Canada’s rules on charities and political activity

December 25, 2012

in Canada, Law, Politics, The environment

Canadian charities – especially environmental charities – now feel threatened that they will lose their special tax status if they engage in ‘political’ activity. The Canada Revenue Agency website describes the rules:

Registered charities are prohibited from partisan political activity, because supporting or opposing a political party or candidate for public office is not a charitable purpose at law. There are two aspects to the prohibition: the first restricts the involvement of charities with political parties; the second restricts the involvement of charities through the support or opposition to a candidate for public office. Charities engaging in partisan political activities risk being deregistered.

There is also a policy statement that further fleshes out the rules.

This means, for instance, that LGBT organizations cannot support candidates who support equal rights for their members or oppose candidates who want to restrict their rights. Environmental charities, likewise, cannot oppose parties or candidates that believe in the wholesale destruction of the natural world.

I think this overlooks the reality that large-scale social and political change always requires political agitation. Campaigns against child labour, or in favour of the rights of women, could never have succeeded if they did not engage with the political system. If society is going to continue to make progress, it seems sensible to recognize this and allow charities to pursue their aims through political means.

The current restrictions on political activity are especially objectionable in that they risk being selectively applied. Canada’s Conservative government is a strident defender of the oil sands and fossil fuel development generally, frequently advancing the laughable claim that this is an ‘ethical’ source of energy. Cracking down on charities for engaging in political activity is just another way in which the government can tilt the scales in favour of this destructive activity.

The scale of change which we need to achieve if we are to avoid catastrophic climate change is enormous. It requires major political change in countries like Canada. Allowing environmental charities to fund bird sanctuaries, but not to support or oppose parties or candidates, misrepresents the scale and character of our environmental problems. It also misrepresents the proper role of civil society in democratic societies, which does not end where the formal realm of ‘politics’ begins.

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{ 9 comments… read them below or add one }

anon December 26, 2012 at 1:18 pm

Without these rules, what’s to stop totally partisan organizations like political campaigns from forming ‘charities’ in order to become tax exempt?

BuddyRich December 27, 2012 at 9:00 am

I think anon hit the nail on the head about why these rules are there.

This has been on the books for awhile (2003 is the date of the policy directive) and reading some of the examples of what is permitted and what isn’t was enlightening, as well as some of the legal decisions around charity registrations.

From the examples of what is permitted, much political activity can occur, provided that the primary focus of the charity is on its other “charitable” works and considering education is considered a charitable purpose, non-biased advocacy should be covered.

Actually in so far as one particular party isn’t singled out, policy relating to the charities’ interests can be criticized, provided it is a “reasoned” criticism, so that should absolve most environmental groups.

I mean if the CD Howe institute and especially the Fraser Institute can be considered charites, then pretty much anything can.

Milan December 27, 2012 at 12:26 pm

The new rules are certainly having something of a chilling effect on environmental charities. I have personal experience with one charity that has overtly dialed back its climate change activity, out of concern that its tax status will be evaluated and possibly revoked.

I have heard similar concerns described by people working for other environmental charities, including in relatively non-controversial areas like wildlife conservation.

BuddyRich December 27, 2012 at 1:21 pm

From my admittedly layman’s interpretation of the rules on the CRA website, its not a rational fear. Though I suppose the cost of defending oneself, even if innocent, is enough of a deterrent.

The only thing that changed recently is how “gifts” to third party donees are accounted for if that donee spends it on “political purposes”.

Of interest is the examples here of “charitable”, prohibited and permitted political activities.

http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html#N10591

I don’t see what the problem is. I do note, ironically, that the definition of a charitable purpose, contains a clause specifically for advancing religion. Especially considering alot of the other “tests” involve what a “rational” person would believe.

– the relief of poverty;
-the advancement of education;
-the advancement of religion; or
-other purposes beneficial to the community in a way the law regards as charitable.

But even if charitable status is revoked, donations could still be made to an advocacy organization, they just can’t issue tax receipts. Though, I don’t know what the proportion of donations are just for the tax write-off currently, but I would think that within environmental circles, donations really are all about the cause and not the write-off, but I am naive like that.

Still I wonder if the lung cancer society or heart and stroke foundation could launch public awareness campaigns about the dangers of smoking or eating a high fat or sugar diet without also being under the same scrutiny as environmental groups.

Antonia January 25, 2013 at 8:05 am

The balance with the issue anon pointed out is difficult. In the UK and elsewhere there have been weathy political groups creating charities to exploit loopholes but, as you say, much charitable work has to engate politically if it is to effectively pursue its charitable aims. Useful standards and tests are elusive but the legislation you describe definitely sounds worrying, as ‘education’ can’t accommodate all advocacy campaigns.

See this week’s Kochtopus articles in the Independent – http://www.independent.co.uk/environment/climate-change/exclusive-billionaires-secretly-fund-attacks-on-climate-science-8466312.html

Antonia January 25, 2013 at 8:08 am
Tristan March 24, 2013 at 3:08 pm

The idea that anything done by a charity is non-partisan is to ignore the traditional meaning of politics. However, since politics no longer means the use of power for the common interest, this legal distinction merely makes clearer an effectively partisan, “non partisan” interest in the devolution of power and state roles away from governments towards NGOs and corporations. Charities are expected to take on welfare state functions, not persuade the state to take on more functions – don’t you know we are suppose to shrink the state and this is a non-partisan interest!

The charity based solution to environmental problems is clearly to set up a non governmental monitoring system and allow producers to label their products “sustainable” according to this independent third party verifier. Then, the market will decide whether we democratically want to avert climate disaster or not, through the power of consumer choices!

oleh April 2, 2013 at 1:56 am

The local Metro paper reports that of the 880 charities audited to determine if they exceed the allowable 10% for political activity, only one did. This suggests that charities are complying by these restrictions.

Ironically, the same paper reports as a result of the audit and other publicity on this issue, some environmental groups with charitable status have increased their political activity realizing there is a 10% allowance.

BuddyRich February 7, 2014 at 8:13 pm

Hrm… I guess I was wrong in my assessment…

http://www.cbc.ca/news/politics/7-environmental-charities-face-canada-revenue-agency-audits-1.2526330

Troubling that a tool like this can be used to silence criticism.

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