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Charities political activities: CRA consulting on rules

charities political activitiesThe Government of Canada has committed to modernizing the rules governing the charitable sector to ensure that they are operating in a regulatory environment that respects and encourages their contribution to society. One of the areas they are looking into is clarifying the rules governing charities political activities.

Currently, registered charities are allowed to engage in non-partisan political activities within certain limits. They are not allowed to engage in partisan political activities. However, political activities, such as lobbying for reform of laws or policies, are permitted up to a 10 percent ceiling.

The CRA’s policy guidance for charities on political activities can be found in the following documents:

Overall, the CRA guidance documents indicate that partisan political activities that are prohibited include, among others:

  • providing financial or material contributions to a political party or candidate
  • making public statements (oral or written) that endorse or denounce a candidate or political party
  • organizing an all-candidates meeting or public forum in a way that could be seen to favour a political party or candidate

Any charity that is found to be too politically active is threatened with losing its charitable status.

The issue with charities political activities?

The CRA seems to think that the rules governing the political activities of charities is not being followed, and that too many charities are getting involved in political activities and lobbying for different causes with specific political parties.

Since 2012, the CRA has launched thousands of audits to focus on a registered charity’s political activities, requiring them to surrender thousands of files and emails. Moreover, the Conservative government launched an $8-million program to audit the political activities of select charities. According to the media (Globe and Mail, Toronto Star, Financial Post etc.), funding for the CRA audits grew to more than $13 million, and 60 charities were eventually targeted. These audits are still ongoing.

The Charities Program Update – 2014 includes a section entitled Political activities compliance overview, which explains CRA’s general approach to political activities audits, how files are selected for audit, some of the CRA’s observations so far, and other related topics. The program update also provided a breakdown of how charities participated in or carried out political activities.

Several charities have challenged CRA’s definition of political activity as they fight audit findings, and the anti-poverty charity, Canada Without Poverty, has gone a step further by filing a constitutional challenge of a section of the Income Tax Act that restricts the political activities of charities. They are arguing that the Act violates Section 2 of the Charter of Rights and Freedoms, which guarantees freedom of expression and freedom of association, and in their case, by restricting how its members can collectively press politicians and others for changes to laws and policies to alleviate poverty.

What we can deduce from this, is that it is easy to encounter potential compliance issues with the rules governing charities political activities. For example, the Canada Without Poverty (CWP) is primarily an advocacy organization that has has exited for over 43 years. “Relief of poverty” has long been accepted as a charitable purpose under charities law. As a result, they participate in public policy discussions related to poverty all the time.

After the CRA audit, the auditors found that over a three year period (source: The National Union of Public and General Employees (NUPGE)):

  • CWP members and staff frequently identified changes that needed to be made to laws or policies in order to alleviate poverty and publicly promoted the adoption of a national anti-poverty strategy.
  • Some of CWP’s activities “created an atmosphere conducive to advocating for changes to laws and policies.”
  • CWP’s political activities included hosting a dinner where people living in poverty ate a meal with members of parliament and other decision-makers and discussed their experiences of poverty and ideas about how to address it; organizing policy summits where people living in poverty could collaborate with social policy experts and academics to develop recommendations for addressing poverty; and offering an online course on Canada’s obligations to address poverty under international human rights law, where people living in poverty could join a community of learners to discuss topics of the day.
  • CWP published links on its website to newspaper articles and other materials which were critical of some of the government’s policies and recommended changes.

Such activities go beyond the 10 percent ceiling, thus CWP was found in non-compliance with rules governing charities political activities.

Consultation on rules governing charities political activities

The CRA will collaborate with the Department of Finance to engage with charities to clarify the rules governing political activities. The online consultations are now open, and the in-person consultations will also be held in six cities across Canada. The online consultations are open to all Canadians, including charities. All comments are requested by November 25, 2016. Recommendations to the Minister of Finance is expected in early 2017.

For the purpose of the consultation, some of the questions posed by the CRA are as follow:

  • Are charities generally aware of what the rules are on political activities?
  • What issues or challenges do charities encounter with the existing policies on charities’ political activities?
  • Is the CRA’s policy guidance on political activities clear, useful, and complete?
  • Should changes be made to the rules governing political activities and, if so, what should those changes be?

More information on the consultation can be found here, including how to submit your feedback.

How can we help?

Apolone Gentles wrote a very useful blog post on Monday Lobbying: Considerations for not-for-profits. The article explains four things not–for–profits must consider on the issue of lobbying, the importance of understanding the rules and implementing a policy including were to get a sample policy.

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Yosie Saint-Cyr, LL.B., Managing Editor

Managing Editor at First Reference
Yosie Saint-Cyr, LL.B., is a trained lawyer called to the Quebec bar in 1988 and is still a member in good standing. She practised business, employment and labour law until 1999. For over 17 years, Yosie has been the Managing Editor of the following publications, Human Resources Advisor, Human Resources PolicyPro, HRinfodesk and Accessibility Standards PolicyPro from First Reference. Read more
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