different funding environments.

Governance and Compliance for Nonprofit Boards

Strong governance protects your charitable status, maintains public trust, and ensures effective mission delivery.

Board Responsibilities

Duty of Care: Board members must exercise reasonable care, skill, and diligence in fulfilling their responsibilities, including attending meetings prepared, asking informed questions, and understanding the organization’s finances.
Duty of Loyalty: Board members must act in the organization’s best interests, avoiding conflicts of interest and self-dealing. Related party transactions must be disclosed and managed with appropriate safeguards.
Duty of Obedience: Board members must ensure the organization operates within its charitable purposes, complies with governing documents (letters patent, bylaws), and follows applicable laws.

Conflict of Interest Policies

Every nonprofit should have a written conflict of interest policy requiring board members and senior staff to:

  • Disclose any actual or potential conflicts annually and as they arise
  • Abstain from discussion and voting on matters where conflicts exist
  • Avoid using their position for personal benefit or the benefit of related parties

    • Transactions with board members or related parties must be at fair market value, properly documented, and disclosed on your T3010.

    Executive Compensation

    Nonprofit executive compensation must be reasonable and comparable to similar positions in the sector. The CRA scrutinizes compensation that appears excessive, particularly in relation to organizational revenue.

    Compensation Philosophy: Document your approach to compensation, including how you determine appropriate ranges and what comparables you use.
    Comparability Data: Use salary surveys for nonprofit organizations of similar size, budget, and complexity in your geographic area (Mississauga, GTA, Ontario).
    Performance Evaluation: Link compensation to documented performance evaluations conducted annually by the board (or appropriate committee).

    Technology Solutions for Nonprofit Accounting

    Modern accounting software designed for nonprofits can significantly improve efficiency, accuracy, and financial visibility.

    Nonprofit Accounting Software Options

    QuickBooks Nonprofit: QuickBooks Online offers nonprofit-specific features including fund accounting, program tracking, and T3010 data organization. Integrates with common donation platforms and is cost-effective for small to mid-sized organizations.
    Aplos: Cloud-based software designed specifically for nonprofits and churches, with built-in fund accounting, donor management, and financial reporting aligned with nonprofit needs.
    Sage Intacct for Nonprofits: Enterprise-level solution for larger nonprofits with complex multi-entity structures, extensive grant management needs, and sophisticated reporting requirements.
    Blackbaud Financial Edge NXT: Comprehensive solution popular with larger charities, particularly in healthcare and education sectors, with strong integration with fundraising and donor management systems.

    Donor Management Integration

    Integrating your accounting system with your donor management/CRM platform eliminates duplicate data entry and ensures donation revenue is accurately recorded.

    Popular Donor Platforms: Bloomerang, DonorPerfect, Little Green Light, Raiser’s Edge, and CanadaHelps all offer integration capabilities with accounting systems.
    Automated Receipt Generation: Many platforms can automatically generate official donation receipts meeting CRA requirements immediately upon gift processing.
    Campaign Tracking: Link donations to specific campaigns, appeals, or programs to measure fundraising effectiveness and properly apply donor restrictions.

    CRA Audits and Compliance Reviews for Charities

    The CRA conducts audits and compliance reviews of registered charities to ensure adherence to the Income Tax Act requirements.

    Types of CRA Charity Reviews

    Pre-Registration Review: For new charity applications, the CRA reviews your proposed activities, governance structure, and financial plans to assess eligibility for registration.
    Education and Compliance Review: The CRA may conduct reviews to verify compliance with specific requirements (e.g., political activity limits, international activities) without a full audit. These often result in educational letters suggesting improvements.
    Audit: Comprehensive examination of your books, records, activities, and governance to verify compliance with all charity requirements. Audits can result in penalties, compliance agreements, suspension of receipting privileges, or revocation.

    Common CRA Audit Triggers

    Significant Changes: Major changes in activities, revenue sources, or governance can trigger reviews to ensure you’re still operating within your charitable purposes.
    Complaints: Public complaints to the CRA’s Charities Directorate often initiate reviews, particularly regarding governance issues, excessive compensation, or misuse of funds.
    Random Selection: The CRA conducts random audits as part of its oversight mandate.
    Related Party Transactions: Significant transactions with board members, employees, or related organizations receive heightened scrutiny.
    Political Activity Concerns: Activities that appear to exceed political activity limits or engage in partisan activity commonly trigger audits.

    Responding to CRA Charity Audits

    If your organization receives an audit notification:

    Engage Professional Help Immediately: Work with a CPA experienced in nonprofit compliance and CRA charity audits to prepare your response and represent your organization.
    Organize Records: Compile all requested documentation systematically, including financial records, board minutes, program documentation, and policies.
    Understand the Issues: Work with your advisor to understand the CRA’s concerns and assess whether your organization has compliance gaps.
    Respond Thoroughly and Promptly: Provide complete, accurate information within CRA deadlines. Incomplete or delayed responses extend audits and may be interpreted negatively.
    Implement Recommended Changes: If the audit identifies compliance issues, implement recommended changes quickly and document your corrective actions.

    Insight Accounting CPA has successfully represented numerous charities through CRA audits and compliance reviews, helping organizations in Mississauga and across the GTA resolve issues and strengthen their compliance frameworks.

    Grant Management and Reporting

    Many nonprofits rely on government and foundation grants, each with specific financial reporting requirements.

    Grant Accounting Best Practices

    Separate Tracking: Track each grant as a separate project or program in your accounting system to enable accurate financial reporting against grant budgets.
    Allocation Methodologies: Document how you allocate shared costs (rent, utilities, executive salaries) among programs and grants. Common methods include square footage, staff time allocation, or direct program hours.
    Time Tracking: For grants requiring staff time reporting, implement systems to track time by program/project, even if staff work across multiple programs.
    Budget vs. Actual Monitoring: Review budget-to-actual comparisons monthly for each grant to identify variances early and stay within approved budgets.
    Unspent Grant Funds: Understand each funder’s requirements for unspent funds at grant end. Some require return of unused funds; others allow carryover with approval; some convert to unrestricted support.

    Multi-Funder Compliance

    Organizations with multiple government and foundation funders must navigate potentially conflicting requirements:

    Eligible vs. Ineligible Costs: What one funder considers an allowable administrative cost, another may deem ineligible. Track costs carefully and understand each funder’s rules.
    Cost Allocation Policies: Document your cost allocation methodologies and apply them consistently across all grants to ensure defensible reporting.
    Indirect Cost Rates: Some funders allow indirect costs at negotiated rates; others have caps or prohibit certain indirect costs. Know each funder’s rules.
    Audit Requirements: Different funders may require different audit standards (e.g., Canadian Audit Standard 805 for grant-specific audits vs. full organizational audits). Plan accordingly.

    International Activities and Foreign Operations

    Charities conducting international activities face additional compliance complexity.

    Reporting Requirements for Foreign Activities

    T3010 Disclosure: All foreign activities must be disclosed on your T3010, including countries of operation, types of activities, amounts spent, and whether you use intermediaries.
    Qualified Donees: Charities can only gift to other registered charities or qualified donees. Sending funds to foreign organizations requires careful structuring as your own charitable activities, not as gifts.
    Direction and Control: When working through foreign partners, you must maintain “direction and control” over how funds are used to ensure they’re applied to your charitable activities. This requires written agreements, reporting, and monitoring.
    Anti-Terrorism: Enhanced scrutiny applies to international activities to ensure funds don’t support terrorism. Implement due diligence on foreign partners and beneficiaries.

    For charities in Ontario conducting international work, proper structuring of foreign activities is essential to maintain compliance and protect your charitable status.

    Year-End Financial Statement Preparation

    Accurate year-end financial statements form the foundation of your T3010 filing and demonstrate stewardship to stakeholders.

    Financial Statement Components

    Statement of Financial Position: Shows assets, liabilities, and net assets (fund balances) by fund category (unrestricted, restricted, endowment) at fiscal year-end.
    Statement of Operations: Reports revenue and expenses for the fiscal year, showing changes in each fund category.
    Statement of Changes in Net Assets: Demonstrates how fund balances changed during the year from operations, transfers, and other changes.
    Statement of Cash Flows: Shows sources and uses of cash during the year, classified as operating, investing, and financing activities.
    Notes to Financial Statements: Provide essential context including accounting policies, details of significant accounts, commitments, contingencies, and related party transactions.

    Common Year-End Adjustments

    Accounts Receivable: Record grant receivables, pledges (if policy permits), and other amounts due at year-end.
    Deferred Revenue: Recognize unearned revenue for grants or donations received for future periods.
    Accrued Expenses: Record expenses incurred but not yet paid (e.g., final payroll, utilities, professional fees).
    Prepaid Expenses: Recognize amounts paid in advance for expenses related to future periods.
    Donated Goods and Services: Record in-kind contributions if they meet recognition criteria.
    Capital Asset Amortization: Record depreciation on capital assets over their useful lives.

    How Insight Accounting CPA Supports Ontario Nonprofits

    At Insight Accounting CPA, we provide comprehensive financial management and compliance services for registered charities and nonprofits across Mississauga, Toronto, and the GTA.

    Our Nonprofit Services

    T3010 Preparation and Filing: Accurate, timely preparation of your Registered Charity Information Return with thorough review to avoid common errors.
    Financial Statement Preparation: Full-service year-end statement preparation compliant with ASNPO standards, formatted for your stakeholders and CRA filing.
    Review Engagements and Audits: Professional assurance services providing confidence to funders, donors, and your board.
    Bookkeeping and Monthly Financial Reporting: Ongoing accounting support with monthly financial statements, budget variance analysis, and cash flow projections.
    Grant Compliance and Reporting: Specialized support for complex multi-funder environments, including grant-specific financial reporting and audit support.
    CRA Audit Representation: Experienced guidance through CRA compliance reviews and audits, from initial response through resolution.
    Strategic Financial Planning: Multi-year financial modeling, scenario planning, and strategic budget development aligned with your mission and growth objectives.
    Internal Control Assessment: Review of your financial controls, policies, and procedures with practical recommendations to strengthen accountability and reduce risk.

    Why Choose Insight Accounting CPA

    Nonprofit Specialization: Deep expertise in charity compliance, T3010 requirements, and the unique financial challenges nonprofits face.
    Local Presence: Conveniently located in Mississauga with nonprofit clients throughout the GTA, we understand the Ontario regulatory environment and local context.
    Year-Round Partnership: We’re not just your year-end accountantwe’re your financial partner throughout the year, available when questions or challenges arise.
    Technology-Forward: We work with modern cloud-based nonprofit accounting systems, enabling real-time collaboration and efficient processes.
    Values Alignment: We’re committed to supporting organizations that strengthen our communities, and we structure our fees to be sustainable for nonprofits of all sizes.

    Take the Next Step: Strengthen Your Nonprofit Financial Management

    Whether you’re a small grassroots charity in Mississauga, a mid-sized nonprofit serving the GTA, or a large provincial charity headquartered in Ontario, professional financial management and compliance support protects your mission and builds stakeholder confidence.

    Don’t wait until T3010 filing deadline stress or a CRA audit to get your financial house in order. Proactive financial management, accurate record-keeping, and expert compliance support provide peace of mind and free you to focus on your charitable mission.

    Contact Insight Accounting CPA Today

    Phone: (905) 270-1873
    Email: info@insightscpa.ca
    Location: Serving nonprofits throughout Mississauga, Toronto, Brampton, Oakville, Vaughan, and the entire GTA

    Schedule a complimentary consultation to discuss your nonprofit’s financial management needs, T3010 compliance challenges, or upcoming audit requirements. We’ll assess your current situation, identify opportunities for improvement, and provide clear recommendations for strengthening your financial operations.

    At Insight Accounting CPA, we’re committed to supporting Ontario charities with the specialized financial expertise you need to maintain compliance, build stakeholder trust, and achieve your mission.

    Frequently Asked Questions About Nonprofit Financial Management and T3010 Compliance

    What happens if I miss the T3010 filing deadline?

    Missing your T3010 deadline results in late-filing penalties and potential compliance action from the CRA. Initial late filings may result in warning letters. Repeated late filing can lead to suspension of receipting privileges (your ability to issue official donation receipts) or even revocation of charitable status. If you’ve missed your deadline, file immediately and consult with a nonprofit CPA to assess your situation and prevent future issues.

    Can I prepare my own T3010 or do I need an accountant?

    Small, simple charities with straightforward finances can prepare their own T3010 using the CRA’s online filing system. However, most charities benefit from professional preparation due to the complexity of proper program classification, disbursement quota calculations, and financial statement reconciliation. Errors on T3010 returns can trigger audits or compliance issues, so professional preparation provides both accuracy and peace of mind. At Insight Accounting CPA in Mississauga, we prepare T3010 returns for nonprofits throughout the GTA at cost-effective rates scaled to organization size.

    What’s the difference between ASNPO and ASPE accounting standards?

    ASNPO (Accounting Standards for Not-for-Profit Organizations) are Canadian accounting standards specifically designed for nonprofits, including charities. ASPE (Accounting Standards for Private Enterprises) applies to for-profit businesses. The key differences include fund accounting requirements, revenue recognition for contributions and grants, and financial statement presentation. Registered charities should use ASNPO for their financial statements to properly reflect restricted funds, deferred contributions, and other nonprofit-specific items.

    How much should I pay my Executive Director or CEO?

    Executive compensation for nonprofits must be reasonable and comparable to similar positions in the sector. Use nonprofit salary surveys for organizations of similar size, budget, complexity, and geographic location (Mississauga, GTA, Ontario) to establish appropriate ranges. Document your compensation philosophy and decision-making process. The CRA scrutinizes compensation that appears excessiveas a general guideline, executive compensation exceeding 10-15% of organizational revenue in smaller charities, or significantly above sector norms for larger charities, may raise red flags. Consult with a nonprofit CPA to ensure your compensation practices are defensible.

    Do I need audited financial statements for my nonprofit?

    Audit requirements depend on your incorporation structure, revenue size, member votes, and funder requirements. Ontario nonprofits incorporated provincially may require audits based on annual revenue thresholds and member voting. Federally incorporated nonprofits generally require audits unless members vote to waive the requirement and revenue is below $500,000. Even if not legally required, many government funders and foundations require audited statements as a funding condition. Review engagements provide a less expensive alternative for organizations not legally requiring audits. Consult with Insight Accounting CPA to determine your specific requirements.

    What is the disbursement quota and how do I calculate it?

    The disbursement quota is the minimum amount a registered charity must spend annually on charitable activities and gifts to qualified donees. For most charities, it’s calculated as 3.5% of the average value of property not used in charitable activities or administration (essentially, investment assets) that exceeds $100,000. The calculation is complex and includes amounts spent on charitable programs, grants to qualified donees, and certain administrative costs directly supporting programs. Capital asset acquisitions and some administrative expenses are excluded. Errors in disbursement quota calculation can result in penalties, so professional review is recommended.

    Can my charity engage in political activities?

    Registered charities can engage in limited non-partisan political activities that are connected and subordinate to their charitable purposes. Generally, charities can devote up to 10% of resources to political activities (though the CRA has moved away from strict percentage limits in favor of a “connected and subordinate” test). Political activities must be non-partisan (not supporting or opposing specific parties or candidates), factual, and connected to the charity’s purposes. Partisan political activity or activities that are not connected and subordinate can jeopardize charitable status. Consult with a nonprofit CPA or charity lawyer before engaging in activities that may be considered political.

    What records must I keep and for how long?

    Registered charities must maintain complete books and records for at least six years from the end of the tax year to which they relate. This includes financial records (invoices, receipts, bank statements, cancelled checks), donation records and receipts, board minutes and resolutions, contracts and agreements, employment records, program documentation, and T3010 returns. Records must be kept in Canada and be available for CRA inspection. Implement systematic record retention policies and storage systems (physical and digital) to ensure compliance and facilitate audits or reviews.

    *Insight Accounting CPA is a Mississauga-based CPA firm specializing in nonprofit financial management, T3010 compliance, and strategic advisory services for registered charities across the Greater Toronto Area. Our team understands the unique challenges nonprofits face and provides tailored solutions that strengthen financial accountability while respecting resource constraints. Contact us at (905) 270-1873 to discuss how we can support your organization’s mission through expert financial management and compliance services.*

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