A new report from the Broadbent Institute is raising questions once again about the political activity audits conducted by the Canada Revenue Agency (CRA) and whether or not the agency has unfairly focused on charities with missions that don’t align with the interests of the federal government.

The report finds nine out of 10 prominent right-wing charities claimed zero per cent of their budgets were used for political activity in the most recent fiscal year. The final filing for the tenth organization has yet to be submitted or made public by the CRA.

The report is an update of a similar October 2014 investigation, which discovered all 10 charitable organizations reported zero political activities between 2011 and 2013. That investigation led the Broadbent Institute to call for an independent inquiry into the CRA’s audits to ensure charities under investigation aren’t the target of political attack.

The new report, which reviews the 2014 filings of the 10 organizations in light of their public activities, renews calls for an independent inquiry “to ensure transparency and fairness in the CRA’s decision-making.”

Under CRA rules, charities are allowed to spend up to 10 per cent of the organization’s time and money on "political activities," which the CRA defines as any activity that seeks to change, oppose or retain laws or policies.

According to the Broadbent Institute, many of the public activities undertaken by the organizations in question, which include the Fraser Institute and Focus on the Family, appear to meet the definition of political activity.

For example, in September 2014, Marco Navarro-Genie, president of the Atlantic Institute for Market Studies published an opinion piece in the Chronicle Herald that discouraged governments from banning fracking, saying the move “closes opportunities for greater innovation…and the development of more employment.”

“Prohibition is the wrong impulse,” he wrote.

The report also cites the example of Macdonald-Laurier Institute managing director Brian Lee Crowley, who in July 2014 argued the federal government should “assert its power to sweep away barriers to trade created by the provinces” in the Globe and Mail.

Other groups investigated in the Broadbent report are: C.D.Howe Institute, the Montreal Economic Institute, Canadian Constitution Foundation, Energy Probe Research Foundation, and Frontier Centre for Public Policy.

“The examples cited are only some of the many possible examples of political activity in which these groups engaged,” Jonathan Sas, Broadbent Institute director of research and author of the report, writes. “The juxtaposition calls into question how these charities interpret the restrictions on engaging in 'political activity' and why, if these groups are engaging in political activity, as defined by the CRA, the agency continues to allow them to report zero per cent.”

So far, at least 52 charities have been the target of the CRA’s $13.4 million audit program, which began in 2012.

Environmental Defence, the David Suzuki Foundation, Equiterre, Pen Canada, Canada Without Poverty, Canadian Centre for Policy Alternatives and the Ecology Action Centre have all been subjected to investigation and audit since the program began.

In March 2015, the University of Victoria Environmental Law Centre released a report, prepared for DeSmog Canada, that called for significant reform to Canada’s charitable tax law.

The report found current rules around the issue of political activity are confusing and create an “intolerable state of uncertainty.”

The report called on the federal government to clarify rules about what constitutes political activity and to loosen the 10 per cent rule on allowable limits.

The Broadbent Institute report confirms the broad discrepancies in how charities view reporting requirements around political activities.

“This report makes clear that the CRA rules around political activity are interpreted, to put it charitably, quite differently by many right-leaning charities,” Sas concluded in the report.

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A new report from the Broadbent Institute raises fresh questions about whether Canada Revenue Agency (CRA) audits are being used as a politicized tool to pressure critics of the federal government. 

The report, Stephen Harper’s CRA: Selective audits, “political” activity, and right-leaning charities, says several right-leaning charities are reporting zero “political” activity while engaging in work that appears to meet the CRA’s definition.

“We know charities that have been critical of policies of the Harper government are being audited by the Canada Revenue Agency. With mounting evidence suggesting bias in auditing decisions, we need to find out what’s going on here,” said Rick Smith, executive director of Broadbent Institute, a non-partisan organization founded by former NDP Leader Ed Broadbent.

Fifty-two charities are being targeted in a $13.4 million audit program launched by the federal government in 2012 to determine whether any are violating a rule that limits spending on political activities to 10 per cent of resources. Those charities include Environmental Defence, the David Suzuki Foundation, Canada Without Poverty, Ecology Action Centre and Equiterre.

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The Broadbent report examined publicly available CRA tax filings of 10 charities and cross-referenced these with their publicly available work. In each case, the charities had reported that they had conducted no political activity between 2011 and 2013.

The Broadbent Institute’s review, which includes the Fraser Institute, the Atlantic Institute for Market Studies and Focus on the Family, provides examples of activity for each of the charities that appear to meet the CRA’s definition of “political.”

For example, on Oct. 22, 2012, the Fraser Institute released a report calling for the B.C. government to lift its moratorium on offshore oil and gas exploration, which appears to fall under the CRA’s guideline on what constitutes political activity, which states an activity is political if “the intention of the activity is to incite, or organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.”

The report raises fresh questions about the CRA’s selection process for determining which charities are targeted for political-activity audits.

Other groups scrutinized in the Broadbent report are: Macdonald-Laurier Institute, C.D. Howe Institute, the Montreal Economic Institute, Canadian Constitution Foundation, Energy Probe Research Foundation, Frontier Centre for Public Policy and Institute for Canadian Values.

It’s unknown whether any of these groups are currently under audit.

The Broadbent Institute is calling for the establishment of an independent inquiry to examine CRA processes to ensure transparency and fairness in its decision-making criteria around political-activity audits and interpretations of “political” activity, and to ensure such processes are not subject to political pressures or interference. 

“Political activity is a critical part of many charities’ work. Progressive or conservative, blunting the ability of civil society to advocate and to engage in debate and, occasionally, dissent should concern us all,” Smith said.

Photo: Obert Madondo via Flickr

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