6 Steps to Start a Charity
Charity is something that most people do out of passion and philanthropy. However, in recent times, the number of incidents where people left their secure corporate life to start a charity has increased immensely.
So, contrary to popular belief, this period is not only favorable for starting "for-profit" organizations but also for establishing non-profit organizations. Here are steps to start a charity:
1. Decide on the purpose
The first step to charity is having a clear idea of the mission and vision of the charity. The purpose of formation should be clear, concise and must define what it does, for whom, and what the basic service is.
The Canada revenue agency (CRA) has identified four categories for charity:
- Relief of property
Such organizations mainly aim at providing accommodation to disabled persons with low income.
- The advancement of education
The main aim of such organizations is to educate people or provide community development through workshops and seminars.
- The advancement of religion
Their main aim is to preach the doctrines and spiritual observance of religious faiths.
- Other beneficial purposes to the community
Charitable purposes that are not included in the categories above, but are a part of charity, are included in this category.
2. Pick a name
The name of the institution is the element of the organization that will distinguish it from other organizations. Thus, having a name that is justified under these two categories is essential. These categories are:
For a name to be distinctive it is necessary for it to be unique. This is important because if there are organizations with names similar to yours, people tend to get confused.
The descriptive element in the name is what describes the aim of the charity. Hence, having a name that is closely related to the kind of work you are involved in or directly points out to the work, is advisable.
3. Gather relevant documents for registration
While you don’t have to necessarily register your organization, in our opinion, it is always best to register it. This is because registration provides the organization a separate legal identity that is different from the founders of the organization.
However, for some, registration is more like an obligation. So, before you make a decision, understand why you need registration. Then, if you decide to register your firm with the CRA, collect the following documents:
- A completed Form T2050, Application to Register a Charity Under the Income Tax Act signed and dated by two of the organization's directors or trustees
- A complete and legible paper copy of the organizations governing documents. This should also contain the purpose of the organization.
- A copy of the by-laws, if applicable. These by-laws should also be attested by an incorporating authority or by two officials of the organization.
Once all 5 parts of the form are filled along with supporting documents, the form is to be submitted to the CRA for review. Based on the completion of the form, the CRA will either give it a ‘complete’ or ‘incomplete’ status. If the form is given a complete status, it is verified and an acknowledgment letter is issued to the applicant.
Fundraising is an inevitable aspect of charity. Of course, you can put your own funds to a large extent, but eventually you will need to raise support from others. It can be support from anyone - friends, family or any unknown individual. Raising funds from ‘for-profit’ organizations is also a good option.
This is initially going to be one of the most challenging steps in starting a charity, but over time the process will be less strenuous. So, be patient and be prepared to make significant number of calls, meetings and presentations.
6. File annual T3010 information return
Once you are bestowed with the prestige of a registered charity, it is mandatory to file an annual information return, after the end of charity’s fiscal period. Here, make note that it is important to attach all the financial statements along with the form.
Besides these points, the thumb rule to start any charity is to have passion for it. There will be times when you question the need for going through all this trouble. In those times, it is your passion that will take you forward. So, pour yourself into your passion and create a legacy that excels in helping others.