When preparing an application to register a corporation as a charitable organization, an applicant must take particular care in drafting the purposes section of the application, as these define the objectives and objects the organization hopes to achieve upon incorporation. The purposes define what the organization plans to accomplish in incorporating itself. This guide will provide a general accounting of how to prepare charitable purposes for artistic activities, but it is strongly suggested you speak to legal counsel to fully advise you on drafting these documents.
In drafting the purposes of an organization, the Ministry of the Attorney General, in its “Not-For-Profit Incorporator’s Handbook,” has set out a number of pre-approved object clauses a corporation could use in its application. With respect to the Arts, the following purposes have been pre-approved as sufficiently charitable in nature:
- To educate and increase the public’s understanding and appreciation of the arts by providing performances of an artistic nature in public places, senior citizens’ homes, churches, community centres and educational institutions and by providing seminars on topics relating to such performances.
- To provide instructional seminars on topics related to the performing and visual arts.
- To produce performing arts festivals for the purposes of educating and advancing the public’s understanding and appreciation of performing arts and to educate artists through participation in such festivals and related workshops.
An organization could potentially use these pre-approved purposes in drafting its application (so long as they reflect the purposes and intentions of the organization) and successfully register as a charity with the Ministry and the Canada Revenue Agency (the “CRA”). Unfortunately, if these pre-approved clauses do not reflect the actual purposes of the organization, are too broad and vague with respect to the applicant’s activities, or are not sufficient alone to garner charitable registration in light of the details and information provided in the applicant’s application with the CRA, the organization will not meet the requirements to be registered as a charity. In such cases, the applicant must draft custom charitable purposes in the hopes the Ministry and CRA will grant charitable status.
To be eligible for charitable registration with the CRA, an applicant’s purposes must be exclusively charitable and define the scope of the activities engaged by the organization. Although limited exceptions apply, an organisation must devote a majority of its resources and time to these charitable purposes. To be eligible for charitable registration, the purposes of the organization must contain the following three elements:
- The purpose must fall within one of the charitable purposes categories;
- The purpose is the means for which the organization provides a charitable benefit; and
- The purposes is for the benefit of an eligible beneficiary group.
With respect to the first element, the CRA has defined four broad categories of charities that the purposes must fall within to be considered exclusively charitable. These include:
- Relief of Poverty;
- Advancement of Education;
- Advancement of Religion; and
- Those other purposes beneficial to the community in a way the law regards as charitable.
With respect to the first three categories of charity, the elements is usually met by including the purpose category, such as “advancement of education” in the wording of the purpose. As for the fourth category, if an organization relies on this category in defining its purposes, it must specify and identify a specific purpose descriptor within the broad category of charitable purposes, such as the preservation and protection of the environment and wildlife.
Arts and the furtherance of the Arts is not one of the specifically enumerated charitable categories, but organizations that carry out artistic activities may still be eligible for charitable registration so long as they can demonstrate its purposes fit within one of the categories and its activities further charitable purposes. This is often done by defining the artistic purposes within the context of:
- The advancement of education;
- The advancement of the public’s appreciation for the arts; or
- The promotion of the commerce or industry of the arts.
Advancing education within the Arts by teaching, training, and mentoring through classes, activates, and seminars may be considered the “advancement of education”, but in such cases, these activates and classes must be structured and aimed at educating and teaching a specific public audience. Advancing the public’ appreciation of the Arts can be done through the exhibiting, presenting, or performing of artistic works. Lastly, an organization can promote the Arts commerce and industry by engaging in activities that enhance the artistic forms and styles or the industry as a whole and promoting excellence within the industry. In some cases, an organization’s purposes can be defined such that they cover all three definitions.
The second element a purpose must satisfy is that it is for a charitable public benefit; it must be considered socially useful, objectively measurable, and have public value. Purposes which advance education are often though to deliver tangible charitable benefits. It is less clear whether the advancement of public appreciation or the promotion of the industry provide this same public benefit. In these cases, the purpose must demonstrate that it satisfies two criteria:
- Art Form and Style; and
- Artistic Merit.
In discussing Art Form and Style, an applicant organization must demonstrate that, with respect to the art form and style they are attempting to advance the public’s appreciation of, a common and widespread acceptance of that artistic form and style of art exists and is present within the artistic community. This could potentially eliminate certain obscure or fringe artistic forms and styles if the applicant cannot support its claims with objective evidence.
Artistic Merit refers to the quality of the artistic performance or presentation. The quality of the artistic expression has to be considered “sufficiently high” to satisfy this criterion. Query how this is determined, but common law states that a performance, exhibition, or presentation must be of “high character” and “of value to the public.” Such a determination is often a matter of taste and as such, the CRA often relies on what the Courts, in the past, have considered “accepted canon of taste,” which has been assessed through objective evidence. Again, it falls to the applicant to provide sufficient evidence in its application to satisfy the CRA that its defined purposes meet these criteria.
The final element a purpose must satisfy is that it provides its benefit to an eligible beneficiary group. Ultimately, the charitable benefit must be provided to the public or a sufficient section of the public. What is considered a “sufficient section of the public” is not set in stone and is often determined based on the charitable purpose and its specific requirements. For example, a purpose aimed at “advancing education in the field of dramatic art by establishing a school for students between the ages of ten and eighteen, focusing on acting, dance and other forms of dramatic arts”, would likely still be considered offering its benefit to the public, despite restricting it to children between the ages of ten and eighteen.