Social Enterprise

CRA Guidance on Community Economic Development – CG-014

Community economic development (CED) activities can be charitable when they further a charitable purpose.

Organizations that carry out CED activities may be eligible for charitable registration under the Income Tax Act if all their activities further charitable purposes. Generally, CED activities involve improving economic opportunities and social conditions of an identified community.

Canada Revenue Agency

Particular focus in the Guidance is “program related investments”.  PRIs, broadly speaking, are investments (as opposed to outright grants or expenditures) that directly further an organization’s charitable purpose. While a PRI may involve a financial return to the investor charity, the purpose of the investment is not to earn a financial return but to further a charitable goal.

Examples of program-related investments that include:

• share purchases in a corporation that operates a commercial apartment complex but has agreed to provide a set number of units to low income individuals at reduced rates;
• low-interest loans made to a not-for-profit entity that provides job training to unemployed individuals or those facing imminent unemployment, pursuant to an agreement with the investor charity; and
• lease of a building owned by a charity to an arm’s length organization at less than fair market value, for use by the lessee to teach language skills to help students develop skills necessary for employment, pursuant to an agreement with the investor charity.

For more information check out the Guidance – CG-014.  Note: This guidance replaces Guide RC4143, Registered Charities: Community Economic Development Programs, issued on December 23, 1999.

For more information see also:

• Investment Ready Program – (Government of Canada. Employment and Social Development). The Investment Readiness Program (IRP) is a 2-year $50 million pilot program designed to help advance Social Innovation and Social Finance (SI/SF) in Canada by building on existing supports to help catalyze community-led solutions to persistent social and environmental challenges. The pilot will provide a learning opportunity to inform future direction on how best to support and mobilize the social finance sector. Program is intended to help charities and nonprofit organizations to design, measure, and scale in order to get ready to accept financial investments. For more information on the program check out: Community Foundations of Canada.
• The Trico Foundation (in Calgary) provides educational opportunities and business development funding for non-profits interested in exploring their enterprise potential.
• Innoweave.ca is an initiative of the J.W. McConnell Family Foundation, offering a range of materials through a website, workshops and direction coaching, including specific modules on social enterprise and social finance.
• Alberta Social Enterprise Sector Report Survey 2014
• Social Enterprise Fund
• The Pros and Cons of the Legal Structures available to Social Entrepreneurs in Alberta. 2018. Kristina Roberts. Thrive Calgary
• Start your social enterprise – Government of Canada
• “What does it Mean to Start a Social Enterprise”. (n.d.) Sean McKinnon, et al. Carleton Centre for Community Innovation
• 20 Questions directors of NFPs should ask about social enterprise. 2014. Valentine, Andrew. Chartered Professional Accountants Canada (CPA)
  Use some key questions to learn about social enterprise and what it means for your not-for-profit organization (NFP).
• British Columbia Centre for Social Enterprise

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