What are the three categories of registered charity and why does it matter which one mine is?

The Canada Revenue Agency designates every registered charity as one of three types: a charitable organization, a public foundation, or a private foundation. A charitable organization primarily carries out its own charitable activities directly. A public foundation primarily funds other qualified donees and is governed by a board where no single person or group of related people controls it. A private foundation can also fund other organizations or carry out its own activities, but is typically controlled by a smaller, related group of people — often a family or a small circle of founders.

The designation matters because different rules attach to each category: it affects the disbursement quota calculation, the restrictions on carrying on a related business, permitted investments, and how closely CRA scrutinizes transactions between the charity and people connected to it, since private foundations in particular face tighter conflict-of-interest-style rules given their more concentrated control.

CRA assigns the designation based on a charity's actual governance and activities, not simply on what the charity calls itself in its own materials, and a charity's designation can change over time if its structure or activities shift enough. Confirming the current designation with CRA is worthwhile if it has been some time since it was last reviewed.