The Charities Handbook of the Canadian Council of Christian Charities makes the following statement in reference to financial records. "The purpose of financial reporting in the charitable sector is not to determine profit, but rather to determine the contributions required to meet the objectives of the various projects undertaken by the charity in the year. Donors are asked to make contributions to the charity based on its goals and objectives."
Once your church has registered with the Charities Division of Canada Revenue Agency (CRA), it is a requirement of the CRA that the church maintain and keep an up to date set of financial books. At the very minimum the documents required would include:
- a budget
- a record of income
- a record of expense
- financial statements/reports
- minutes
- duplicate copies of official donation receipts
These documents must be kept on file and available to CRA should they request such information. The financial records must be kept in either of Canada's two official languages, French or English. A financial statement must be filed with the charity's annual return each year.
As your organization grows and moves ahead with its ministries, your financial records will help provide the following:
- historical information which can be used as a tool for planning
- current information which can be used as a tool for evaluating
- accountability
Regular statements of receipts and disbursements should be prepared and presented to the membership. Such statements should be clear and concise. Members cannot deal with what they do not know! Good statements communicate what is happening and the health of the organization.
In general records must be kept on file for six years from the end of the taxation year to which such records relate. For specific information on specific documents, please verify with CRA.
The following lists those documents that must be kept permanently for income tax purposes:
- minutes of meetings of members and the governing board
- all documents and bylaws governing the charity
- duplicate official donation receipts
- all records relating to gifts made where the donor directed that funds be held for at least ten years
