The Canadian Charity Law Podcast

This episode emphasizes the importance of year-end accounting for Canadian charities. ‍ Accurate accounting is legally required for filing the T3010 form with the CRA and issuing correct tax receipts. ‍ Financially sound practices build donor trust by demonstrating responsible use of funds. Analyzing financial records allows charities to learn from past performance and plan for future success. Maintaining organized records simplifies audits and ensures compliance. Finally, the episode suggests seeking professional help when needed.

This episode is jointly sponsored by B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm exclusively serving charity and not-for-profit clients in Toronto, Ontario and across Canada with registration and governance, and B&H Charity Accounts Group, a bookkeeping firm serving Canadian charities in Ontario with all their financial and tax filing needs.

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

https://www.charityaccountingfirm.ca/
P: 289-301-8883

Creators and Guests

DJ
Producer
Dov Goldberg, J.D.
Dov Goldberg is a manager partner at B.I.G. Charity Law Group Professional Corporation, a Charity Law Firm Providing Services Exclusively to Charities Across Canada

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:

Alright, everyone. Welcome back. We're diving into a topic that's super relevant for Canadian charities. It's year end accounting.

Sara:

Yeah.

David:

But we're going beyond just the nuts and bolts of how to do it. Right. We really wanna understand the w h y. Like, why is this so crucial?

Sara:

Exactly.

David:

Yeah. We're using this awesome guide that's, actually aimed at charities themselves.

Sara:

Yeah. It's a great resource.

David:

But we're gonna pull out the most valuable insights, for you, our listeners. You know, the folks who are passionate about supporting these organizations.

Sara:

I think what's so interesting about this guide is it really presents year end accounting as so much more than just a chore. Right. It's like this really powerful tool

David:

Absolutely.

Sara:

That has implications for everything from, you know, staying on the right side of the law to really connecting with your donors and making those smart decisions for the future.

David:

Okay. So let's jump right in. The guide, like, really hits hard on the point that accurate year end accounting isn't optional for Canadian charities.

Sara:

Oh, absolutely not.

David:

We're talking about compliance here. Yeah. Compliance with the Canada Revenue Agency, the CRA.

Sara:

The CRA. Yes. And when we're talking about compliance, we're talking about the t 30 pen form Right. Which, you know, it might seem like just a snapshot of the charity's year.

David:

Mhmm.

Sara:

But it's really much more detailed than that.

David:

It's kind of like a a a financial report card, I guess, you could say.

Sara:

Yeah. A really in-depth report card that you're handing to the CRA to prove that you've been managing your funds properly all year.

David:

Oh, I see. Okay. So it's not just about ticking boxes.

Sara:

Not at all. For instance, there are specific sections where you break down where your revenue comes from.

David:

Oh, like,

Sara:

Like, did it come from donations? Did it come from government grants There it go. Or from other activities? And then you've got a whole section for expenditures, breaking down your spending by program areas, administrative costs, that sort of thing.

David:

So it really is about transparency then.

Sara:

Transparency is key.

David:

But what happens, like, in the real world, if a charity doesn't get this right, what are the consequences?

Sara:

Well, you know, it can go beyond just, you know, some fines. In some cases, if the CRA finds really serious discrepancies

David:

Oh, wow.

Sara:

They can actually revoke a charity status.

David:

Woah. Okay.

Sara:

And, you know, imagine the impact that has, not just on the organization, but on people they're trying to help.

David:

Yeah.

Sara:

Yeah. It's huge. So getting this right is absolutely essential.

David:

Wow. That's a powerful point. It really drives home the seriousness of it. The guide also talks about how good accounting can actually make your relationship with your donors even stronger.

Sara:

And that just makes sense. Right? I mean, think about it. Yeah. Wouldn't you be more likely to give to a charity that can clearly show you what they did with your last donation?

David:

Totally.

Sara:

The guide really hits the nail on the head when it says, people wanna know their donations are making a difference.

David:

It's about accountability.

Sara:

Absolutely. Yeah.

David:

Showing your donors that you're handling their money responsibly.

Sara:

Right.

David:

I was reading about a charity that actually used their year end data to make this infographic for donors. Oh, cool. And it showed exactly how the donations funded different programs.

Sara:

That's fantastic. And, apparently,

David:

it led to way more recurring donations.

Sara:

Yeah. That makes perfect sense.

David:

People could actually see the impact.

Sara:

Transparency breeds trust. Right.

David:

Definitely.

Sara:

And that transparency doesn't just benefit your donors. It's a gold mine of information for the charity itself.

David:

That's right. Yeah. The guide also talks about how year end accounting can give you all these great insights for planning for the future.

Sara:

Absolutely.

David:

It's like a treasure map. It is. Leading to better decisions.

Sara:

The year end review isn't just about looking back. It's about understanding what worked, what didn't work, and using all of that knowledge to shape the future. So for example, you can analyze which fundraising events were the most successful.

David:

Oh, interesting.

Sara:

You can identify areas where maybe, you know, program costs ran a little bit over budget.

David:

Mhmm.

Sara:

And then you take all of that information, and you refine your strategies. So let's say a charity, you know, realizes that their annual gala actually brought in way more money than their online donation drive.

David:

Yeah.

Sara:

So they might decide, okay. Next year, we're gonna put more resources into that gala.

David:

Right.

Sara:

Maybe revamp our online approach a little bit. Oh, that makes sense. It's all about using the data to make informed choices.

David:

It's like a financial detective game. Exactly. You're uncovering clues to help you make those better choices. And the guide also suggests that the year end review can be a real game changer when it comes to actually planning for the next year.

Sara:

Oh, it is. Because solid financials, those are the foundation for everything. Right? So you can use your year end data to create a realistic budget to allocate your resources more effectively. Effectively.

Sara:

You can even look into different budgeting techniques. Have you ever heard of, like, 0 based budgeting?

David:

0 based budgeting. No. I haven't. What's that?

Sara:

So, basically, you start from scratch every single year.

David:

Oh, wow.

Sara:

Instead of just kind of adjusting the previous year's budget, you justify every single expense.

David:

Okay.

Sara:

And it really forces you to look at every dollar you're spending and make sure it aligns with your current priorities.

David:

Wow. That's a really interesting approach. And it's a great example of how those insights from your year end review can lead to real action in the next year.

Sara:

Right. And it's about being proactive rather than reactive.

David:

Exactly. Yeah. Now the guide doesn't shy away from the topic of audits either.

Sara:

And that's smart because audits are just part of life for charities.

David:

Yeah.

Sara:

You know, it could be the CRA. It could be other bodies. But having those organized financial records, like, really meticulously organized, it makes the whole process so much smoother.

David:

Yeah. I can see that.

Sara:

Remember those really detailed sections we talked about in the t 30 10?

David:

Yeah.

Sara:

That becomes your audit trail.

David:

So it's not just about avoiding getting in trouble.

Sara:

Right.

David:

It's about proving that you're managing your finances responsibly.

Sara:

Exactly. It's showcasing that good stewardship of the funds that have been entrusted to you.

David:

So to sum it all up, it's clear that year end accounting for Canadian charities is so much more than just crunching numbers.

Sara:

Oh, def

David:

We're talking about legal compliance. We're talking about building trust with those donors Yes. Learning valuable lessons from the past year

Sara:

Mhmm.

David:

And using those insights to plan strategically for the future.

Sara:

Yeah. Exactly.

David:

It's like really setting yourself up for success.

Sara:

It is. It is. And as one final thought for our listeners, you know, I know accounting can seem kinda tedious sometimes. Yeah. But try to think of it as an investment.

David:

Okay.

Sara:

It protects your charity. It strengthens your relationships with your donors, and it allows you to make those really informed decisions that ultimately benefit the cause you serve.

David:

Yeah. Like, you're laying a strong foundation to do amazing things.

Sara:

A solid financial foundation for all that good work you're doing.

David:

That's a great way to put it. Yeah. So, listeners, think about that. You know, how can you use year end accounting to really take your charitable work to the next level?

Sara:

Absolutely.

David:

That's it for this deep dive. Thanks for listening.

Sara:

Thanks, everyone.