CRA looks at 4 primary areas:
1. Affordable housing for LMI
2. Economic Development activities
3. Community services targeting LMI
4. Activities to revitalize and stablize LMI areas
During an exam, loans and donations are subject to scrutiny concerning whether the monies' purpose is to serve Low to Moderate income areas or individuals. The real question during an exam comes from donations or loans to religious institutions. A loan for working capital would not qualify, but a loan to build a soup kitchen would qualify because of the intent.
So the question becomes, can tax policy be used to mirror stipulations on donations that they have to be used for a specific intent in order to qualify as a charitable donation. Would that be something that is worth pursuing?
Consider that the change would not be to the religious instititions, but to the gifts they receive. In other words, if Mrs. Smith gives a total of $50,000 to a church should she get to write that down as a donation if the church uses it for operating expenses? Or if she earmarks the donation for a food pantry? Why should a mega church benefit from a donation to build a sports complex for their community at the same level that another church uses its donation to run a homeless shelter?
Not all donations are equal and I understand there could be all kinds of Seperation of Church and State issues, but tax policy allows donations to charities. And there could be a floor on what would be looked at for instance anything under $1000 donated over a year would not be subject to such standards.
Like I said this is me thinking out loud, but I think it is worth examining who benefits from charitable donations.