In this episode, we break down why a private foundation can make its directors a fantastic financial return on a loan and still lose its charitable status entirely. We use a nearly 40-year-old Ontario case, the Feldman Charitable Foundation, where a director's company borrowed almost the entire foundation's assets, paid it back in full with no losses, and the board still got hit with a finding that it breached its fiduciary duty. We unpack why the CRA and the courts do not care about the return on investment and instead scrutinize process: who negotiated the deal, whether the foundation had genuinely independent legal advice, whether directors left the room during the vote, and whether the board's reasoning was actually written down. We also cover what modern audits look for, the steep penalties (including a 105 percent tax and revocation of charitable status) that can follow even a profitable loan, and the single best defense a board has, which is meticulous, contemporaneous documentation, not a valuation obtained after the audit letter arrives.

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A Special Mention: A huge thank you to our friends at OrgHub.ca, an innovative software platform that provides not-for-profits and charities across Canada with a streamlined, mode

#CharitableFoundation #OntarioLaw #NonProfitCompliance