In Canada, charities registered under the Income Tax Act receive significant financial privileges: their donors receive a tax credit for contributions, and charities do not have to pay any income tax on the donations they receive. Charities also enjoy a number of other provincial tax privileges, as well as favourable treatment under various laws.
With these privileges, however, come added responsibilities, including extensive legal and regulatory obligations. If charities fail to meet these requirements, the legal consequences can be substantial. Charities are subjected to greater scrutiny in the eyes of the law and the public and are expected to raise, manage, and disburse funds that are entrusted to them in a responsible and transparent manner. Their practices in this regard are keenly observed by all Canadians to ensure that the level of trust placed in them is well founded. If that trust is lost, a charity can expect its donations to disappear, which may lead to its ultimate demise. More powerful than the financial consequences, however, is the reputational impact on the charity involved and, more importantly, on the Christian name under which it operates and how it reflects Christianity as a whole.