Why and how many charities lost their status in the past two years - and the case for more data

The more than 4,000 revocations in 2023 and 2024 does not mean that Canada lost this number of charities – there will have been a significant number of new charitable organizations who registered with the CRA, which is not included in this dataset. 

According to charity researcher Don McRae, there were 85,524 charities registered as of January 5, 2025, down from 85,959 in 2023. That is a net loss of 435 charities. 

Since new registrants have not filled in their first tax T3010 – the registered charity information return – there is not a lot of information available about them, and their names alone do not provide enough of an indication as to what their activities might be, he said.

In analyzing CRA postings in the Canada Gazette, McRae has seen that community benefit organizations make up 42.8 per cent of new registrations.

Churches struggle to stay afloat

The data analysis shows that religious organizations make up an overwhelming percentage of the charities that shut their doors in 2023-2024. About three in every five religious organizations voluntarily gave up their status, implying they no longer had the funds to continue operating in the community, or they merged with others to be able to keep the lights on. 

In 2019, the National Trust of Canada predicted that a third of religious buildings – primarily churches – would close their doors in the decade that followed, an estimated 9,000 buildings. 

There are multiple reasons for this decline, said Wood Daly. 

Along with aging congregations, Wood Daly also cited a growing “lack of religiosity”, and a general decline in those who trust institutions. 

Churches also often lack the human resource capacity to run a charitable organization effectively, and can fall behind on reporting or keeping up with the right requirements, he said. 

The pie chart below shows a breakdown of each of the sub-categories that have a religious purpose or are working to advance faith communities. Different denominations of Christianity are clearly the worst affected by status revocations. 

“One of the things that we don’t have a handle on yet is the closures that may have resulted because of financial and attendance pressures during COVID,” he said. 

“Overall, I don’t think that there was a big shift in financial support for congregations during COVID – in fact, some members were anticipating that it would be problematic and donated more.

“Most denominations are saying that they have not seen a full rebound in attendance [and] that some people got used to attending virtually. I haven’t seen anything domestic in Canada but there is some research in the States that suggests that people who attend virtually do not contribute to the same degree financially.”

The pandemic and health risks definitely sped up the demise of churches in Canada, McRae added. “That meant lower revenues for churches, which meant more churches closing, because they couldn’t keep up the repair and other building costs.

“A number of churches have merged with others in order to maintain the ability of their congregants to worship,” McRae said. 

Wood Daly was also one of the lead researchers on the Halo Project, which seeks to compare the amount that active congregations spend with the amount they regenerate in social impact. 

He found that for every dollar that a congregation spends, it produces $3.39 in economic benefit for its communities. 

Churches and other religious buildings tend to double as multi-purpose sites, hosting daycare services, senior support services, food banks, clothing drives, and being hired as recreational and event spaces. 

Many also host educational classes, such as after-school clubs and Sunday schools.

The research also found that those who attend religious services are more likely to volunteer in their communities: 61 per cent of those who regularly attend a service also volunteer, while the number sits at 37 per cent among those who do not attend religious services or go less frequently. 

This ripple effect that churches and church buildings have in the community goes largely unnoticed, he said. Despite their primary purpose as religious organizations, churches today often serve multiple sectors of the local communities – whether by providing their space at a subsidized rate, opening their doors to marginalized and vulnerable groups, or volunteering their time. 

However, the tax status of churches and other religious entities remains a highly contested issue in Canada. Recently, the Standing Committee of Finance added a recommendation that would amend the Income Tax Act to no longer include “advancement of religion” as a charitable purpose. 

According to Christianity Today, “some local governments have already made moves to tax churches. In 2018, Nova Scotia decided that parts of the property of about 20 churches across the province were not tax exempt because they provided childcare centers during the week.” 

Religious organizations can also be excluded from certain funding pots, exacerbating their already-precarious financial position.

Data gaps: how does the CRA categorize organizations?

How the CRA categorizes charities is a big challenge to overcome. While most will have a primary purpose, they’ll also likely be involved in other causes or activities. 

The CRA said that it gives each organization a category and sub-category at the time of registration, “that reflect their purposes and activities.” 

“The category code generally identifies the category under which a charity’s purposes are classified,” said the CRA. 

“It is important to note that category codes may not always reflect the full extent of a charity’s activities.

“For example, a charity with religious motivations that operates under a food bank could be categorized under a “relief of poverty’ category code.”

The CRA provided Future of Good with an appendix of all of the codes it uses to classify each charitable organization, along with an older coding system it was using. The codes were updated in May 2019 “as part of a transition to digital services” for charities filling in the T3010. 

According to David Lasby, principal researcher at Imagine Canada, the new categories are designed to be more in line with the International Classification of Non-Profit Organizations (ICNPO). 

While the categories are somewhat in line with the CRA’s classifications of charitable organizations, it gets a little more complicated to line up the sub-categories between the ICNPO and the CRA’s codes. 

Most of the changes between the two coding systems appear to be a way to simplify the old categorization system: for instance, in the old codes, there were specific classifications for certain large, pan-Canadian charities, like United Way / Centraide, Boys & Girls Clubs, the Canadian Cancer Society, and St. John’s Ambulance, among others. 

In the new coding system, they are now all classified according to their primary purpose or cause, along with other similar organizations. 

The old coding system also broke down types of funds into more granular categories. One example is the category for foundations that have a specified community benefit: in the CRA’s previous coding system, specific information on how those funds were being directed in the community were available, as they were broken down into civic improvement foundations, conservation / nature foundations, library foundations, and others. 

Previously, when filing their tax return on paper, charitable organizations would also be provided with a TF725 form – a Basic Information Sheet – that allowed them to tell the CRA what the split of their activities was, as well as update it on a yearly basis, Lasby said.

The CRA would send organizations their own assessment of what they felt they did, after which the organization could make amendments. 

“Now, we’re in a situation where, as organizations shift and change, they don’t really have an easy mechanism to update that,” Lasby said. “I’ve certainly mentioned it to people in the CRA.”

As an example, he gave religious congregations partaking in international development work. If they’re classed as a religious organization only, the other part of their work is missed in the CRA’s classifications. 

“There is information that is collected on the T3010 that does potentially shed some light, because organizations have the opportunity to describe new and ongoing programs using free text,” Lasby said. 

“The problem is that it’s free text information and it becomes quite unwieldy to work with.”

As per the new coding system, each category has a sub-category marked ‘Other’, usually assigned the code number 99. 

In our analysis, Future of Good found that a significant number of charitable organizations have been categorized as ‘Other’, making it challenging to ascertain which sub-category they belong to, or what their exact cause is.  

For instance, the category for ‘Organizations Relieving Poverty’ – which encompasses food banks, shelters, and refugee / settlement assistance – is the third highest in terms of charities that have had their status revoked in 2023 and 2024. 

However, of the 471 charities that closed in this category, 343 are marked as ‘Other’. Therefore, for 73 per cent of the charities, the coding system does not provide any more information about their activities beyond poverty relief. 

There is a similar pattern in the Community Resource and Arts / Arts Education categories as well. Future of Good asked the CRA whether there is an ambition to increase the granularity of the codes, particularly the ‘Other’ category, and did not receive a response to this question.