Charitable Business Activities: What You Can and Can't Do (2)

Employees and Your Charity

If you need to hire employees for your charity, that’s actually great news! It means you’ve probably come a long way from registering your charity, and you’re well on your way to achieving your goals. In fact, you might even change the world.

But, while growth, including needing to hire people to help with the day to day of your organization is a good sign, it does also raise a few new questions and problems.

Here’s what you need to know about employing people to work in your charity.

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Hiring and Screening Employees

One of the biggest problems many employers face in Canada is balancing their employees rights to privacy with the protection they are entitled to under The Privacy Act.

The rules about what employers can and cannot ask their prospective hires also differ from one province to the next, and by employer type. So, in some places, you may be allowed to ask if your potential employee has a criminal record, but elsewhere you might not.

The same goes for credit checks. Unless the job is directly related to working in finance or arelated industry, it might not be relevant to the job, and asking for one might contravene the Act.

Generally, when it comes to employees and privacy in Canada, any screening, background checks or surveillance by employers must be relevant to the job, disclosed to the employee, applied consistently, and obtained through legal and credible means.

This includes things like drug and alcohol testing, and even looking up employees on social media.

Of course, even though you can’t be excessively invasive with your employees, you should also know that any negative behavior that they might indulge in (and any press that accompanies it) can and probably will reflect on your organization. That might not affect your organization in any fundamental way, but it can be a public relations nightmare. So, make sure you have clearly defined policies governing employee conduct, and that you apply them consistently.

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Remuneration and Charity Employees

Many charities only employ a handful of directors and trustees and rely on the donated time of volunteers to get a lot of their work done. However, if you are paying those directors and trustees, you need to know that the CRA has set strict guidelines for how much they can earn, and what kind of earnings they are entitled to.

You can read more about this on the Government of Canada website which also has information about undue benefits, and how employee remuneration affects your tax returns.

It’s also important to note that the CRA does pay close attention to the earnings of charity directors and trustees, and they will take action if they suspect something is amiss.

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Volunteers

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Many charities rely on volunteers to get their good work done. But it’s also interesting to note thatjust the act of encouraging volunteerism can be considered a charitable purpose, and that organizations that do that can become registered charities.  

If volunteers incur expenses while working for a charity, and are not reimbursed for those expenses, they are also seen as a gift to the organization, and the rules about gifts and donations would apply.

Which means that while it’s fine for charities to make use of volunteers, they do need to be knowledgeable about the regulations, and how they apply.

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Policies First

A charity is like any other business. There are all kinds of legislation that governs what you can and can’t do, including when you hire employees. Some of that legislation is specific to charities, but some applies generally. Some is managed at the federal level, but there is also provincial level legislation to consider.

The best advice is the same as it would be with any business. It’s always best to know the rules before you need to apply them, and to have policies drawn up before you need to use them.

Spend some time before you need to hire employees or take on volunteers, and make sure that you’ve dotted all the i’s and crossed all the t’s. It will undoubtedly save you a lot of time, money, and effort later. Stay abreast of changes in legislation too.This is a good business practice, but it will also ensure that your charity stays in good standing, and on the right side of the law.