Agency Contract or Joint Venture Agreement for Charities Operating Through 3rd Party Intermediaries

When charities operate through third-party intermediaries, it is crucial to have a clear and comprehensive agency contract or joint venture agreement in place. Such agreements should include various essential components to ensure the charity maintains control over its funds and resources while carrying out its mission effectively. 

First and foremost, the 3rd party intermediary must have the necessary reputation, expertise, capacity, and experience to carry out the activities required by the charity. It is also critical that the intermediary is not affiliated with terror or militia groups.

A project description must also be included, which is clear, complete, and detailed. This should include where the activities will occur, when, who will be doing them, and the projected budget. A written agreement outlining this requirement should be included in the contract to ensure that the charity maintains direction and control over its funds and resources. 

If the foreign activity involves a capital project, such as purchasing property or a building, the Canadian charity must (subject to limited exceptions) hold title to the foreign assets. The foreign intermediary must provide the Canadian charity with sufficient books and records to satisfy the charity and the CRA, ensuring that the project is completed as instructed.

The contract must also specify how the project is distinct from other projects carried out by the contractor to demonstrate that the Canadian charity is more than just a conduit for the 3rd party. It is essential to note that decisions for recipient eligibility must be made by the Canadian charity, not the contractor.

This is included in the direction and control requirement stated above. Ongoing reports, including interim and final reports, must also be provided for in the contract, with source documents such as receipts, pictures, invoices, and the like included in the reports. 

In addition, t is recommended that funds not be transferred in one tranche. Instead, funds should be advanced in installments upon the 3rd party contract reaching pre-determined milestones. This ensures that the charity can monitor the project's progress and make any necessary adjustments as needed.

In conclusion, a well-crafted agency or joint venture agreement is crucial for charities operating through third-party intermediaries. Such agreements must include all the above mentioned components to ensure the charity maintains control over its funds and resources while carrying out its mission effectively.

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