https://gcfcanada.comwp-content/uploads/2021/03/Ministry-Projects-Risks.jpgPGJyLz4=PGJyLz4=The pandemic has had many effects on our world globally, many negative but some positive. One outcome is the increased public awareness and the supportive response of individuals and churches to provide for the desperate needs of many developing nations and impoverished communities around the world. You may relate to this, perhaps your church or church members have come together with a desire to bring change and impact lives in a particularly needy area.Whether the desire of a church and its members to be involved in international missions was strong pre-pandemic or the pandemic was the catalyst that led them to start an overseas ministry, the reality is that international ministry can be complicated. In fact, some churches managing an overseas ministry project may not realize that they could be putting their charitable status at risk with the government.It is important for churches in Canada to be aware of their options for both national and overseas ministry and determine whether managing such projects will put their church at risk of non-compliance with the Canadian government.

How can a Canadian church support ministry projects within Canada or overseas?

The Income Tax Act (Canada) allows charities to conduct their charitable purposes by: 1) providing financial support or assets to another “qualified done”; or 2) the church can conduct their “own activities” nationally or internationally.

Option 1: The church can provide financial support or assets to another “qualified donee.” A “qualified donee” is another Canadian registered charity. For many churches this is the simplest and best way to support ministry at home or abroad that is outside of their expertise. For example, a Canadian church with no experience in international ministry operations that wishes to aid people in Haiti may decide to support Doctors Without Borders Canada, a “qualified donee,” already working in that area.

• The registered charity provides direction and control for the ministry project that is being supported by the church. The church has varying degrees of connection and interaction with the ministry project’s representatives but is not involved in the project’s day-to-day ministry decisions.

• The Canadian registered charity takes on the full risk that comes with managing an international ministry project. For the price of their administration fee, the foundation or charity takes on full responsibility to collect the required charity compliance documentation. This includes financial information, showing how donated funds were spent with receipt documentation, ministry reports to determine program effectiveness, and compliance with all other reporting expectations of the government, including annual tax filings.

Option 2: A Canadian church can conduct their “own activities” nationally or internationally. Nationally, is generally straight forward, a church conducts ministry that fulfills the charitable objects in its founding documents. However, a foreign charity or NGO is rarely a qualified donee, thus Canadian charities cannot transfer funds or assets except to further their own charitable activities in a structured arrangement. There are a few structured arrangements which a Canadian church can use to operate overseas.

• Use Canadian employees or volunteers to work abroad;

• Use an Agency Agreement with an Agent working to fulfill the charitable objects of the church’s project;

• Use Contractor Agreements;

• Establish Joint Ministry Agreements; and

• Cooperative Partnership Agreements.

Citing: Mark Blumberg - Canadian Charity Law

Churches with overseas ministry as their “own activities” vs. with intermediaries:

It is important to be aware of the complex requirements associated with sending funds internationally. While the church is a tax-exempt organization, it must collect proof that the international ministry project is fulfilling its intended charitable purpose, and this purpose must fall within the church’s stated charitable objects. Due to the requirements of Canada Revenue Agency (CRA) to have very specific charitable objects listed in founding documents, Canadian church’s may be more limited in overseas ministry options. Thus, it is important for a church to consult their founding documents to ensure the type of ministry they plan to engage in overseas falls within their charitable purposes.The church must also be able to show direction and control over the project. This inevitably requires a lot of administration and oversight by the Church. The church must manage things carefully and keep the project finances separated from the church’s normal operations. To show direction and control, it must ensure finances are being utilized as directed which requires reviewing and approving transfer of funds, collecting receipts for expenses, and creating and managing a separate budget. The church must also collect regular ministry reports that demonstrate that the ministry project’s objectives are being fulfilled. As well, the church must provide proof that it is complying with all labor laws, charitable registrations, and governing tax laws nationally and as laid out by the government of the country within which the ministry is taking place. While the direct management of an overseas project may be challenging, it is possible to do this well when it is thoughtfully planned.

Is your church considering managing an international ministry project?

Consider implementing these best practices:

• Consult qualified experts to identify what legal, reporting, and tax requirements are needed both nationally, as well as within the country where the ministry will be operating.

• Be thoughtful and strategic when developing the mission purpose and determining how to be involved.

• Verify that the ministry project’s purposes align with the charitable purposes of the church under which the church has charitable status.

• Develop a budget that will meet the program objectives and admin requirements.

• Using government compliance requirements, determine the standards and frequency of ministry and financial reporting.

• Consider what the long-term partnership with mission workers should look like.

• Identify individuals or an intermediary that can fulfill the ministry work abroad.

• Find committed volunteers who can serve together from Canada to manage and provide guidance to those working abroad.

• The church should develop and provide clear guidelines for the committee to work within.

• Provide clear ministry objectives and measuring criteria to the employees, agents, or intermediaries working abroad.

• Develop a system to ensure compliance of required documentation is received in a timely manner.

• Conduct annual audits to examine supporting receipt documentation and ensure expense compliance.

Citing: Jeffrey Vikstrom, Network CRCNA

Is your church at risk of being in non-compliance?

Churches are often involved in great overseas ministry projects and so it is vital that they remain compliant with government requirements to ensure they do not put themselves at risk of losing their charitable status. As we have noted, the result of forging ahead without confirming the project aligns with the church’s charitable purposes is one way to put the church’s status at risk. The other is to have a project that aligns with the Church’s objects but be unable to show how funds were used overseas or lack other required documentation showing direction and control. It is unfortunate, but some charities have lost their charitable status because they were unable to prove how their financial support was used overseas and thus were not providing the direction and control required by CRA. Churches can certainly support overseas ministry projects, however, managing an overseas project independently requires extensive oversight and time to remain compliant.

Overseas Ministry Solutions:

The simplest, and probably the best way, to avoid putting your church at risk is to seek out a “qualified donee,” specifically a Canadian charity or foundation that has experience with international ministries and projects. Find one that shares your ministry values and has proven ministry and fiscal management. There are some that can vary the level of management that is given based on the situation or the church’s preferences. This could be a denominational mission agency, or it could be a registered foundation like the Great Commission Foundation (GCF). Foundations such as GCF can provide a broader scope of ministry options than a traditional Mission Agency and are often willing to collaborate on a new ministry initiative.It is important to recognize that your church can still engage with and have personal connections with the overseas ministry when using an agency to manage the project. This collaboration will likely strengthen ministry ties as the back end administration is not becoming an onerous job for the church or volunteers. Instead, the church members can focus their time on developing stronger relationships with their international ministry partners.PC9icj48L2JyPg==https://gcfcanada.comwp-content/uploads/2020/11/GCF-Logo-2.pngABOUT GCFSince 2002, the Great Commission Foundation has been providing a place for individuals, ministries and organizations to thrive in ministry. Our vision is to work together to help the impoverished, further education, and help fulfill the Great Commission of Jesus Christ.We are passionate about simplifying Ministry & Mission. Our team of skilled administrative and accounting personnel are dedicated to simplifying ministry, enabling you to focus on God’s calling. We are passionate about using our abilities to bring admin relief to our agents and projects and release them to spend more time on ministry work. Through collaboration, we provide compliance, clarity, and relief to ministry. We welcome any Christian ministry or project to contact us to discuss how we can collaborate. We believe we are stronger together.PC9icj48L2JyPg==LEARN MORE PC9icj48L2JyPg==PC9icj48L2JyPg==https://gcfcanada.comwp-content/uploads/2019/07/Dan-Melissa-Whitcombe-Greater-Joy-School.jpg