We would like to start a Scholarship Fund and provide charity receipts to our donors.
Q. What will the CRA be looking for in our charity application, and what should we include in the application to ensure that our application is approved and the charity is registered?
The provision of scholarships, bursaries, awards and prizes, whether inside or outside of Canada, is generally charitable under the charitable head of “advancement of education”.
In determining whether the provision of scholarships or bursaries is charitable at law, the Charities Directorate (Charities arm of the CRA) will review:
A. whether the charity maintains sufficient direction and control over the provision of the awards; and
B. the element of “Public Benefit”.
The Public Benefit requirement is satisfied by the process used to select the recipients of the scholarships.
· Many scholarships are awarded on the basis of
· scholastic achievement;
· financial need;
· on the basis of excellence in extracurricular activities.
These criteria are generally acceptable and will be registered as a charity.
To make sure it meets the necessary element of public benefit, an applicant must provide all the following information:
- the eligibility and selection criteria it uses in distributing such prizes;
- the composition of the selection committee;
- how and where the award is advertised;
- the amounts it will award;
- how it will distribute the funds.
In most cases, a scholarship fund set up to help any of the following will not qualify as charitable:
- a named individual or individuals;
- employees of a company;
- members of a private club, a trade union, or a co-operative.
A scholarship can be limited to groups, such as:
· students of a school
· persons of the same gender; or
· people of specific ethnic backgrounds.
On the other hand, awarding scholarships based on criteria such as membership in an organization (other than an educational institution) would typically not be acceptable.