What is 'direction and control' and why does CRA require a charity to prove it when working with a partner group?

"Direction and control" is the standard CRA applies whenever a registered charity works with a partner that isn't itself a qualified donee — a community organization, an unregistered local group, or an organization operating abroad, for example — to carry out charitable activities. Rather than simply handing money to that partner and letting it decide how to spend it, the charity has to be able to show it actually directed how the funds were used and kept ongoing oversight and control over the activity throughout.

CRA requires this because a charity only gets the tax and registration benefits it has for conducting its own charitable activities — and when it works through a non-qualified-donee partner, the law treats that work as needing to genuinely remain the charity's own activity, carried out through an intermediary, rather than the charity simply funding someone else's independent project. Without demonstrated direction and control, CRA can treat the charity as having improperly conducted its charitable work through an unauthorized third party, which puts the charity's own registration at risk.

In practice, this means charities working with non-qualified-donee partners need real, documented oversight mechanisms — clear agreements, reporting, monitoring, and the ability to redirect or stop funding if the partner doesn't use the money as intended — not just goodwill and trust in the relationship.