The Canadian Charity Law Podcast | Can I Register a Sports Organization as a Canadian Charity?

Here we explore when a Sports Organization can and cannot qualify for charity registration in Canada.

This episode is sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm serving charity and not-for-profit clients across Canada (https://www.charitylawgroup.ca/ 416-488-5888) and B.I.G. Charity Accounts Group, a firm serving Canadian charities with all their financial statements and tax filing needs.

https://www.charitylawgroup.ca/
416-488-5888

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What is The Canadian Charity Law Podcast ?

Exploring the ins-and-outs of Canadian Charity Law in a way that can be understood by the layperson, including Charity Registration, Not-for-Profit Incorporation, Charity Governance, Charity Fundraising, Tax Receipting, and much more!

David: 00:00

Okay. Ready for a deep dive?

Rachel: 00:01

Always.

David: 00:02

Today, we're tackling something that sounds simple on the surface but gets really complicated fast. When can a sports organization in Canada actually be a registered charity?

Rachel: 00:12

Right. You'd think sports, good cause, easy peasy, but the CRA, they don't mess around.

David: 00:18

That's what we're here to break down. No more vague ideas. We've got the CRA's actual guidelines on this, so let's get specific.

Rachel: 00:25

Love it. Specificity is key in this world. That's for sure.

David: 00:28

Okay. So what's the biggest misconception people have walking into this?

Rachel: 00:32

Oh, that's easy. They think just because you're promoting sports, boom, instant charity.

David: 00:35

But the CRA is super clear, just encouraging people to play. That alone isn't enough.

Rachel: 00:40

So my weekly basketball game with friends, that's a definite no on the charity front.

David: 00:44

Got it. Exactly. Fun, yes. Charity, not so much.

Rachel: 00:48

So what does cut it then? What are we looking for?

David: 00:50

The 4 pillars, that's where it starts. Relief of poverty, advancement of education, advancement of religion, or other purposes beneficial to the community. Those are the big categories the CRA wants to see. Okay. So some of those seem pretty broad.

David: 01:04

I'm guessing that last one, other purposes, that's where things get really interesting. Right?

Rachel: 01:08

Mhmm.

David: 01:09

What are some real examples of how sports can actually tick those charitable boxes?

Rachel: 01:14

Oh, totally. Let's take relief of poverty. We saw this great organization that provides free after school sports for low income families. And it wasn't just the sport itself. They covered equipment, coaching, even transportation, and healthy snacks, the whole package.

David: 01:31

That's incredible. I love how they went above and beyond to really break down those barriers. But what about advancement of education? That's gotta be a slam dunk for school sports programs. Right?

Rachel: 01:39

You'd think so. Right. But it's trickier than that. The CRA wants to see education as the main focus, not athletic achievement. So a school using basketball drills to teach geometry that works, a purely competitive team aiming for championships, Not so much.

David: 01:55

So it's about how the sport's integrated, not just the sport itself. What about advancement of religion then? I'm picturing those summer camps, a little bible study, a lot of volleyball.

Rachel: 02:04

You're not far off. If the primary focus is still religious instruction, those sports can be what the CRA calls an ancillary activity, a supporting role.

David: 02:14

Ancillary. I like that. The sports are like the supporting actors, not the lead role.

Rachel: 02:19

Perfect analogy, and that distinction is key because it applies to those other purposes beneficial to the community too. The CRA wants a clear connection. Sport equals charitable benefit.

David: 02:31

Okay. So let's get into those other purposes then. This is where I'm really curious how sports can fit in.

Rachel: 02:37

Well, one area we see a lot of creativity is with at risk youth. It's about using sport as a tool for positive change, not just giving them something to do.

David: 02:45

I like that. What does that actually look like on the ground, though? Give us an example.

Rachel: 02:49

We found this organization using hockey to teach conflict resolution to youth involved in gangs, not just playing, but group discussions, role role playing all through the lens of hockey. The CRA loved it.

David: 02:58

Wow. Who knew hockey could be such a powerful tool? That's amazing.

Rachel: 03:02

Right. And it's not just for youth either. We're seeing more organizations using sports to help seniors, people with disabilities, even veterans with PTSD. The CRA recognizes those benefits too.

David: 03:14

This is so inspiring, but I'm realizing there's a lot more to this than meets the eye. Good intentions aren't enough. You really need to understand the nuances of these guidelines.

Rachel: 03:24

100%. And, unfortunately, even with the best intentions, there are some common pitfalls.

David: 03:30

Okay. That's what I'm talking about. We've heard what the CRA likes, but what about the red flags? What should people watch out for?

Rachel: 03:37

Oh, there are a few. One big one is that whole elite sports thing. If it feels like an organization is all about competition, like their main goal is training high level athletes, the CRA gets a little wary.

David: 03:49

So less about the love of the game, more about just churning out champions.

Rachel: 03:52

Exactly. They wanna see that wider community benefit, not just helping those already at the top. Okay.

David: 03:56

I'm picturing this super exclusive training academy, amazing equipment, the best coaches, but they only take athletes who already meet these crazy high standards. That's not gonna fly. Right?

Rachel: 04:07

Probably not. Even if they do a little fundraising on the side, the CRA is looking at their core purpose. If it's exclusivity over accessibility, that's a problem.

David: 04:16

Leveling the playing field, not tilting it more towards those already ahead.

Rachel: 04:19

Exactly. And this ties into another red flag when there's just not enough real accessibility. High fees, limited spots, programs only for a certain group, CRA is gonna notice.

David: 04:31

So, like, that golf club with a huge waiting list and a membership fee that cost more than my car, Not very charitable, even if they host a tournament once a year.

Rachel: 04:40

You got it. It's about making sure a wide range of people can actually participate and benefit inclusivity, reaching those who wouldn't otherwise have those opportunities.

David: 04:49

This is fascinating. It's like a whole different way of thinking about sports. Right. But hold on. Before we go too far, we've talked about the 4 pillars, these red flags.

David: 04:56

Can you just bring it together for our listeners? Like, what's the one thing to remember in all this?

Rachel: 05:01

Intention versus impact. The CRA wants to see that an organization is using sport as the tool to achieve the charitable goal, not the other way around.

David: 05:10

So don't just talk the talk. Gotta walk the walk.

Rachel: 05:12

100%. And speaking of walking the walk, another area that trips people up is when an organization is all about just one sport.

David: 05:23

The single sport thing.

Rachel: 05:24

Mhmm.

David: 05:24

I can see how that gets tricky.

Rachel: 05:26

Yeah.

David: 05:26

It's easier to think of that as just a soccer club or whatever that happens to do some good on the side.

Rachel: 05:31

Exactly. The assumption is they're really about promoting that sport, not necessarily tackling a bigger social need.

David: 05:38

So how does a single sport organization overcome that? Can they ever be a registered charity?

Rachel: 05:43

They can, but they've got to be smart about it. Show a super strong link between that specific sport and their mission. Like, that sport is essential to their goals, not just something they happen to like.

David: 05:55

Got an example so that I need a real world case to make sense of this.

Rachel: 05:58

We saw this group that works exclusively with veterans. Right? And their whole thing is surfing. But they've been able to prove that for these veterans with PTSD, other trauma, surfing is uniquely therapeutic.

David: 06:10

Wow. That's incredible. So the sport itself becomes almost like a pathway to healing. You know?

Rachel: 06:15

Exactly. That's what the CRA is looking for, that deeper impact, the connection between the activity and the purpose.

David: 06:21

This is all making so much more sense now. But I I have a feeling there's even more to consider. Right?

Rachel: 06:27

Mhmm.

David: 06:28

What other factors is the CRA looking at when they're evaluating these organizations?

Rachel: 06:33

Oh, absolutely. They're gonna wanna peek into those financials.

David: 06:36

Makes sense.

Rachel: 06:37

See where the money's coming from and, more importantly, where it's going.

David: 06:41

Right. Gotta follow the money trail.

Rachel: 06:42

Exactly. Are those donations actually funding those programs, or are they going towards, you know, fancy equipment for a select few?

David: 06:51

So transparency is key.

Rachel: 06:53

Absolutely. And speaking of proof, the CRA also wants to see those tangible results. Right? They're looking at how many people are benefiting from these programs, what kinda impact those programs are having.

David: 07:03

Yeah. Are they actually making a difference?

Rachel: 07:05

Exactly. And are they trying to grow that impact, reach more people? Those are all things they consider.

David: 07:10

It's like showing that ripple effect.

Rachel: 07:12

Yes.

David: 07:12

This has been so eye opening. It's like we went from sports 101 to a master class on charitable sports organizations in Canada.

Rachel: 07:21

I love that. It's all about those connections.

David: 07:24

Speaking of connections, for our listener, if they could only take away one thing from this whole deep dive, what would it be?

Rachel: 07:33

That's a good one.

David: 07:34

What's the big one?

Rachel: 07:35

I'd say it's this. Next time you're thinking about supporting a sports organization, whether it's donating, volunteering, even just cheering them on, take a second to look deeper.

David: 07:46

Yeah.

Rachel: 07:47

Don't just go with your gut. Ask. Are they really about the cause? Using sports as a force for good, or is it more about the sport itself?

David: 07:54

Don't just follow the team. Follow the impact. Yes. I love that. We've gotta be mindful of where our support goes.

David: 07:59

Yeah. This has been incredible. Thank you so much for guiding us through this.

Rachel: 08:03

My pleasure.

David: 08:04

Any final thoughts before we let you go?

Rachel: 08:06

Just just never underestimate the power of sports to change lives

David: 08:10

So true.

Rachel: 08:11

Especially when it's combined with a real commitment to giving back. It's amazing what's possible.

David: 08:16

On that inspiring note, we'll wrap up this deep dive. A huge thank you to our expert for joining us. And to our listeners, as always, keep learning, keep asking those questions. And remember, every new piece of knowledge is a win.