Quick Our Basement is Flooding – Call a Lawyer
By: Adam Aptowitzer
There are times being a lawyer is a bit like being a plumber. Like a plumber, a lawyer is called when an organization is being built, and like a plumber we are called in an emergency. But that is where the similarity ends, because while it seems fairly obvious when you have an emergency which might require a plumber, it is apparently less so with a lawyer. One situation which tends to elicit panic from organizations is an unexpectedly negative response to a request for (re)-registration.
This situation often results when an organization is revoked for failure to file the T3010 and then applies for re-registration on its own. Operating under the assumption that they qualified as a charity prior to their revocation, and that they should therefore re-qualify, many organizations are surprised when the CRA has reservations (at least) about re-registering them.
At times, this is the result of “mission creep”, in which case an organization may have been charitable when they were first registered but over time have developed either different objects – or a different way of achieving them. And this is where a lawyer can help. Sometimes these changes may be covered by changes to the law and the organization may still be charitable if the objects are amended to actually cover what the organization does. At other times, there may be older cases in different jurisdictions which could be used to justify the organization’s operations as charitable.
However, and not to belabour the analogy, but just as with a plumber, it is best to call the lawyer before the basement is flooded. In the context of an application for re-registration it is similarly best not to rely on the assumption that the organization will re-qualify for registration, but rather to bring in a professional before the application goes into the CRA. What many organizations do not understand is that the CRA will examine the totality of the organization’s activities over the years prior to an application for re-registration. And given the complexity of the laws governing charities, many groups have been offside one or another legal provision at some point. This in itself can be grounds for denying re-registration. Part of the lawyer’s role is to scour the organization’s record, correct these problems going forward, and provide the relevant information to the CRA in the proper context.
For organizations that are already registered, the emergency in question is usually an audit. It is our experience that a lawyers’ involvement can never come too early as there are many other instances in which a lawyer may have contributions to make which would never even occur to the layperson. For example, we have seen situations where the charity does not have the documents requested (often for good reason) and so undertakes to create the document for CRA. At other times we have seen oral statements by a representative of the charity taken out of context and used as a reason to discipline the charity and reassess the donors.
Fundamentally, charities need to be aware that their conception of the law in a matter may not be entirely accurate and that the additional expense of a lawyer, early in the process, may be necessary to resolve the situation in a timely fashion. As they say, a stitch in time saves nine.