The Department of Finance Canada is about to lift regulations that allowed charities to spend only 10% of their revenue on political activities.
“Some charities have argued that the rules on political activities are confusing, overly restrictive and hard to apply in practice while denying charities the ability to participate fully in public policy development,” a spokesperson for the Canada Revenue Agency told me in an email on October 2, 2018. (Emphasis mine.)
Never mind that in a sector valued at $246 billion in 2014, all charities spent only $25 million on political activities.
And as far as I can reckon, “some charities” fall into two groups. The first is comprised of charities identified for audit by the CRA under the Harper Conservative government in 2011 and 2012, many of them environmental organizations who felt they were being targeted because they spoke out against that government’s policy. (We actually don’t know why these charities were being audited. The Income Tax Actprevents that information from being public.)
Whatever the reason for the audits, the germ of the “free speech” argument was sown then and taken up by other charities and their supporters who were concerned about the “chill” or as the subsequent government put it, “denying charities the ability to participate fully in public policy development.”
The second group of “some charities” is comprised of larger, wealthy charities who want to 1) do away with any kind of charity regulation 2) give themselves the most money out of the tax system as possible. They are represented by charity sector lobbyists.
The government consultations that followed were run by the second group and legitimized by the first group. Strange bedfellows, right?
When all is said and done, “as announced in the news release of August 15, 2018 … the Government intends to amend the Income Tax Act to implement changes consistent with recommendation no. 3 of the Report of the Consultation Panel on the Political Activities of Charities. The intended amendments will allow charities to pursue their charitable purposes by engaging in non-partisan political activities and in the development of public policy,” according to the CRA. (Emphasis mine.)
The Consultation Panel was largely made up of charity sector lobbyists who, above all other issues, lobby for better tax breaks for large donors. Take a look at my August 22, 2018 for detailed analysis on the work of that panel.
So, quite apart from the decision in Canada Without Poverty vs the Attorney General of Canada where an Ontario Superior Court judge ruled the CRA regulation that allowed a charity to spend only 10% of its revenue on political activity was an infringement on free speech, the current government was planning to make these changes—or similar changes—since it came into office.
“In 2015, the Mandate Letters of the Minister of National Revenue and the Minister of Finance directed them to ‘allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and non-for-profit sectors. This will include clarifying the rules governing ‘political activity,’ with an understanding that charities make an important contribution to public debate and public policy,” said a CRA spokesperson. A noble sentiment to be sure, but one with stark ramifications for the sector as whole.
“Some charities” were having an impact. And “some charities” are now celebrating.
Having won their court case, Canada Without Poverty is happy. They can now spend their entire $422,000 budget on political activities without fear of losing their charity status.
Likewise, Environmental Defence Canada, which celebrated the Canada Without Poverty decision, can spend as much of their $2.7 million budget on political activities as they like.
Imagine Canada sees this as a “golden opportunity.” For them, it’s a win-win. They are a charity themselves which represents the interests of wealthy charities, who will support them even more to “represent the charity sector.”
But do you know who else can spend up to 100% of their revenue on political activities?
The Faith-based charities that make up 31% of all charities and 41% of all charitable revenue.
In 2014, 41% of charity sector revenue was $110.8 billion dollars. Does there exist an oversized potential for religious organizations to influence public policy? Was there any consideration of that implication, as one example?
Take ShareLife, a Roman Catholic organization with a $14 million budget that supports “agencies that carry out the mission work of the Church.”
Among the organizations they support include The Natural Family Planning Association which “provides instruction with respect to the Billings Ovulation method of family planning,” and the anti-abortion group, Birthright, which “provides a caring, non-judgmental support to girls and women who are distressed by an unplanned pregnancy.”
You could also look at the Fraser Institute, a charity with a $10 million budget that claims its mission is to educate Canadians and which has, over the past 40 years, done research and developed programming that is against universal health care, public education, climate change legislation and government regulation. They can now spend their entire budget on political activities.
Let me be clear. I think all these ideas should be discussed in the public square. And I’m even willing, despite my personal disagreement, to support a certain level of a tax credit for the value of that perspective. I believe that a charity should spend 10% of its revenue on dealing with systemic problems and wish more of them would do so.
But If an organization wants to spend the bulk of its resources on lobbying, it should not be able to issue tax credits for that.
Tax credits are paid for by the people of Canada. As a citizen, I am not prepared to pay for charities to spend all their money to infringe on Chapter 15 of the Charter of Rights and Freedoms or lobby government in the interests of the few over the common good of the many.
As charity lawyer, Mark Blumberg, says, “there is a difference between ‘free speech’ and ‘subsidized speech.’”
Blumberg has also reported that he has “already had calls from a number of controversial and purely political non-profit organizations looking to become registered charities.”
This regulatory change ensures that not only will money continue to talk, but that it will be able to shout from the rooftop so loudly it will drown out everyone else around it.
We already have a situation in this country where the wealthiest charities are outspending their counterparts by four to one in fundraising costs. The ability of those charities to create a loosened regulatory framework that continues to further their interests will now be unfettered.
Our own government—through what I consider a lack of independent investigation, a complete failure of imagination and the continued infantilization of charities as bunch of “do-gooders” rather than an economic sector of considerable size and competing interests—is about to create a Canadian version of Citizens United.
When I shared my questions with the CRA, I was told, “a charity will be permitted to carry on political activities provided that those activities are ancillary and incidental to the fulfillment of its charitable purposes.
“These changes would leave untouched the common law requirement that a registered charity cannot be established or operated for a political purpose.”
I’m not sure how this is less confusing than the current regulations.
What you can call it is a needless bloody shame. Or an unmitigated disaster in the making.
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The Department of Finance Canada added some consultation in the form of written submissions until October 13, 2018. Click here for more info on how to do that.
GGail Picco is an award-winning charity strategist widely recognized as one of Canada’s foremost experts on how to carve a path through the increasingly complex dynamics of the charitable sector. Civil Sector Press published her latest book, Cap in Hand: How Charities are Failing the People of Canada and the World, in 2017. http://www.gailpicco.com
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