All About Estates

Donating Internationally

Aim for Seva - Indian school girls

Canadian donors who wish to support foreign charities and international charitable initiatives have historically had limited options.  While there are about 3,000 registered charities with international activities and another 700 foreign universities with qualified donee status, there are coverage gaps.  It’s a big world with lots of needs.

Starting in 2022, new rules were introduced that enable Canadian charities to make grants to non-qualified donees.  To translate, these are organizations that are doing charitable work but are not registered charities in Canada.  These rules are now clarified with a new CRA Guidance.  Greater flexibility is coming, but donors need to proceed with caution.

The rules

The Income Tax Act was changed in 2022 to enable registered charities to grant to non-qualified donees.  Until that time, charities could only grant to qualified donees, which is a category made up of about 86,000 registered charities and 9 other types of organizations that are eligible to receive gifts and issue tax receipts.  The change was the result of a decade-long campaign by the charitable sector to make working with foreign charities easier and more consistent with the practice of other major countries.  Canada Revenue Agency released its final administrative Guidance for charities on December 19, 2023.

A grant is an attractive structure for a charity.  The grantor transfers ownership and liability for the property to the grantee.  Prior to 2022, a Canadian charity had to follow the “own activity” rules.  These are also known as “direction and control”, a phrase that underscores the retention of ownership and liability for the funds expended.  The need for Canadian direction has been criticized as inherently colonial.

Under the “direction and control” rules, a charity may work overseas using its own employees or volunteers.  Or the activities may be carried out through a documented agreement with a foreign agent, contractor, or partner.  In every situation under “direction and control”, the Canadian charities retains a measure of ownership and liability.  The new “qualifying intermediary” grant rules are supposed to make it easier for charities to support international activities, but CRA’s Guidance is complex and accountability focused.

Reaction to the new regime

There has been a lot of commentary by charity lawyers and charitable sector organizations about the new rules and how they differ from the existing “direction and control” rules.  While some charity lawyers reject the usefulness of the new regime, most see utility.  All agree that the new rules, as outlined in CRA’s administrative Guidance, are cumbersome and untested.  Nonetheless, they provide charities and, by extension, donors with new options.

Quick starts

A few charities immediately used the new rules to immediately start granting to non-qualified donees.  These “quick starts” organizations started granting even before CRA finalized its Guidance. In 2022/23, at least two charities reported grants to non-qualified donees on their T3010 charity returns.  The Alberta Conservation Association, a primarily government funded charity, made 25 grants to Alberta non-qualified donees in 2022.  A Montreal-based foundation made a single grant of $11.9 million to a foreign institute for space research.  There is clearly demand for simplified granting, but it will take a while before the implications CRA’s Guidance is fully understood.


A charity can’t just grant to any organization it wishes to.  The charity must have a charitable purpose that aligns with the grant.  For example, unless a foundation has educational purposes related to scholarships it can’t fund scholarships at a rural Indian school via a grant.  Grants must be supported by specific charitable purposes – so those grants are in furtherance to the charitable purpose.  Even if those charitable purposes are in place, a detailed agreement is needed for each grant.

Here are some of the requirements:

  1. The disbursement furthers a stated charitable purpose of the charity;
  2. The grantee organization exclusively applies the disbursement to charitable activities that further a stated charitable purpose of the charity; and
  3. The charity maintains documentation sufficient to demonstrate both (A) the purpose for which the disbursement is made and (B) that the grantee organization exclusively applies the disbursement to charitable activities that further a stated charitable purpose of the charity.

The other consideration for charities is the prohibition against directed giving.  A donor cannot direct that a donation supports a particular non-qualified donee at the time of the gift.

Donor options

In my practice, I often speak to donors who have a sincere intention to support foreign charities with a gift by will.  Many immigrated to Canada and would like to support charities in their country of birth.  The new rules, however, are not a blank ticket to donate internationally.  Each registered charity that wants  to make these grants will need supportive charitable purposes, policies, and processes.

I predict that foundations with donor advised funds, including community foundations, will become the major actors in making grants to international charities. Large grants will be made in installments over several years, not lump sums.

The estate donor with intentions to support a specific international charity via a gift to a Canadian registered charity can’t just name a charity in her will and hope for the best.  Donors need to speak to the Canadian registered charity and understand its charitable purposes and policies. The foundation must be a clear commitment to granting to international non-qualified donees.  Directed giving needs to be avoided.  Donor due diligence is key, and careful planning is essential.

Granting to international charities not registered in Canada is an emerging area. Canadian registered charities will need to build capacity to make these grants compliant and impactful.

About Malcolm Burrows
Malcolm is a philanthropic advisor with over 30 years of experience. He is head, philanthropic advisory services at Scotia Wealth Management and founder of Aqueduct Foundation. Views are his own.


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