Canada Revenue Agency (CRA) has been notorious in recent years for its attacks on charities for their alleged political activities. Charities concerned about climate change and Aboriginal rights bore the brunt, with some still awaiting the attitude change promised by Justin Trudeau when he took power.
Taking Trudeau at his word, our law firm provided our thoughts to the Liberals’ inquiry on the issue of how charities’ political activities should be regulated.
Here’s a précis. The full submission is here.
There are significant benefits to acquiring the status of a registered Canadian charity. All income earned by registered charities is exempt from income tax under the Income Tax Act.
Charities may also issue donation receipts to donors, entitling individual donors to claim tax credits and corporate donors to claim tax deductions. Charities are obliged to devote all their resources to pursuing the public interest — by doing good — what charitable objectives, in essence, are. Currently, though, only a modest portion of a charitable organization’s resources may be devoted to political activities — even if they are ancillary and incidental to the organization’s charitable activities.
Charities’ good works involve them in major public policy files — environment or poverty, for example — and are carried out in the context of government policies and programs which can enhance or inhibit them.
Government policies and programs formulated in the absence of effective input from Canada’s charities — experts with community-level knowledge and experience — will necessarily be inadequate, or not in the best interests of Canadians — the public interest.
A voice for the public interest
It is an essential component of good government policy-making that the public interest be a dominant consideration. As charities have no owners and are funded by the voluntary contributions of Canadians, they are uniquely positioned to advocate for the public interest.
This is particularly important because the well-funded voices of private interests can dominate government policy-making if public interest advocacy is absent or ineffective. The current rules constraining the political activities of charities limit the advocacy of charities in areas where the public interest demands it most.
Charities, as advocates for the public interest, should be at least as unfettered as the voices of private interests when engaging in advocacy that advances their charitable purposes. Government policy-making is dominated by corporate interests and lobbying.
Recent experience in relation to climate change and the fossil fuel industry illustrates the problem. The voice of the fossil fuel industry drowned out the public interest voice coming from Canada’s environmental charities.
The fossil fuel industry and its supporters in government are prepared to risk catastrophic climate change to preserve the industry’s short-term gain. The problem is, virtually all the science points to the need for an urgent transition to renewable energy, leaving the vast bulk of known fossil fuel resources in the ground.
Corporate interests dominate policy
In the past decade, there has been a massive shift in federal government policy to adopt Alberta tar sands development as Canada’s prime path for economic development. This shift in policy occurred in the absence of any significant public discussion as to whether it was in the public interest to pursue that shift, given the enormity of the climate change challenge.
A recent study of lobbying efforts, Big Oil’s Oily Grasp, prepared by the Polaris Institute, found:
“Heavy lobbying by the oil and gas industry has far outstripped any other interest group seeking to influence the Harper government over the last four years.
… More than 2,700 meetings between oil and gas lobbyists and federal office holders since 2008 have helped turn Canada into a ‘petro state.’
Environmental non-governmental organizations, the groups most likely to question and oppose the fossil fuel industry, are almost completely invisible on the lobbyist registry compared to the companies profiled here.”
The limited public interest lobbying to counter the oil and gas lobby was carried out in large part by charitable organizations.
Political advocacy by charities
To begin to ensure that the public interest is a prime consideration in government policy, charities should be allowed and encouraged to express themselves on matters of public interest, and they should be able to encourage public support for their views.
Canadian businesses are encouraged to engage in political activities. Private businesses can deduct their advertising and lobbying expenses from their taxable income — without limit. As long as political advocacy by a business is in pursuit of profit, it is permitted to do anything — and take the tax benefits — without further constraint by CRA.
On the other hand, the current limits on charities’ political activities severely constrain their ability to effectively advocate with governments for the public interest.
Political activities by charities should be treated in the same way that political activities by corporations are treated. If political advocacy by a charity is in pursuit of its charitable purposes, this should be permitted, without limit. Charities should be entitled to advocate and oppose changes in law and public policy, including changes to legislation, provided that their advocacy is related to charitable purposes.
Iler Campbell LLP is a law firm serving co-ops, not-for-profits, charities and socially-minded small business and individuals in Ontario.
Pro Bono provides legal information designed to educate and entertain readers. But legal information is not the same as legal advice — the application of law to an individual’s specific circumstances. While efforts are made to ensure the legal information provided through these columns is useful, we strongly recommend you consult a lawyer for assistance with your particular situation to obtain accurate advice.