A CHARITY is often referred to by several different terms. Although they are not technically interchangeable, everyone will recognize a charity if you refer to it as:
– A Charity
– A Non-Profit
– An NGO (Non-Governmental Organization)
However, there are significant differences between a charity and a non-profit. First, a charity is federally registered while a non-profit is provincially registered. The most significant difference is that a federal charity can issue a tax receipt and a provincial non-profit cannot. While registering as a federal charity is a more arduous process the benefits are substantial, especially in terms of the potential donor base. Federal charities are far more likely to attract donations from individual donors, who will in return, receive a charitable tax receipt for their gifts. In addition, most foundations are either restricted to, or choose to, only fund federally registered charities rather than provincial non-profits.
In the broadest terms, each non-profit is further classified as either a Charitable Trust, a Private Foundation, or a Public Foundation. The primary distinction between a Charitable Trust and a Foundation is that Charitable Trusts (charities), as a rule request grants from foundations and provide direct services to their constituencies, while foundations usually award grants to charities but are not usually involved directly in the delivery of those services. Their role however is indispensable as these foundations contribute over $7 billion dollars in grants to charities every year!
Also, it is important to understand that the non-profit industry is HUGE. There are 170,000 registered non-profit organizations in Canada, of which 85,000 of them are registered as federal charities. More importantly, in terms of fund development, there are 11,000 foundations and they have become an indispensable source of income for charities. With over $9.1 billion dollars in assets, and a government requirement to distribute a minimum of 3.5% of total assets annually, foundations play a key role in sustaining the non-profit sector in Canada.
The following provides some basic information on the types of foundations that are registered in Canada:
PRIVATE FOUNDATIONS (Family Foundations, Special Interest, or Corporate Foundations): These organizations are set up solely to make grants. Their assets are most often derived from the gifts of an individual, family, or from a profit-making business.
PUBLIC and COMMUNITY FOUNDATIONS: The funds for a Public Foundation are usually derived from many donors that want to designate their funds to specific areas of interest. Community Foundations usually restrict their grants to a specific geographic area.
GOVERNMENT FOUNDATIONS: These Foundations are often established with funds from gaming and/or lotteries and usually operate independent of the government.
Most Charitable Trusts self-identify by one of the following Sector designations and receive:
- Grants for Education
- Grants for Health
- Grants for Religious Organizations (Faith-Based)
- Grants for Social & Human Services
- Grants for Arts & Culture
- Grants for Environmental
- Grants for Animal Welfare
- Grants for Sports & Lifestyle
The following list covers the basic types of grants that most foundations award.
- Building Fund Grant: Funds provided for construction and/or renovations.
- Capital Fund Grants: Funds provided for buildings, construction, or equipment.
- Emergency Fund Grants: A one-time grant to cover immediate short-term funding needs on an urgent basis.
- Endowment Fund Grants: Funds intended to be kept permanently and invested to provide income for continued support of the organization.
- Equipment Fund Grants: Funds to purchase equipment, furnishings, or other materials.
- Matching Grants: A grant which is made to match funds provided by another donor.
- Operating Fund Grants / Capacity Building Grants: Funds to cover the regular personnel, administrative and other expense for an existing program or project. These are also sometimes call Infrastructure Grants.
- Program Fund Grants: Funds to support specific projects or programs as opposed to general operating grants.
- Research Fund Grants: Funds awarded to institutions to cover costs of investigations and clinical trials. Research grants for individuals are usually referred to as “fellowships.”
- Seed Money Grants: A grant used to start a new project or organization. Seed grants may cover salaries and other operating expenses of a new project.