Sunday 15 May 2011

Charity and Non-Profit Fraud

Although I plan to write much more about the various resources that you can utilize to find your perfect volunteer opportunity I want to spend a little time talking about "fraud". I think it goes without saying that there are many volunteer opportunities out there and most of them are not advertised  through official media channels.
These may be great opportunities, as a lot of charities don't have the resources to properly promote themselves. But be careful because there will always be people out there who want to make a quick buck and take advantage of others. To avoid fraudulent causes, make sure that you are participating in a registered charity or an incorporated non-profit organization.

What is a registered charity?
A charity that is registered with Canada Revenue Agency . You can always check the name or the BN/registration number of the charity on their website and see if the charity is listed.

What is a BN/registration number?
"The BN is used by the federal government to identify organizations and the various program accounts they have. A complete BN has two parts: the registration number (first nine digits) and the account identifier (two letters and four digits)." Often when you ask people for donations they will ask you for this number.

What is a donation receipt?
A charity is registered under the Income Tax Act and is therefore eligible to issue official donation receipts (usually for donations over $20) for income tax purposes. If it is not a registered charity it is illegal for them to issue donation receipts.

Non-profit organizations vs. charities?
A charity is a non-profit organization but not all non-profit organizations are charities. Confusing!? Well to make things clear "a non-profit organization is an association, club, or society that is operated exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. No part of the organization's income can be payable to or available for the personal benefit of any proprietor, member, or shareholder, unless the recipient is a club, society, or association whose primary purpose and function is to promote amateur athletics in Canada." Basically not all non-profit organizations are registered as charities with Revenue Canada and thus they will not be able to issue a donation receipt.

But that doesn't mean that it is illegal for a non-profit organizations to fundraise. In fact, a lot of bigger non-profit organizations, that have a board of directors, will be "incorporated" (kind of like a business can be incorporated so that there are shareholders) with the provincial or federal government and will have an associated BN and Corporation Number that you can ask for in order to check if they are registered with the government.

However, there are also cases when the non-profit organization is not incorporated and they also need to fundraise money for a good cause. This complicates matters quite a bit but the best way to check if they are for real is to ask questions about the cause  and how the funds will be utilized. The bottom line here is to stay informed about the organization you wish to volunteer for. If you believe someone is operating a non-profit organization under false pretenses you should report them to the police or the appropriate government agency as soon as possible.

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