On December 14, 2012, CRA released Guidance CG-018 Arts Activities and Charitable Registration. The Guidance replaces CRA’s former published policy statements on arts and charitable registration, which were quite limited in scope. The Guidance provides a thorough summary of CRA’s positions on how organizations conducting and supporting arts activities can obtain and maintain charitable registration.
We reported previously in this Newsletter on a draft version of CG-018 that was released in November 2011. The final Guidance has not been changed significantly from the draft version released in November.
The Guidance confirms that there are three broad categories of activities related to the arts that may qualify as charitable purposes under one or more of the four heads of charity. These are:
- teaching or training artists, art students, or the public through structured activities (which may be charitable as advancement of education);
- exhibiting, presenting, or performing artistic works (which may be charitable under the fourth head of charity – advancing the public’s appreciation of the arts); and
- activities that enhance an art form or style within the arts industry for the benefit of the public (which may also be charitable under the fourth head of charity – promoting commerce or industry of the arts).
The Guidance states that in order to be found charitable under the fourth head of charity – which includes activities that advance the public’s appreciation of the arts, as well as activities that promote commerce or the arts industry – it will be necessary to satisfy two criteria: (i) art form and style and (ii) artistic merit. These criteria are intended to ensure that the artistic works being presented and/or promoted fall into recognized categories of art forms and styles – e.g., “jazz music”, with “music” constituting the art form and “jazz” constituting the style – and meet a minimum standard of quality so as to be considered to deliver a charitable benefit.
The Guidance elaborates on the tests that CRA will apply in determining whether these criteria are met. With respect to art form and style, CRA states that an organization must demonstrate common or widespread acceptance of both the form and style of art within the Canadian arts community. Appendix C to the Guidance sets out art forms and styles that will be presumed to have common and widespread acceptance, without further evidence. For new art forms or styles, organizations are expected to provide enough information to enable the CRA to assess whether they have received common and widespread acceptance. Evidence that will support the common or widespread acceptance of an art form/style includes:
- the art form and style is taught at accredited Canadian institutions of higher learning;
- the art form and style is recognized by a national or provincial/territorial arts body in Canada; and
- the art form and style is recognized in established Canadian academic arts journals or arts publications.
To demonstrate that an artistic work has artistic merit, organizations must meet an objective test to demonstrate the quality of the work. In addition to providing a detailed description of the artistic work, organizations will need to demonstrate that the work was selected for exhibition or promotion through an open, unbiased selection process and that the work has been reviewed or vetted by independent sources (mainstream media sources, arts publications, etc) and/or that the artist has established artistic training and qualifications.
The Guidance also discusses the issue of private benefit, noting that charitable arts organizations must operate to provide a public benefit to the broad community and not to support the careers of specific artists. Any private benefits that arise from an organization’s activities must be incidental only.
CRA also addresses the criteria applied to the charitable registration of arts councils, which typically exist to promote public participation in the arts, as well as museums, art galleries and performance venues. The criteria applied to these organizations are consistent with those discussed above.
Arts organizations that have charitable registration, or are considering whether to seek charitable registration, should consult the Guidance carefully.