OTTAWA - Most Canadian charities that provide disaster relief at home and abroad are breaking the rules, suggests a new probe by the Canada Revenue Agency.
More than half of the 27 disaster-relief charities randomly picked for close scrutiny by the agency's charities directorate failed to meet standards - including some that handed over donations to "non-qualified" recipients abroad.
"The common theme amongst charities displaying foreign activity concerns was gifting to non-qualified donees or transferring funds collected in Canada to an international governing body without control over the use of the funds," says an internal report.
The document, completed this fall, was obtained by The Canadian Press under the Access to Information Act.
The agency launched the so-called disaster-relief project in 2005, following the torrent of donations from Canadians to help victims of the Dec. 26, 2004, tsunamis triggered by an earthquake off Indonesia.
About 225,000 people were killed in 11 coastal countries, and the Christmas-season disaster drew billions in aid from around the world, including hundreds of millions of dollars from Canada. Concerns were raised at the time about how effectively the unprecedented pool of donations would be spent.
The Canada Revenue Agency's probe looked at the 2,350 Canadian charities that reported any disaster-relief activity between 1993 and 2004, for anything from earthquakes to floods.
Of these, 178 reported that disaster relief was their main concern, and 27 were picked for auditing. Twenty-four of the audited charities focused on projects aboard.
Auditors found a raft of problems, including improper donation receipts, bad or non-existent bookkeeping, shoddy paperwork and failure to monitor how donations were being spent once money was send abroad.
The agency required seven of the charities to sign so-called compliance agreements to fix serious problems, and another nine received "education" letters requiring them to deal with more minor infractions.
The document does not identify individual organizations, nor does it provide details of the rule-breaking.
A spokeswoman for Canada Revenue Agency said none of the groups were stripped of their charitable status.
"No charities were revoked for cause as a result of this review," said Beatrice Fenelon.
She added that the agency is still reviewing the findings to determine what internal changes or processes may need to be changed to better monitor disaster-relief charities.
The review also looked at 29 disaster-relief charities that lost their charitable status either voluntarily or because of serious infractions. Typically, these groups - which raised funds through collection boxes, mail campaigns or dinners and galas - lasted just four years on average.
Most of them failed to file the required paperwork for winding down their operations.
The Canadian International Development Agency and the Foreign Affairs Department also participated in the probe.
Fenelon said the directorate is planning to launch reviews of other types of charitable groups, though she declined to give details in order to "protect the integrity of these projects."
About 82,000 federally registered charities take in about $40 billion each year from donors in Canada.
There have been several horror stories in recent years about charities lining the pockets of unscrupulous operators, though the head of the charities directorate, Elizabeth Tromp, has said the vast majority are doing good work.
