Many of the organizations doing impactful work in communities are nonprofits without charitable status. These organizations are defined by the CRA as “non-qualified donees” (NQDs), an umbrella term that includes a broad range of non-charitable organizations including non-profits and grassroots organizations among others, as well as international charities. Following changes made in the 2022 federal budget, the CRA issued new guidance to make it easier for funders to support these organizations.
Considering the importance of the work being done by NQDs, four funders- Fondation Lucie et André Chagnon, Inspirit, Laidlaw and McConnell- have come together to create a toolkit to help more funders to support NQDs.
NQDs can play an important role in achieving charitable impact. Partnerships between charities and NQDs can offer significant means and scale for impact. And, in the international space it is nearly impossible to carry out charitable work through qualified donees alone.
Quick facts:
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- There were approximately 86,000 registered charities in Canada in 2022.
- There were approximately 84,000 social-purpose organizations NOT registered as charities in Canada in 2022, not including unregistered grassroots groups and non-incorporated associations.
- This means almost half of social purpose organizations in Canada in 2022 were non-qualified donees.
- The 2021 report Unfunded: Black communities overlooked by Canadian philanthropy highlighted that groups serving and led by equity deserving groups, including Indigenous-led and Black-led organizations, tend to receive fewer charitable dollars. Many of these organizations are NQDs.
With the disbursement quota now at 5%, an estimated additional $200 million will flow into the charitable and non-profit sector. However, research indicates that groups serving and led by equity deserving groups, including Indigenous-led and Black-led organizations, tend to receive fewer charitable dollars. Many of these groups are also NQDs. If funders increase disbursement without diversifying grantees, inequities in the way support flows within the sector will only be reinforced.
Funders may be concerned that they are assuming risk for what the donees does. However, if they follow an existing due diligence process, they are likely not assuming any additional risk, depending on the specifics of the situation.
The new guidance offers funders a great opportunity to expand impact and forge new partnerships with organizations led by and serving equity deserving groups. This new toolkit is a free resource available to help funders and charities and nonprofits navigate these new opportunities.
Quotes:
“The Fondation Lucie et André Chagnon believes that partnering with non-qualified donees broadens the scope of our support by reaching groups from historically marginalized and isolated communities, ensuring greater equity among the organizations we support.” – Gia Mieu Tran, Financial Partnerships
“Inspirit often works with early-stage organizations that are developing their infrastructure to secure non-profit status and potentially qualified donee status. These organizations typically are led by and serve equity-seeking and deserving communities. We believe it is important to fund these organizations as they begin their impact journey.” – Chris Lee, Director of Programming
“As a youth funder, Laidlaw prioritizes grassroots groups, youth leadership, and Black-led and Indigenous-led initiatives. Youth collectives are often registered nonprofits or unregistered groups rather than charitable organizations. By funding these groups, we hope to redistribute wealth, historically amassed on the backs of Black and Indigenous communities, back to them.” Aldeli Albán Reyna, Director of Grants and Community Initiatives
“Partnering with non-qualified donees allows McConnell to go beyond registered charities in supporting initiatives that respond to urgent community needs, serve equity-seeking groups, and perform impactful roles in the nonprofit sector.” – Jane Rabinowitz, Chief Program Officer