Funding Work Overseas: How Canadian Charities Can Grant to Non-Qualified Donees
Quick answer: Since June 2022, Canadian registered charities can make grants to organizations that are not qualified donees, such as overseas partners, as long as the grant furthers the charity’s purposes and the charity meets CRA accountability requirements: due diligence before granting, a written agreement, monitoring, and records showing how the money was used. Charities can still use the older intermediary model based on direction and control.
Many Canadian charities do their most important work outside Canada, often through local partners. For years, the only way to fund those partners was to keep “direction and control” over every activity. Since 2022, there is a second option: grants to non-qualified donees, which the CRA calls grantee organizations.
Two ways to fund a partner
- Intermediary arrangement (direction and control). The partner carries out your charity’s own activities on your behalf. You set the work, approve budgets, receive regular reports and keep control over how resources are used. This is the traditional model described in the CRA’s guidance on activities outside Canada.
- Grant to a grantee organization (qualifying disbursement). You give a grant to an organization that is not a qualified donee, for a charitable purpose, and meet the CRA’s accountability requirements. The CRA’s final guidance on this regime was published in December 2023.
What the CRA expects for grants to grantee organizations
- Due diligence before granting: know who the grantee is, its track record, governance and capacity, and assess the risks of the project and location.
- A written grant agreement setting out the charitable purpose, budget, reporting, and what happens if funds are misused.
- Monitoring proportionate to the size and risk of the grant: progress reports, financial reports, and site visits or third-party verification where appropriate.
- Records showing the money was used as intended, kept in Canada and available to the CRA.
- Reporting on the T3010, with itemized details for larger grants to grantee organizations.
Charities whose purposes are purely grantmaking may need to update their governing documents before using this route, because grants must further a charitable purpose the charity itself holds.
Practical documentation checklist
- Board-approved policy on grants and international activities
- Partner due-diligence file, refreshed regularly
- Signed agreement for each project, with budget and reporting schedule
- Proof of transfer, including currency conversion records
- Financial and narrative reports from the partner, with supporting receipts where possible
- Your own review notes showing the reports were checked
Why the paperwork matters
When the CRA audits a charity with overseas activities, the question is rarely whether the work was good. It is whether the charity can prove where the money went and that it stayed within its charitable purposes. Strong documentation is what protects your registration.
We work with many relief, humanitarian and faith-based charities funding work abroad. Our fractional CFO service sets up the grant files, monitoring and reporting the CRA expects, and our audit preparation keeps them ready for review.
Frequently asked questions
What is a non-qualified donee?
Any organization or person that is not a qualified donee under the Income Tax Act, such as a foreign charity, a local partner overseas or a Canadian non-profit that is not a registered charity. Since 2022, registered charities can make qualifying disbursements to these grantee organizations if they meet the CRA’s accountability requirements.
Do Canadian charities still need direction and control for overseas work?
Not always. Direction and control remains required when a partner carries out the charity’s own activities as an intermediary. For grants to grantee organizations, the charity instead needs due diligence, a written agreement, monitoring and records showing the funds furthered charitable purposes.
How do grants to non-qualified donees appear on the T3010?
Charities report qualifying disbursements to grantee organizations on the T3010, including itemized details for larger grants. Keep agreements, transfer records and grantee reports so the figures can be supported if the CRA asks.
Disclaimer: This article is for general information only and reflects the rules and guidance available when it was published on October 14, 2026. Tax, charity and accounting rules change over time, and every organization’s situation is different. Please consult a qualified lawyer or accountant before relying on this information. Linked CFO is not a public accounting firm, and this article is not legal, tax or accounting advice.
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