Charities and Political Activities in Canada: One Year Later
Charities are dealing with a new landscape one year after the federal government proposed—and later passed—amendments to the Income Tax Act on October 25, 2018. The amendments enshrined the notion that “charitable activities include, without limitation, public policy dialogue and development activities carried on in furtherance of a charitable purpose.”
Then-chair of AFP Canada Scott Decksheimer, CFRE, responded to the new definition saying, “clarity on allowable activities will help organizational leaders, boards of directors and volunteers engage government representatives with confidence.”
The decision to propose a new definition of charitable activities sprang from a July 16, 2018, decision at the Ontario Superior Court in the case of Canada Without Poverty vs. the Attorney General of Canada that made a charity’s political activities a free speech issue. The Court decided that limiting the amount of money a charity can spend on political activity to 10 percent of their expenditures was a limitation of speech.
Canada Without Poverty, a small Ottawa-based charity brought the case to court because their charitable status was under threat after the Canada Revenue Agency (CRA) found that almost 100 percent of their activities were political.
And despite previous statements that the “Government of Canada had identified significant errors of law and has served notice that it will be appealing the decision,” Ottawa dropped its appeal on January 31, 2019, citing consultation with the charity sector over the winter.
At the time, Leilana Farha, executive director of Canada Without Poverty said, "the decision to let…the decision stand is a huge victory for democracy in Canada."
The actions signaled a remarkable about face for the federal government (albeit under a different political party) where, from 2012—2014, $13 million had been earmarked to audit 60 charities, starting with environmental charities who were critics of the government's energy and pipelines policies.
“The new regulations haven’t changed what we do that much,” says Tim Gray, executive director of the Environmental Defence Fund, whose organization was the subject an audit starting in 2012. “Our view was that to protect the environment, we have to work on public policy.
“The benefits have been reduced costs,” added Gray. “The audit started in 2012 and is just now about to be closed. Over that time, we have incurred about $500,000 in legal fees. And it will mean less time tracking for staff who, under the old rules, had to note when they spent three minutes on an email that might have been political.”
He also feels that, more broadly in the sector, it will help charities do advocacy. “Many smaller groups were petrified of it. Now that the limitations are gone, it will take a while for people to incorporate that into their plans. But I think the public expects this from charities.”
The Canadian Cancer Society (CCS), which has always invested in advocacy, says their investments have not changed as a direct result of the new regulations, given that the amount that it invested in advocacy in the past has always been below 10 percent of revenue.
“We have always recognized the importance of advocating to government for healthy public policies that help to prevent cancer and support those living with cancer and their caregivers,” says Kelly Masotti, director of public issues for CCS. “In 2018/2019, our financial results show that we spent $3 million on advocacy – 1.7 percent of our total revenue. From 2012 to 2019 we spent between 1.7 percent and 4.8 percent of revenue on advocacy work. We will continue to invest in advocacy to ensure government policies reflect the needs of Canadians affected by cancer.”
Tides Canada, a charity that supports a range of social and environmental work, and which was also the subject of an audit in 2014, reports that regulations have not had a significant effect on its work and that it continues to engage in a minor amount of political activity.
“Tides Canada welcomes the change, as public policy dialogue and development activities are an important way for charities to do their work and achieve their missions,” said Elissa Beckett, vice president for development and strategic initiatives for Tides Canada, in a statement.
“We believe that all voices should be heard on important public policy issues that affect Canadians,” continued Beckett. “And we appreciate the recognition of the role that charities play in public advocacy. All charities have a right to do their work on behalf of Canadians free from threat or political interference.”
Canada Without Poverty talked about what the change in the definition of charitable activities and the decision not to appeal the Ontario Superior Court decision meant to them.
“CWP’s successful Charter challenge … has meant that we can now pursue our charitable goal without the anxiety we once shouldered,” says Farha.
“We never understood how we were supposed to relieve poverty in the country without enabling the free speech of our members living in poverty,” she continued. “And we never understood how poverty in a sophisticated welfare state like Canada could be undone without focusing our activities on improving laws and policies.”
Farha says the victory feels that much better to her knowing that it’s having a positive impact across the charitable sector and the country. “I hope the government eventually comes to recognize that despite having lost the legal battle, this is in fact a win for them—Canada now has a much healthier democracy.”