F9. I have heard the term arm’s-length applied to registered charities. What does it mean?

Short answer

At arm’s-length describes a relationship in which the parties act independently of each other.

The opposite — not at arm’s-length — includes individuals who are related to each other by blood, marriage, adoption, and common law relationships. Not at arm’s-length also covers people acting together without separate interests, such as those with close business ties.

Long answer

The concept of arm’s-length is used, amongst other things, in registered charities to clarify private benefit. For example, promotional items must be supplied at arm’s-length at a reasonable market value and without any excessive private benefit to the supplier, the charity’s board, or any individual members of the board.