Having an appropriate level of detail will increase the likelihood that the charity’s
resources will be properly utilized.
We reprint a caution from CRA about written agreements:
“However, simply entering into an agreement is not enough to prove that
a charity meets the own activities test. The charity must also be able to
show to the CRA that the charity has a real, ongoing, active relationship
with its intermediary, whereby it directs and controls the use of its
resources by that intermediary. ”
The sample contractor agreement below is included to provide some assistance to
charities in understanding some of the elements that may in certain circumstances be
included in an intermediary contract. It was an agreement approved by CRA in a
particular situation.
It covers a relatively straightforward contractor arrangement
between a Canadian charity and its foreign contractor.
It may not necessarily be
appropriate for a larger, more complicated situation or one involving a government or
foundation funder with greater reporting requirements. It also may not be appropriate in
places with difficult security situations or endemic violence. When charities enter into
large or complicated contractual relationships with foreign charities or organizations, it is
advisable to obtain legal advice from a lawyer who is knowledgeable about direction and
control and “measures of control” in the context of Canadian charities conducting foreign
activities.
For further information on Canadian charities and foreign activities see