People assist an injured man in Christchurch, New Zealand on Feb. 22 following a 6.3 magnitude earthquake.Martin Hunter/Getty Images
The federal government has made it easier for Canadians to donate directly to earthquake relief efforts. But not in Japan.
In New Zealand.
The Canada Revenue Agency has added the Christchurch Earthquake Appeal Trust to a list of foreign charities eligible to issue tax receipts to Canadian donors. The trust was set up by the New Zealand government shortly after a 6.3-magnitude quake struck the country on Feb. 22, killing nearly 170 people. The charity raises money to fund relief work by the Red Cross and others.
It's a significant move because normally Canadians cannot receive tax receipts for donations made outside the country. Only six other foreign charities have similar CRA status and they are based in the United States, Switzerland and South Africa.
The CRA's decision means a Canadian donating $1,000 to the New Zealand earthquake relief effort can get a tax break worth roughly $400. By contrast, a similar donation to the Japanese Red Cross is not eligible for a tax break.
The decision has perplexed many in the charity world, including those raising money for Japanese earthquake victims. They welcome moves to help victims of the New Zealand quake, but don't understand why other charities aren't included.
"It's something that I'm going to look into and find out what's going on," said Greg Masuda of the B.C. Japan Earthquake Relief Fund. "There would be a strong interest in [donating directly to Japan]"
Mr. Masuda said many people have contacted the organization saying they prefer donating directly to the Japanese Red Cross instead of giving to Canadian Red Cross, which is forwarding donations to its Japanese affiliate. Mr. Masuda has told them they can only get a tax receipt by donating through Canadian charities like the Red Cross, which has raised nearly $9-million for Japan so far. Including a Japanese charity on the CRA's list would open more options for donors, he added.
Japan's Consulate General in Vancouver has also received several donations to the earthquake relief. The office put a notice on its website saying all donations will be forwarded to the Japanese Red Cross but "according to Canada Revenue Agency regulations, your donation cannot be recognized as a tax deductible donation."
CRA spokesman Philippe Brideau said the agency couldn't comment specifically on the Christchurch charity. He referred to the CRA's policy on how these decisions are made.
According to that policy, the decision comes after "Her Majesty in right of Canada" - essentially any federal department or agency - makes a gift to a charitable organization outside Canada. The size of the donation isn't specified but once the gift is made, relevant information is forwarded to CRA officials who decide if the charity can issue tax receipts to Canadians. Officials conduct a two-part test: First, the foreign charity has to prove it received the gift and secondly it must demonstrate it meets the same registration requirements the CRA uses for Canadian charities. If that test is met, the foreign charity can be added to the list. The designation lasts two years and can be renewed.
There are currently 15 organizations on the list but only seven meet the two-year eligibility limit - two foundations connected to the Aga Khan, the Council for American Relations, Education Africa, the William J. Clinton Foundation, the Woodrow Wilson International Center for Scholars and the Christchurch Earthquake Appeal Trust. The CRA has not explained why those charities were chosen or whether others applied and were rejected.
Charity experts say the CRA's selection process is too vague. "This mechanism could provide a helpful way for Canadians to give internationally, but it is currently being used in an arbitrary way," said Malcolm Burrows, who heads philanthropic advisory services at Bank of Nova Scotia. "Clearer rules and more transparency is required."
Mark Blumberg, a Toronto lawyer who works with charities, said the CRA should develop a list of international organizations Canadians could support at any time, including during disasters. "It seems very ad hoc to, every time there is a disaster, to just toss someone on the list," he said. "We don't know exactly why [the New Zealand charity]was picked versus something else," he added. "It would be nice if, quite frankly, they added Japan and if they added a few others."