This chapter outlines the policies and procedures a licensing official must follow to determine:
To be eligible to receive a lottery licence, an organization must first have charitable objects and purposes that fall within one of the four classifications of charitability:
Determining an organization’s eligibility for lottery licensing is a complex process. The guidelines set out in this chapter cannot be considered independently of each other; a licensing official must consider all circumstances to determine which of the organization’s objects or purposes and activities fall within one of the four charitable classifications. It is not sufficient to look at an organization’s purposes to decide whether it qualifies as charitable: it is also necessary to look at the organization’s activities.
A licensing official may reference decisions made by the courts, the Canada Revenue Agency and Office of the Ontario Public Guardian and Trustee as a guide to eligibility decisions. However, registration under the federal Income Tax Act as a charitable organization does not confer automatic lottery licensing privileges. Similarly, approval of letters patent of incorporation by the Office of the Ontario Public Guardian and Trustee does not confer automatic lottery licensing privileges. Licensing officials must make eligibility decisions on a case-by-case basis, by considering the specific circumstances of each organization.
Licensing officials must determine the eligible uses of lottery proceeds for each organization by examining the charitable classification of the organization’s objects or purposes and activities. For example, an organization that has not demonstrated that it has an object that falls within the “relief of poverty” classification cannot use lottery proceeds to operate a food bank.
Some organizations have objects or purposes and activities that fall within more than one of the four charitable classifications. In this case, eligible uses of lottery proceeds may also fall within more than one of the four classifications.
This chapter is provided as guidance. It is not intended to provide definitive statements with regard to any organization that may apply for a lottery licence. It provides details regarding:
The examples are not exhaustive. They are provided to describe the principles a licensing official must use to determine the eligibility of an organization’s objects or purposes and activities.
Organizations must be continuously reviewed and reassessed to ensure continued eligibility. The examples used in this chapter reflect the current interpretation of what is eligible. It is the duty of licensing authorities to remain current.
To be eligible for a lottery licence, an applicant must qualify either as an eligible charitable organization or as a non-profit organization with charitable objects or purposes.
There is no general statutory definition of “charity” and “charitable.” Although there are many worthwhile activities and causes, not all are considered charitable. An essential and common element in the determination of what is charitable is the provision of “public benefit.” What is considered to benefit the public does not remain constant. It changes with the changing values and needs of society and reflects the social conditions of the time.
In order to determine which organizations are eligible for lottery licences, the Alcohol and Gaming Commission of Ontario (AGCO) uses the four charitable classifications described in the next sections. In order to qualify for a lottery licence, an organization must demonstrate that it exists to provide services in one of the four charitable classifications. In addition, an eligible organization must also meet all of the following criteria:
An organization may have objects or purposes that focus its activities towards a specific segment of the community, for example, Indigenous persons, senior citizens or people with physical or developmental disabilities. Such organizations may be eligible if their objects or purposes and activities fall within one of the four charitable classifications. A licensing official must assess the activities of the organization in order to determine whether the organization is eligible and, if so, within which of the four charitable classifications it falls:
(A) The relief of poverty
The “relief of poverty” classification includes organizations that assist the economically disadvantaged by directly providing goods, social services, programs or facilities. The financial and other assistance provided is intended to alleviate the effects of living in poverty.
Poverty must be considered in relation to current economic and social conditions. The provision of goods or services to relieve poverty is intended to ensure that individuals have a basic standard of living. Individuals do not have to be destitute in order to qualify for this assistance.
Food banks, soup kitchens and organizations that provide clothing, furniture and appliances are examples of these types of organizations.
See also “2.7.1. Policies: The relief of poverty”.
(B) The advancement of education
The courts have defined the “advancement of education” as:
Simply providing information does not meet this definition: significant training or instruction must also be offered.
To meet this definition, the instruction must be available to a wide section of the public and must not be restricted by any means. It is not necessary for an organization to provide instruction or training in a formal classroom setting, but its activities must improve human knowledge and provide a public benefit through instruction.
Teaching institutions and schools are examples of organizations that may fall within this charitable classification.
See also “2.7.2. Policies: The advancement of education”.
(C) The advancement of religion
The “advancement of religion” refers to:
To be eligible as a charitable organization in this classification, a group’s spiritual beliefs or faith must include an element of worship of a personal God, gods or deities. Fostering a belief in proper morals or ethics alone is not enough to qualify a group as an eligible organization in this classification.
The group’s activities must also include an element of public instruction and the promotion of spiritual teachings. Its activities must serve religious purposes for the public good. The group’s beliefs and practices cannot include anything the courts consider subversive, immoral or illegal.
Places of worship, such as churches, mosques, temples and religious congregations, are examples of these types of organizations.
See also “2.7.3. Policies: The advancement of religion”.
(D) Other charitable purposes beneficial to the community
This is the broadest classification and the most difficult to consider. An organization with a charitable purpose that does not fall under one of the first three classifications may be eligible in this classification. The organization’s activities must provide a public, not private, benefit.
The phrase “other charitable purposes beneficial to the community” has been interpreted to include activities that benefit the whole community, without discrimination, so that the purposes have a truly public character. This may include:
See also “2.7.4. Policies: Other charitable purposes beneficial to the community”.
In general, eligible organizations fall into one of two categories.
In order to be considered a charitable organization for the purposes of lottery licensing, an organization must have objects or purposes and activities that are exclusively and wholly charitable. A charitable organization cannot have a mixture of charitable and non-charitable purposes or activities.
Charitable organizations have a number of characteristics:
The Office of the Public Guardian and Trustee has supervisory responsibility for charitable organizations and their use of charitable funds. Charitable organizations must comply with the reporting requirements of the Charities Accounting Act and the ownership restrictions set out in the Charitable Gifts Act.
Charitable organizations may register with the Canada Revenue Agency. However, registration as a charitable organization for the purposes of the Income Tax Act does not automatically qualify an organization for lottery licensing.
Organizations that have a mixture of charitable and non-charitable objects or purposes may be considered to be “non-profit with charitable objects.” A non-profit organization with charitable objects is eligible to receive lottery licences if its charitable mandate falls within one of the four charitable classifications and it meets all the other relevant criteria.
Non-profit organizations have a number of characteristics in common with charitable organizations. However, non-profit organizations do not have the same level of restriction placed on their business activities and the public benefit that they provide.
If an organization’s application does not include documentation proving its status as a charitable organization, it should be considered against the eligibility criteria to determine whether it is a non-profit organization with charitable objects.
If a licensing official receives an application from an organization that appears to be a sub-group, “partner” or auxiliary of another eligible organization, the official must ask the following questions in order to determine the status of the two organizations:
If the comparison shows that the two organizations exist for the same purposes, the parent group may be licensed if it is an eligible organization. The sub-group, “partner” or auxiliary may only be licensed where the parent group chooses not to conduct lottery events and permits the sub-group, “partner” or auxiliary group to hold lottery licences on its behalf.
If two or more eligible organizations amalgamate, the resulting entity must be treated as one organization for lottery licensing purposes. For example, if two community service organizations that each have a break open ticket licence amalgamate, the new organization may have only one licence. When two or more eligible organizations amalgamate, licensing officials must complete a full eligibility review.
Eligible organizations that amalgamate must disburse the funds in their designated lottery trust accounts for the purposes approved by the licence. The funds may be disbursed after amalgamation. If the funds are not disbursed before amalgamation, the licensing authority must approve the disbursement of funds.
When an eligible organization amalgamates with an ineligible organization, the new organization may or may not be eligible for lottery licensing. Licensing officials must complete a full eligibility review before issuing any new lottery licences.
An eligible organization that amalgamates with an ineligible organization must disburse the funds in its designated lottery trust account before amalgamation, for the purposes approved on the licence. The licensee must notify the licensing authority of the disbursement.
Prior to the disbursement of funds the lottery licensing authority must approve any request to hold lottery proceeds in a designated lottery trust account past the date of amalgamation and must also give prior approval of any final disbursement that occurs after amalgamation.
An organization is ineligible for a lottery licence if:
Organizations ineligible for lottery licensing include:
The above list is not intended to be exhaustive. Every organization must be reviewed, based on the documents provided, since all organizations are unique.
Governments are political bodies established for administrative purposes. Their primary mandate is to govern, which is not a charitable object. Services provided by governments may provide a public benefit and, if provided by a charitable organization, may be considered a charitable activity. However, a government is not a charitable organization and is not eligible for lottery licensing.
When reviewing organizations that are associated with governments, licensing officials must determine the extent to which the organization is:
For example, conservation authorities established under the Conservation Authorities Act are not separate legally, administratively and financially from the government. Therefore, typically these types of organizations are not eligible for lottery licensing.
A licensing authority must never issue a lottery licence to a municipality or one of its administrative departments. Municipalities derive their powers from the Municipal Act or, in some cases, a constituting act. As entities established primarily for local administration, they are not given the power to carry out charitable objects or to conduct lottery schemes. Therefore, municipalities and their operating committees or agencies do not meet the definition of a charitable organization and do not qualify for licensing under Section 207(1)(b) of the Criminal Code.
When reviewing organizations associated with a municipality, a licensing official must determine the extent to which the organization is controlled by the municipality and whether the organization is separate legally, administratively and financially from the municipality.
Public libraries constituted under the Public Libraries Act are not separate financially and administratively from the municipality. Therefore, boards of public libraries established under the Public Libraries Act are not eligible for lottery licences.
Many agencies operate under legislation and receive government funding. To determine the eligibility of these organizations, a licensing official must review the legislation that sets out the organization’s mandate and its relationship to government. Whether the organization is separate legally, administratively and financially from government and the degree of control exercised by government over the organization will determine whether the organization is eligible for lottery licensing.
Once a licensing official has decided an applicant is eligible to receive a lottery licence, the licensing official must examine the intended use of lottery proceeds listed on the licence application.
In order to determine the eligibility of the proposed use of proceeds, a licensing official must review the organization’s programs and services.
As outlined in Section 2.1.0, an eligible organization’s charitable objects and purposes must fall within one of four classifications. The eligible uses of proceeds will vary by classification and by eligible organization. As such when determining what is considered an eligible use of proceeds for an eligible organization, the following factors must be taken into consideration:
Eligible uses of proceeds must be:
A licensing official must determine the eligible uses of proceeds on a case-by-case basis. To determine which of the organization’s ongoing costs are eligible, the licensing official should review the proposed budget against the organization’s stated mandate. Only those costs that relate directly to the delivery of its eligible programs should be approved as eligible uses of lottery proceeds.
In addition to using lottery proceeds for the direct delivery of its eligible programs, an organization may also use lottery proceeds to pay some of the administrative expenses of those programs. To be considered an eligible use of lottery proceeds, these expenses must be essential for the direct delivery of the organization’s charitable objects. The licensing authority must give prior approval to requests to use lottery proceeds for administrative expenses on a case-by-case basis.
The licensing official may limit the use of proceeds to only those expenses that relate to the direct delivery of programs.
The licensing authority must monitor the use of lottery proceeds to ensure they are used as approved, for expenses related to the direct delivery of the eligible charitable services, for the benefit of Ontario residents.
All proceeds raised from lottery licences must be used for a charitable object or purpose that directly benefits the residents of Ontario. The funds do not necessarily have to be spent in Ontario, but an Ontario resident or community must benefit. This policy applies regardless of the beneficiary’s status as a citizen of Canada. For example, refugees living in Ontario may be beneficiaries of programs set up for the relief of poverty in Ontario. However, lottery proceeds cannot be used to bring non-residents to Ontario to then benefit from lottery proceeds. Also, proceeds must be used to generate a charitable, not an economic, benefit.
The following examples are eligible uses of lottery proceeds spent out-of-province to benefit a project or resident of Ontario:
The following list provides some examples of projects that do not qualify:
Although many of these activities are worthwhile projects, they provide a direct benefit to individuals outside Ontario. The Order-in-Council limits the allowable use of lottery proceeds to charitable activities that provide a direct benefit to the residents of Ontario.
Eligible charitable organizations requesting approval to donate lottery proceeds to other eligible organizations must demonstrate that:
The same type of eligible charitable organization as described in Section 2.4.1(A)(i) may also in certain circumstances donate lottery proceeds towards goods or services for use by organizations that in themselves may not be considered charitable in nature, including those that are dependent upon municipal governments. In this instance it must be demonstrated that:
An example of an eligible charitable organization donating lottery proceeds towards goods or services for use by another organization that in itself may not be considered charitable in nature:
A service club such as a Rotary Club raises funds for the inclusion of a public computer workstation for a public library established by a municipality. Raising funds for the inclusion of a computer may constitute a charitable use of funds by the club provided it can be shown that the proposed use is over and above the basic services that would normally be provided by the library.
An example of an ineligible use of proceeds:
A service club wishes to donate lottery proceeds to purchase jackets for a men’s baseball league.
In some cases, an eligible charitable organization that meets the criteria set out in 2.4.1(a)(i) may purchase or donate funds towards the purchase of a non-core item for another organization. The recipient organization must use the item for a purpose that provides a public, not a private benefit.
Prior to the purchase, the donating and recipient organizations must enter into a trust agreement outlining their respective responsibilities. The agreement must include the following information:
This agreement is necessary to ensure:
An example of an eligible use of proceeds when a charitable organization donates funds towards a capital expenditure:
A service club raises lottery proceeds towards the purchase of a van for a publicly owned long- term care home to transport patients. The purchase of the van may be an eligible use of proceeds provided the service club can demonstrate that the purchase of the van is over and above the services that the long-term care home would normally provide.
Eligible organizations must provide very detailed information concerning their proposed use of lottery proceeds. Because many organizations do not have wholly charitable objects or purposes, it is sometimes difficult to determine whether a proposed use of proceeds can be considered a charitable purpose. In broad terms, proceeds may be used to offset the expenses that are integral to the charitable functions of the organization. These are known as “direct expenses.” A direct expense includes any expense that directly helps to fulfil the organization’s charitable mandate.
Organizations have costs that may be classified as direct or indirect expenses. A curling club that runs a youth program as a charitable function, in addition to its adult program, has costs that may be considered as direct or indirect depending on the program for which they are incurred. The cost of ice time necessary to deliver the youth program is eligible as a direct expense if it can be isolated from the cost for the adult program. If the cost of the ice time required for the youth program cannot be determined and isolated, it is not an eligible use of lottery proceeds.
Indirect expenses include the group’s general operating costs such as salaries, administration, rent, or utility expenses such as heat and hydro. Indirect expenses are not generally considered essential for the delivery of the charitable purpose and therefore may not be eligible uses of proceeds.
The licensing authority may approve these expenses if the applicant meets all of the following requirements:
Volunteer and/or staff training may be an eligible use of lottery proceeds. Generally, lottery proceeds may not be used to pay expenses associated with attending, organizing or running conferences or workshops. However, in certain circumstances conferences or workshops may constitute a charitable purpose.
In order to use lottery funds to attend, organize or run a training session, the organization must demonstrate that the training provides a significant charitable and community benefit related to an educational program. The following types of training may qualify:
If the conference or workshop is only for personal development or if it only benefits the membership of the organization, it does not constitute community benefit and cannot be funded with lottery proceeds.
The following types of conferences and training are examples that do not qualify as a charitable use of lottery proceeds:
The licensing authority must determine whether or not the conference or training constitutes a charitable purpose. The following questions will assist in that determination.
Unless the answers to the above questions clearly indicate that a public charitable benefit will result, the licensing authority must not grant the organization permission to use lottery licensing proceeds for the conference, workshop or training expenses.
An eligible charitable organization that conducts research as an integral part of its charitable mandate may apply for a lottery licence to fund the direct costs of that research. Research may be funded through lottery proceeds if it advances human knowledge and if the resulting advances provide a public benefit either through instruction (“the advancement of education”) or by improving the health and well-being of the residents of Ontario (“other charitable purposes beneficial to the community: health and welfare”).
The licensing authority may grant approval on a case-by-case basis, under the following conditions:
The cost of travel for staff, volunteers and individuals benefiting from the charitable activities of the organization may be an eligible use of proceeds. These costs must directly benefit residents of Ontario and must be considered integral to the organization’s eligible charitable objects or purposes and activities.
The following examples are eligible uses of lottery proceeds for travel costs:
In some cases, organizations may request approval to pay out-of-province travel costs. The organization must demonstrate that a direct benefit will be provided to the public of Ontario. If the travel provides only a private benefit, the travel costs are not eligible. A licensing official must determine the type of benefit provided on the basis of the organization’s charitable object or purpose and activity.
A licensing official must consider requests for approval to pay out-of-province travel costs with lottery proceeds on a case-by-case basis. For example, out-of-province travel to advance education, particularly for youth, is eligible.
On the other hand, out-of-province travel is not an eligible use of lottery proceeds for an arts or cultural organization. Arts and cultural organizations must provide a benefit directed towards the broader public of Ontario, not the individual members of the performing organization. When the performance is outside Ontario, the audience is not made up of Ontario residents. Therefore, the benefit of the travel is considered a private benefit directed to the individual performers. This also applies to school bands travelling out-of-province for the sole purpose of performing while travelling.
The courts have recognized that support to “the aged” (senior citizens) through programs that improve physical and mental health may be considered charitable in nature.
These types of programs may fall under the eligible charitable category of “relief of poverty” or “other purposes beneficial to the community” depending upon the activity. For example, programs that provide relief from loneliness and isolation of the aged, and improve their mobility and fitness may be eligible under “Other purposes beneficial to the community: Health and welfare.” A non-profit organization that is established to operate and maintain a senior citizens’ centre or seniors’ social club to provide recreation, cultural activities and other programs for senior citizens may also be eligible for licensing.
The licensing authority may grant approval on a case-by-case basis, under the following conditions:
An organization cannot use lottery proceeds for any purpose that was not approved on the original licence application, unless it obtains prior written authorization from the licensing authority.
To obtain an amendment to its proposed use of proceeds, an organization must submit a written request to the applicable licensing authority setting out the reasons for the requested amendment. The requested uses must be related to the direct delivery of the objects or purposes of the licensee. The licensing authority has the right to refuse to amend the approved uses of proceeds.
A proposed use of lottery proceeds is ineligible if:
Eligible organizations may not use the proceeds from lottery licences for:
This section provides an overview of the process to determine whether or not an organization is eligible for lottery licensing, and whether or not its proposed use of proceeds is eligible.
STEP 1: Determine the eligibility of the organization
If the organization’s objects and purposes are eligible, continue to Step 2. If not, the organization is ineligible for a lottery licence and the process stops here.
STEP 2: Determine the eligibility of the proposed use of proceeds
To evaluate the use of proceeds, ask the following questions:
If the answer to both questions is “Yes,” the applicant’s lottery application and some or all of its proposed uses of proceeds may be eligible for lottery licensing.
To be eligible for lottery licensing, an applicant must have an established organizational structure. The applicant must be a legal entity and must have a formal document that establishes the organization. However, incorporation, whether provincial or federal, is neither a prerequisite nor a guarantee that a licence will be issued. No one may use lottery proceeds to start up an organization.
In order to be eligible, an organization must:
The terms and conditions for each lottery licence set specific application requirements, which are summarized in the relevant licensing policy sections of this manual.
When an organization first applies for any type of lottery licence, or whenever a review of its eligibility is required, it must provide all of the following information and documents that apply to it:
The organization must also provide any other information that will assist the licensing official to determine the charitable nature of its objects, purposes and activities.
After the review has been completed, the licensing officer may require additional information to process the application. The organization must provide any information that is requested.
If any changes are made to the documents submitted, the organization must provide the licensing authority with the amended documents as soon as they are available.
Because organizations change, an organization that is considered eligible for lottery licensing must continue to provide the licensing authority with any amended documents as soon as they are available.
Organizations that receive lottery licences will be subject to periodic eligibility reviews.
In order to determine eligible uses of proceeds, the organization must set out in detail its proposed uses of proceeds and to which programs the proceeds will be applied. The organization’s proposed use of proceeds must be for charitable programs and the programs must be consistent with the charitable objects and purposes of the organization. These objects and purposes must be of a charitable nature and fall within at least one of the four charitable classifications listed in Section 2.1.0.
In addition to the policies for “Use of Proceeds” and examples of “Eligible Uses of Proceeds” provided throughout this chapter, the following guidelines may be used to evaluate and determine eligible uses of proceeds:
The licensing official must assess the applicant’s eligibility by asking the following questions. If the answer to any of these questions is “no,” the organization is ineligible.
Every applicant organization must have a document that establishes the organization, setting out the members’ common purpose and detailing how the organization will operate in order to achieve that purpose. Formal documents include letters patent, constitution, and memorandum of association. Informal associations that have not adopted formal written constituting documents are not eligible for lottery licensing.
The organization must demonstrate that the following items are included in its constituting documents:
The guidelines in this section are intended to help licensing officials determine:
An organization’s charitable classification determines its eligible uses of lottery proceeds. The four classifications are:
The lists of eligible uses below are not intended to be exhaustive. A licensing authority may approve other proposed uses, depending upon the specific mandate of the organization. Any eligible organization, regardless of its charitable classification, may be approved for other uses of proceeds, provided that those uses are:
When an application is approved, the application for the licence forms part of the licence itself. If the licensing authority does not approve all the requested uses of proceeds, the approved uses of proceeds and any restrictions must be specified on the licence when it is issued.
Licensees wishing to use proceeds for any purpose not requested on their original application must request a licence amendment and receive approval before using the proceeds for those purposes.
See also “2.4.0. Overview: Eligible use of proceeds”“2.4.1. Policies: Eligible use of proceeds”, “2.4.1(G) Amendments to the approved uses of proceeds” and “2.5.1. Policies: Ineligible use of proceeds” .
To be eligible in this classification, a charitable organization must meet all of the basic eligibility criteria set out in this chapter and must demonstrate that its programs and services assist those who are:
Examples of the types of organizations that may be eligible in this classification include:
With prior approval from the licensing authority, a charitable organization may use lottery proceeds to set up a fund to assist those in financial need. The fund must provide assistance to address a common need and must be available to anyone in the community who has that need. Approved uses of the fund may include the provision of short-term relief or a one-time payment to relieve an exceptional condition or circumstance (for example, floods that result in devastation to an Ontario community). More than one charitable organization may contribute to the fund, provided it falls within the charitable organization’s mandate. Payments must be made directly to the service provider/retailer.
The licensing authority may approve eligible organizations in this classification to use lottery proceeds for the direct delivery of services for:
To be eligible in this classification, an organization must meet all the basic eligibility criteria and restrictions on uses of proceeds set out in this chapter. Proceeds cannot be used to fund core programs or services. They must demonstrate that its programs and services:
Normally, the training or instruction provided will lead to a recognized degree, diploma or certificate.
Eligible charitable organizations must demonstrate that:
Education for the professional development of a person or group (such as training courses for teachers, lawyers and nurses) is not an acceptable use of funds in this classification.
An organization that provides a program or curriculum that is contrary to the laws of Ontario or Canada or international law is not eligible for lottery licensing.
Examples of the types of organizations that may be eligible in this classification include:
In the case of schools, the lottery licensing applicant must be the school itself, not a class or department within the school. However, parent/teacher associations or other groups may also be eligible for lottery licensing, provided that they:
Only one related eligible organization may be licensed at any one time to fund the same educational purpose, school, program or governing body. Therefore, the school and its parent/teacher association may not both hold lottery licences. The parent/teacher association is only eligible for lottery licensing if the school determines that it will not raise funds through charitable lotteries.
School councils required by the provincial government are not eligible for lottery licensing.
Proceeds raised from lotteries cannot be used to fund core programs or services. The definition of core programs or services depends on what has been historically provided by the individual school and what is mandated by the provincial government. Additionally, eligible uses may vary between boards of education and schools in the same community.
The licensing authority may approve eligible organizations in this category to use lottery proceeds for the following purposes, so long as they are not historically provided by the organization or mandated by the provincial government:
Schools may only use lottery funds to purchase non-core services, items or equipment as approved by the lottery licence. Schools may not use lottery proceeds for the purchase, construction or renovation of facilities or buildings or to purchase other capital assets, such as school buses.
The lottery proceeds raised must be used for the overall benefit of the school. For example, lottery proceeds raised for athletic programs must be used to support all representative sports teams within the school, not just selected teams.
Schools may receive donations of lottery proceeds raised by eligible organizations for approved uses. In some cases, an eligible organization may purchase or donate funds towards the purchase of a non-core item that has not historically been provided by the school.
Prior to a capital expenditure, the board and the donating organization must enter into an agreement outlining their respective responsibilities. This agreement must include the following information:
This agreement is necessary to ensure:
Lottery proceeds may be used to establish or support scholarship or bursary funds for educational purposes, under the following conditions:
A scholarship fund that allows only a limited number of applicants, such as the children of members of a small service club, to apply would be considered too narrowly focused. Lottery proceeds may not be used for this purpose.
Scholarships or bursaries for the development of established professionals are also ineligible.
The “advancement of religion” refers to promoting the spiritual teachings of a religious body and maintaining the doctrines and spiritual observances upon which those teachings are based.
To be eligible in this classification, an organization must meet all the basic eligibility criteria set out in this chapter and must demonstrate that its programs and services assist in the delivery of religious services and programs to the community. Additional objectives of religious organizations usually include support of the poor, sick and destitute as well as a host of other charitable objectives. In order to be eligible, an organization must demonstrate:
Activities that advance religion may include:
Examples of the types of organizations that may be eligible in this classification include:
Religious organizations may use lottery proceeds to provide direct benefits only to the residents of Ontario.
The licensing authority may also allow religious organizations to use lottery proceeds to provide programs falling within other classes of charitable purposes, such as the relief of poverty and the advancement of education, as long as these are included in the objects or purposes of the organization.
An organization that attempts to influence public opinion or actions on political issues is not advancing religion in the charitable sense. Therefore, advocacy, self-help groups and groups dedicated to the political, personal and financial advancement of their members are not eligible organizations in this category.
The licensing authority may approve eligible organizations in this classification to use lottery proceeds for the following purposes:
In addition to meeting all the basic eligibility criteria set out in this chapter, an organization may be eligible under this classification if one of its main objects is a charitable purpose beneficial to the community and does not fall within one of the first three classifications.
An organization must have a purpose that provides a public benefit, but this alone is not enough to qualify it as charitable. To be eligible in this classification, an organization must demonstrate that it provides a broad public benefit directed toward an identifiable segment of the community or a significant portion of the community.
An eligible organization in this classification may also have objects or purposes that are not charitable, as long as those objects are secondary to the main purpose, which must be charitable. The organization must be operated on a non-profit basis.
For administrative purposes, eligible organizations with other purposes beneficial to the community have been divided into the following six categories:
The promotion of voluntarism, in itself, is not eligible for lottery licensing. Advertising for volunteers, matching individuals to volunteer placements and promoting volunteer activity are not eligible uses of lottery proceeds. However, volunteer training and support and providing direct charitable services, such as counselling for those in need, are eligible uses of proceeds.
See also “2.4.0. Overview: Eligible use of proceeds”, and “2.5.0. Overview: Ineligible use of proceeds”
To be eligible in this category, an organization must meet all the basic eligibility criteria set out in this chapter and demonstrate that:
Examples of the types of organizations that may be eligible in this classification include:
A licensing authority may approve eligible organizations in this category to use lottery proceeds for the following purposes:
To be eligible in this category, an organization must meet all the basic eligibility criteria set out in this chapter and demonstrate that:
Eligible organizations may provide programs dedicated to:
Examples of the types of organizations that may be eligible in this classification include:
The following are some examples of what a licensing authority may approve as eligible uses of lottery proceeds:
To be eligible in this classification, an organization must meet all the basic eligibility criteria set out in this chapter and must demonstrate that it provides programs and services to enhance health and fitness through organized, competitive physical activity.
An organization must demonstrate that:
Three types of groups are eligible in this category:
Only Ontario residents competing in amateur sports as individuals or as members of teams that are part of a recognized sports organization may benefit from lottery proceeds.
For the purposes of lottery licensing, the term “youth” refers to anyone under the age of 18. The majority of individuals (over 50%) benefiting from programs offered by organizations in this category must be under 18 years of age at the start of the sporting season. Adult teams and leagues are not eligible.
To be eligible in this category, an organization must meet all the basic eligibility criteria set out in this chapter and must demonstrate that it is:
Examples of the types of organizations that may be eligible in this category include:
Ontario associations for representative teams are eligible for one licence per type of gaming event, per team in a municipality at a time, provided that:
If a non-profit club runs both youth and adult programs, only direct expenditures for the youth programs may be considered as eligible uses of lottery proceeds. In order to be eligible, the club must be able to separate the costs of the youth and the adult programs in the budget and the financial tracking system.
Most of the individuals benefiting from programs offered by organizations in this category must have a demonstrated physical, mental or developmental disability.
To be eligible in this category, an organization must meet all the basic eligibility criteria set out in this chapter and must demonstrate that it is:
Examples of the types of organizations that may be eligible in this category include:
Adult amateur sports organizations (where most of the players are 18 and over) representing Ontario or Canada in the Olympics, the Pan American Games or the Commonwealth Games may be eligible to receive lottery licences.
To be eligible in this category, an organization must meet all the basic eligibility criteria set out in this chapter and must demonstrate that it is:
Only Ontario residents may benefit from lottery proceeds, regardless of whether the organization is representing Ontario or Canada.
The types of organizations that may be eligible in this category include teams representing Canada in the Olympics, Pan American Games and Commonwealth Games, but lottery proceeds may only be directed towards the expenses related to Ontario residents.
In order to be eligible for lottery licensing, adult sports organizations that do not represent Ontario or Canada in competitions must fulfil some other purpose beneficial to the community. This means that an organization must demonstrate that it has a charitable mandate beyond its adult sports purpose. Lottery proceeds may only be used for the charitable objects of the organization, not for any adult sports objective.
The following types of organizations are not eligible to receive lottery licences:
A sports organization must provide detailed information regarding its proposed use of lottery proceeds. The licensing official must consider the proposed use of proceeds on a case-by-case basis.
The licensing authority may approve eligible organizations in this category to use lottery proceeds for the following purposes:
Lottery proceeds may be used for travel and transportation costs for sanctioned out-of-town tournaments or competitions. These costs may include meals, accommodation, airline tickets, bus rental and other reasonable expenses incurred by the players, and a reasonable number of coaches and chaperones for any youth participants. Please note that third-party commercial receipts must be provided for travel.
Mileage costs for personal vehicles are not permitted.
The organization must provide the following information with its licence application:
Except in unusual circumstances, lottery proceeds may not be used to fund travel costs associated with out-of-province training. A sports organization requesting approval for such costs must demonstrate that:
See also “2.4.1(E) Travel costs”.
Coaching fees (salaries) are considered an indirect expense. However, it is recognized that in certain sports, coaching plays an important role in the development of the players. Therefore, coaching fees are considered eligible uses of lottery proceeds provided the following conditions are met:
Sports organizations may also use proceeds for training or to develop coaches themselves to the level of ”Community Sport” certification under the National Coaching Certification Program.
If the presence of officials and referees is integral to the proper conduct of the sport, the following types of organizations may use lottery proceeds to pay their fees:
The fees must be based on amounts authorized by the league or association and only be paid to individuals assigned by the league or association to officiate at the event.
Adult amateur sports organizations representing Ontario or Canada may not use lottery funds to pay officials or referees.
The following costs are not considered eligible uses of lottery proceeds for any amateur sports organization:
In the case of sports organizations, administration costs such as administrators’ salaries, tournament and team registration fees, office expenses and utilities are considered to be indirect expenses that are not essential to the delivery of the sports program. Since these administration costs are not considered charitable, they cannot be paid using lottery proceeds.
Organizations that support youth programs and services for youth that enhance human development, civic responsibility and pride in the community may be eligible for lottery licensing in this category.
An organization must meet all the eligibility criteria set out in this chapter and demonstrate that:
Examples of the types of organizations that may be eligible in this category include organizations formed to:
Cadet organizations associated with the Armed Forces, such as Air Cadets, may be eligible to receive lottery proceeds. In some circumstances cadet organizations may be controlled by the Provincial Command Provincial Command of the Royal Canadian Legion and may therefore not be constituted as separate legal and administrative organizations. The eligible organization may be the Provincial Command. In those cases, the Provincial Command must apply for and hold the lottery licence on behalf of each cadet group.
The licensing authority may approve eligible organizations in this category to use lottery proceeds for the following purposes:
To be eligible in this category, an organization must meet all the eligibility criteria set out in this chapter and demonstrate that:
Examples of the types of organizations that may qualify in this category include those providing:
Member organizations of the Ontario Federation of Snowmobile Clubs may be eligible provided that:
The licensing authority may approve eligible organizations in this category to use lottery proceeds for the following purposes:
Eligible member organizations of the Ontario Federation of Snowmobile Clubs may only use lottery proceeds for education and safety programs approved by the Registrar. Proceeds cannot be used for other activities, such as trail grooming and maintenance.
In some cases, an eligible charitable organization that meets the criteria set out in Section 2.4.1(a)(i) may purchase or donate funds toward the purchase of a non-core item for another organization. The recipient organization must use the funds for a purpose that provides a public benefit and is an eligible use of proceeds.
Prior to the purchase, the donating and recipient organizations must enter into an agreement outlining their respective responsibilities. The agreement must include the following information:
This agreement is necessary to ensure:
Community service organizations are established to provide funds to other organizations that carry out charitable activities for the benefit of the community. To be considered eligible for lottery licensing, a community service organization must have an object or purpose that allows them to make donations to eligible organizations. A community service organization must include a statement of how it intends to use the proceeds with its lottery licence application.
Community service organizations are divided into three categories:
Service clubs are generally set up to perform activities and undertake projects that benefit eligible charitable organizations or to operate programs that provide a direct charitable benefit to the public.
To be eligible for lottery licensing, a service club must meet all of the basic eligibility criteria set out in this chapter.
Each branch or chapter of larger service clubs, such as the Rotary or Lions clubs, which have regional, provincial or national mandates, may be eligible, providing the branch:
Examples of the types of organizations that may be eligible in this category include:
Eligible uses of lottery proceeds by service clubs
The service club must give the licensing authority detailed lists of how it proposes to use the lottery proceeds. The service club may only donate lottery proceeds to an organization that is itself eligible to receive a lottery licence and has been approved by the licensing authority. The service club must ensure that donated lottery proceeds are used for purposes consistent with the receiving organization’s mandate and approved uses of funds.
The licensing authority may approve service clubs to use lottery proceeds for the following purposes:
Ineligible uses of lottery proceeds by service clubs
In addition to their charitable objects and purposes, service clubs have a mandate to provide membership- oriented activities. These activities provide a private, not a public, benefit to the members of the service club. Membership-oriented activities do not qualify as charitable and service clubs may not use lottery proceeds for these purposes.
The following types of costs do not qualify as eligible uses of proceeds for service clubs:
Service club building funds
If a service club owns a building that it allows charitable organizations to use free of charge, it may use lottery proceeds for a building fund. The building fund may be used to renovate the sections of the building made available to charitable organizations in accordance with the policies for building funds outlined in this chapter. The service club must demonstrate that the public benefit goes beyond the occasional usage by outside charitable groups.
Many of the objects and purposes of the Royal Canadian Legion and similar veterans’ service organizations are similar to those of general service clubs. Therefore, for lottery licensing purposes, the branches and commands of the Royal Canadian Legion and similar veterans’ service organizations are treated in the same manner as general service clubs, and the accepted uses of proceeds for service clubs also apply.
The Royal Canadian Legion and its branches may use lottery proceeds for:
Eligible uses of lottery proceeds
The licensing authority may approve the Royal Canadian Legion to use lottery proceeds for the following purposes:
(See also “2.4.1(G) Amendments to the approved uses of proceeds”.)
Royal Canadian Legion building funds Guidelines:
A number of Royal Canadian Legion branches provide their facilities free of charge to eligible charitable organizations. At times, the branches may need to use lottery proceeds to construct new buildings or to cover the costs of renovations. In addition to the general policies set out in “2.8.1. Policies: Building funds”, the Registrar has established supplemental building fund policies that apply to the Royal Canadian Legion and its branches. In addition to the usual approval from the licensing authority (who has the final decision), a branch’s proposal to use lottery proceeds for building funds must be reviewed and approved by the Ontario Provincial Command of the Royal Canadian Legion.
Eligibility criteria
The licensing authority may grant approval for a branch of the Royal Canadian Legion to use up to a maximum of 50 per cent of net lottery proceeds to cover the capital costs of construction, repair or the leasehold improvement of branch buildings. Capital repairs do not include the normal painting, decorating (interior and exterior) and service calls that are included in the percentage of net lottery proceeds allowed for general maintenance of the building.
The licensing authority may approve a building fund under the following conditions:
Approval process
Prior to using lottery proceeds for renovations or the construction of new buildings, branches must comply with the procedures set out by the Ontario Provincial Command of the Royal Canadian Legion. In addition, branches must follow the general policies for building funds. (See “2.8.1. Policies: Building funds” for further information.)
If the branch does not comply with this approval procedure, the licensing authority must refer the matter to the Administrative Committee of the Ontario Provincial Command for any action it may deem necessary.
This policy also applies to Legion branches in northwestern Ontario. However, they are not required to obtain approval from the Ontario Provincial Command, since they do not fall under its jurisdiction, but they must follow the general policies for building funds. (See “2.8.1. Policies: Building funds” for further information.)
Application requirements
If a branch proposes to use lottery proceeds for building fund purposes, it must supply the following information with its licence application:
The Ontario Provincial Command may request additional documentation to support building fund proposals. The Command must make these documents available to the licensing authority upon request.
Eligible uses of proceeds
Once the licensing authority has approved the use of proceeds for a building fund, the branch may use up to 50 per cent of net lottery proceeds for the following building fund purposes:
Please note that lottery funds may be used to renovate the portions of a building used by the public but not the members’ lounge.
Ontario Provincial Command: Construction and renovation procedures
Each branch must comply with the procedures set out by the Ontario Provincial Command of the Royal Canadian Legion for branch construction. These procedures are outlined below:
Prior to purchasing property or engaging the services of an architect or consultant, the branch must present a motion in a notice mailed to each member.
The notice must include:
A branch cannot apply for a lottery licence to raise funds to purchase property or hire an architect and/or consultant until this motion has been approved.
Once the branch has approved the motion and the Provincial Command has granted permission, the branch may engage the services of an architect and/or consultant and obtain an estimate for the proposed plans.
When the branch receives the estimate, it must present a Notice of Motion to a General Meeting. The Notice of Motion must include the following details:
The branch must mail a copy of the Notice of Motion and the date of the General Meeting at which it will be considered, to each member in good standing. The branch must also send a copy of each Notice of Motion and certified copies of the minutes of the General Meeting at which the motion was approved, to the Provincial Command.
The branch must obtain prior written approval from the Ontario Command for each expenditure from the building fund in excess of $5,000 during the course of the fiscal year. The branch must send a copy of this approval to the licensing authority.
The Royal Canadian Legion branch must submit regular financial reports as per the terms and conditions of the lottery licence.
Royal Canadian Legion: Selling property purchased with a building fund
The branch must obtain prior approval from the licensing authority before selling or mortgaging any property acquired or renovated through a building fund made up of lottery proceeds. The branch must prepare a document outlining the value of the lottery proceeds applied to the building fund.
When the property is sold, the branch must calculate the value of the lottery funds contributed to the building fund and must direct that amount of money to other eligible charitable organizations in the community. The branch may reduce this amount by the amount of money the branch could have made on an annual basis by renting the facility instead of providing it free of charge (foregone revenue).
Please note that if the sale occurs after the obligation has been reduced to zero, the branch does not have to distribute any funds from the sale of the property to charitable organizations in the community.
Service Clubs, and the Royal Canadian Legion and similar veterans’ service organizations are permitted to use lottery proceeds for general operating and maintenance costs in certain circumstances.
General operating and maintenance costs may include:
Eligible use of proceeds for general operating and maintenance costs may include the following:
The licensing authority can use the examples that follow to assist in determining the amount allowed for building maintenance costs:
Example 1 (For calculating operating and maintenance cost requests above 20% of net proceeds)
* Mortgage payments are not an eligible building maintenance expense. For claiming rent, a copy of the rental agreement must be submitted.
+ This expense is for minor repairs or general maintenance to the building. Organizations wishing to use lottery proceeds for renovation projects, or capital expenditure costs must submit the required documentation — see “2.8.1(B) Approval process for building funds“.
* The licensing authority must review the list of organizations using the facility. As not all groups using the facility may be charitable, the percentage of use of the facility is determined by those charitable/religious organizations which would be eligible for lottery licensing themselves. If the licensee provides their own charitable programs and services, this usage of the building should also be included in this list.
Example 2
Building maintenance cost per year: |
|
$10,000 |
% of building available for public use (excluding offices & members lounge) |
50% |
($5,000) |
Cost of maintaining public portion of hall |
|
$5,000 |
Number of days per year used by charitable groups (for example, assuming 1 Group per day @ 91 days out of 365 days = 25%) |
|
x25% |
Amount allowed for building maintenance per year: |
|
$1,250 |
Many public, corporate and private sector places of employment conduct and manage lottery events amongst their employees as part of their annual fundraising campaigns on behalf of the United Way and/ or Federated Health (UW/FH). The funds raised from these lotteries are donated to the UW/FH, which, in turn donate these proceeds to eligible charitable organizations that provide a direct charitable benefit to the community.
Public, corporate and private sector places of employment are permitted to conduct and manage lottery events at their places of employment when overseen by the UW/FH and must obtain a lottery licence in order to comply with the Criminal Code (Canada).
Lottery licences will only be issued for events to be held during the official fundraising campaign period of the UW/FH.
Licensing policies for UW/FH
In addition, the following policies apply to all lottery licences issued to UW/FH employee fundraising committees:
The licensing authority must handle requests from organizations wishing to use lottery proceeds for building or renovation projects in the same manner as any other request for the use of lottery proceeds. The organization must show that the building fund constitutes an eligible purpose.
The licensing authority may approve an eligible organization to use up to a maximum of 50 per cent of net lottery proceeds for the capital costs of construction, repair or the leasehold improvement of real property including land and buildings, if:
The following types of construction or renovation may qualify:
The licensing authority may approve a building fund under the following conditions:
Where the building is not used solely for eligible purposes, the maximum amount of lottery proceeds approved for the building fund must be proportional to the percentage of time the building is used to provide a public charitable benefit.
If the applicant organization wishes to use lottery proceeds for the renovation or construction of a building, it must submit the following information to the licensing authority for review prior to, or with the licence application:
All of these criteria will not be relevant in all cases. The licensing authority will base its decision on whether the building/facility will be of benefit to the community or a charitable group, and what happens to the proceeds if the building/facility is sold.
Please note that general maintenance costs are not eligible as part of a building fund.
The licensing authority may grant an organization permission to use a specific amount of proceeds from any licensed lottery event for a building fund. A maximum of 50 per cent of the net lottery proceeds may be allocated to the building fund, once approval has been given for the fund. The licensing authority must approve a specific amount of proceeds, rather than a percentage, and must specify the period of time over which funds may accumulate in the building fund. The period of time will be limited and reasonable and must not exceed two years without further approval.
The eligible organization must:
The organization must obtain prior approval from the licensing authority in order to sell or mortgage any property acquired or renovated through a building fund made up of lottery proceeds. The organization must also prepare a document outlining the value of the lottery proceeds applied to the building fund and obtain prior approval on how the proceeds will be distributed upon the sale.
When the property is sold, the organization must calculate the value of the lottery funds contributed to the building fund and must direct that amount of money to other eligible charitable organizations in the community.