Tariffs and the Arts Community

The Canadian live performing arts community faces a climate of uncertainty amidst proposed international trade tariffs and shifting political landscapes, though the tariffs themselves don't directly target services.

Our friends at CAPACOA are actively addressing these concerns by reinforcing its network, advocating for artists, and providing resources to navigate potential challenges. With a focus on maintaining strong international connections and supporting labor mobility, CAPACOA is working closely with U.S. counterparts and Canadian authorities to mitigate the impact of these changes.

Young Associates can also assist your organization in navigating the financial and operational complexities that arise from these international trends, ensuring your continued success.

Charity and Nonprofit Sector Trends for 2025 Q1

The dawn of 2025 brings a landscape of significant political and economic uncertainty, posing substantial challenges for Canadian nonprofits. With the specter of U.S. tariffs looming and domestic political upheaval underway, the sector faces potential economic downturns and shifts in government priorities. The possibility of a 5.6% GDP decline and a 4.1% core inflation rate due to tariffs, as projected by Scotiabank, could severely impact funding and increase demand for services like food banks, which are already experiencing historic highs. The rapid political developments — including a cabinet shuffle, leadership race, and impending federal election — add further layers of complexity, potentially delaying critical funding decisions and policy advancements. 

Young Associates can help your organization navigate these trends, ensuring financial stability and strategic adaptation in these uncertain times.

Read more here: https://imaginecanada.ca/en/360/what-trends-will-impact-charities-and-nonprofits-first-quarter-2025

Tis the season (for grant deadlines)!

With grant deadlines galore falling in the winter and early spring, many arts managers are poring over budgets and reports for funders – while at the same time juggling the demands of artistic programming in full swing.

These can feel like “weeks of reckoning” where you’re justifying your existence to grantors while working like crazy to maximize today’s successes.

If you’re run off your feet and wondering why you chose this crazy business, check out this short excerpt from Finance for the Arts in Canada, which may help provide some perspective on budgeting an the real world:

The ability to stick to a budget is held as an important benchmark: it’s senseless to invest a lot of time and energy into a plan that’s going to be discarded the moment things change. However, rigid management stifles creativity, and extreme meticulousness can produce needless bureaucracy. The degree of rigour beneficial to a given company depends on factors such as its size and complexity, the risk inherent in its programming (e.g., a choreographic workshop or artist-run centre may need more flexibility than a classical ballet company or major art museum), the skill level of decision-makers, and the attitudes and preferences of the leadership.

Managers are expected to know how to implement a budget (that is, to follow the script, as it were, by setting activities in motion, making the planned purchases and generating the targeted revenues). A complementary expectation is that managers will have the “chops” to manage change while maintaining stability. No year goes fully according to plan — not ever! When confronted by the unexpected, leaders are expected to step up and decide what to do next. These expectations, by the way, come from all directions. Volunteer board members look to paid managers for expertise. Senior staff look to the director for coordination, and more junior staff to managers for specific instruction on what to do.

When you take on a financial management role, you agree not only to balance the demands of a script (your budget) against the exigencies of daily life (the improv element), but also to do so while responding to the expectations of colleagues, your employer (the board) and perhaps other stakeholders. With so many factors at play, it is clear that to thrive, an organization needs more than a skilled manager, it needs recognized and shared processes that provide a framework for adapting to circumstances. In the absence of functional collaboration amongst staff members and between the board and staff, the best financial manager can be thwarted. A productive combination of smarts and structure equips the organization to move forward. An outcome may differ from expectations, but if there’s general agreement that contingencies were handled as well as possible, then the result may be considered a success.

From Finance for the Arts in Canada, Volume 2: Financial Management; Chapter 4: Managing Successfully Throughout the Year

Employer Obligations for the Upcoming Ontario Election

It's voting time in Ontario! Our next election is taking place on February 27. What are your obligations as an employer? Hicks Morley points out the following:

  • Under the Ontario Election Act, all employees who are Canadian citizens, 18 years of age or older, and residents of Ontario are entitled to three consecutive hours to cast their vote on election day

  • Where an employer must provide time off to an employee so they can vote, the employer may not make any deduction from the employee’s pay or impose any form of penalty.

  • If an employee is a returning officer or is appointed by a returning officer to be a poll official, and they request leave for this role at least seven days prior to the commencement of the leave, the employer must provide unpaid time off for the employee to fulfil this role.

Read more about employer obligations to employees during elections on the Hicks Morley website

Top Compliance Issues from the CRA Charities Directorate

As part of the quarterly updates from the Charities Directorate, the CRA notes their top compliance issues from the 2023/24 year. We've summarized them here for you!

Books and records

Reason to educate - minor errors:

  • Non-material and/or unintentional errors and/or omissions in the books and records

  • Not having a travel log to support minor expenses

  • Not maintaining a copy of current governing documents

Examples of high-risk non-compliance:

  • Having no books and records available

  • Refusing to provide books and records

  • Committing culpable conduct (falsified books and records)

Official donation receipts

Reason to educate - missing minor elements:

  • A statement that it is an "official receipt for income tax purposes"

  • The place or locality where the receipt was issued

  • The name Canada Revenue Agency and the website address (canada.ca/charities-giving)

Examples of serious non-compliance:

  • Issuing falsified/fraudulent/inflated receipts

  • Issuing receipts for services

  • Lending registration number to other organizations

T3010 information return

Reason to educate - unintentional minor errors:

  • Allocating fundraising expenses to the wrong reporting line

  • Incorrectly reporting line 5010 “Total expenditures on management and administration”

Examples of intentional/serious errors:

  • Significant inaccuracies, beyond what is reasonably considered minor*

  • Willfully omitting information from the T3010 and/or financial statements

  • Failing to file a return as and when required (which results in a revocation for failure to file)

*Opportunities for the Disabled Foundation v MNR, 2016 FCA 94 at paras 50-51.

CRA typically addresses minor errors without an audit, through communications like education letters.

Audits tend to be reserved for situations where a high risk of potential non-compliance has been identified. CRA uses stronger corrective measures, such as sanctions or revocations, in cases of serious non-compliance.

If you’re concerned about the compliance of your books and records, read Finance for the Arts in Canada to learn all about best practices for keeping your books up to date and accurate.

2024 Charitable Donation Deadline Extension Update

Recently, there's been some confusion around the announced extension of the deadline for making charitable donations eligible for tax support in the 2024 tax year. The extension allows individuals to include donations made between Jan 1 and Feb 28, 2025 on their 2024 tax returns. The Canada Revenue Agency (CRA) recently sent out an update on this matter which can be found here: Extension of the deadline for making 2024 charitable donations.

According to this CRA guidance, individuals may claim the eligible amount of certain gifts made to charities or other qualified donees up to February 28, 2025, on their 2024 personal income tax and benefit return. The gift must be in the form of cash, or transferred by way of cheque, credit card, money order, or electronic payment.

More importantly for our clients, CRA states that charities can issue receipts as normal according to receipting rules, and the CRA will work on their end to administer the extension. Charities are not required to issue official donation receipts specific to the extension period; however, they may wish to do so as a courtesy to its donors, especially if they generally receive only one annual receipt for multiple donations.

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