Allowing Charities to “Do More Good” through Carrying on Unrelated Businesses

Abstract

One way in which charities could increase their positive impact on society is by raising revenue through carrying on a business. Current income-tax legislation in Canada, however, restricts the ability of charities to do so by prohibiting them from carrying on an unrelated business. This article reviews the current law and explores the options for loosening this restriction, while at the same time addressing the potential problems associated with charity-operated businesses. In the end, the author recommends that all charities except private foundations be permitted to operate small businesses, so long as the business activities are disclosed to donors.