Good public policy improves the lives of Canadians, and contributions from civil society groups can significantly improve the public policy that governments make. Despite the benefits of working well together — to both sides, and to Canadians overall — relationships between the sector and governments are not without challenges.

Note: the term "civil society groups" includes both nonprofits, which have no limits on their political activities, and charities, which have well-defined limits on their “political activities,” as described below.

In the last three years, many within the charitable sector have become concerned about Canada Revenue Agency audits focused on political activities, but few realize that controversy over the regulation of charities dates back decades in our country.

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The current controversy revolves around 52 charites being audited in a $13.4 million 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. Some of those charities, including Environmental Defence, the David Suzuki Foundation, Canada Without Poverty, Ecology Action Centre and Equiterre, have gone public with the fact they are undergoing audits.

On February 6, 2014, CBC reporter Evan Solomon published a story and aired a segment on the television program Power and Politics about these audits. The news story raised the question of whether environmental charities critical of the government are being unfairly targeted for their “political activities” as defined by Canada Revenue Agency.

In October 2014, the Broadbent Institute further interrogated that question by releasing a report called Stephen Harper’s CRA: Selective audits, “political” activity, and right-leaning charities.

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

The Broadbent Institute’s report, 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 the report’s authors argue meet the CRA’s definition of “political activity.” It’s unknown whether any of these charities are currently under audit.

Flashback to 1978: Trudeau Government Accused of “Muzzling Charities”

Controversy around charities undertaking “political activities” is anything but new. Thirty-six years ago, in February of 1978, the Trudeau government issued Information Circular 78-3. It warned charities that any political objects or activities would be understood as contravening the Income Tax Act, and could result in the revocation of an organization’s charitable status. The document took a broad view on what constituted political activities, and clarified that none of a charity’s resources could be devoted to them.

Charities, the federal opposition parties and the press reacted strongly to Information Circular 78-3, arguing it contravened the right of free speech, unduly constrained charities in their pursuit of improving society and ran against the democratic values of Canadians. 

An editorial in the Toronto Star from April 18, 1978, captures the tone of the response, calling it “outrageous” for the Trudeau government to “muzzle charities” with guidelines that “take the narrow view that while charities can directly aid the needy, for example, they can’t advocate changes in public policy that might benefit the needy [because] this is considered political activity.”

The Trudeau government defended its actions by claiming the information circular wasn’t a shift in policy, but rather only a reflection of the imperfect case law according to which purposes and activities of charities must be interpreted. Under ongoing pressure, the Trudeau government eventually suspended the circular. 

In 1987, the Mulroney government released Information Circular 87-1, which advanced the now familiar approach of allowing charities to undertake ancillary and incidental political activities that are not partisan and limited to expenditures of 10 per cent of a charity’s resources. The 1987 policy statement also required that charities report on both exempt and political activities in their annual information returns.

The mid-1990s to early 2000s saw an unprecedented amount of activity oriented to improving the relationship between the federal government and the charitable sector. It culminated in June of 2000, when the Chrétien government announced the Voluntary Sector Initiative, a five-year joint initiative between the sector and the government set up to improve their working relationship. Among the many outcomes of the initiative was a Code of Good Practice on Policy Dialogue (2002), which makes explicit why and how the federal government and the sector should work together on public policy.

In 2003, based in large measure on the work described above, and after open consultation with the sector, the Charities Directorate of Canada Revenue Agency updated its guidance on political activities with the release of CPS-022, which is still in effect today. It is substantially the same as Information Circular 87-1, but is more explicit and makes greater use of examples than previous guidance.

A close reading of the guidance reveals that Canada Revenue Agency permits more latitude in terms of political activities than many in the sector appear to believe (see: 10 Ways Charities Have Improved Canadians' Daily Lives). It would seem that at least some of the purported “advocacy chill” often cited in the sector flows from charities themselves not fully understanding the range of activities permitted by the regulator.

While some of the “chill” may be caused by charities’ own lack of understanding of the law, there’s no doubt part of it can also be attributed to the perception of a crackdown on the environmental sector.

While a robust regulator that conducts regular audits is an essential element of a well-functioning charitable sector, being audited is a stressful, time-consuming exercise that distracts from a charity fulfilling its mission. And when you have a government that has openly accused Canadian environmental groups of  “money laundering,” it’s little wonder environmental charities are feeling a little on edge at the moment. Only time will tell how the current audits will go down in the history books.

Obviously, the challenges presented by imperfect case law and an arcane regulatory regime around charities persist today. The Charities Directorate has recently launched a series of tools to help charities understand the rules. And the Pemsel Case Foundation was recently founded with a mission to foster better knowledge and understanding of charity law and regulation by the Canadian public and voluntary sector organizations.

A number of funders, including Max Bell Foundation, have taken an active interest in supporting charities who do public policy advocacy. I would hope these initiatives and others like them will help warm Canadian charities to the idea of doing public policy advocacy — because the potential rewards for all of us are enormous.

This article originally appeared in The Philanthropist.

Photo: Obert Madondo via Flickr

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If the pipeline giant Enbridge Inc. is content to cower behind a 20-something blog manager rather than acknowledge its role in the recent attack on the patriotism of Canadian environmentalists, what hope have we that the company would ever stand accountable for the accidents that will occur – inevitably – if Northern Gateway ever gets built?

That’s a rhetorical question, but a pressing one, given the environmental time-bomb that Enbridge proposes to lay out between the Canadian tar sands and the pristine B.C. coastline.

We actually don’t know for sure that Enbridge is behind the so-called Ethical Oil Institute, a phony grassroots organization that was established by Ezra Levant and run for most of its first year by Prime Minister Stephen Harper’s current Director of Planning, Alykhan Velshi. But you might come to your own conclusions by watching this clip or reading the transcript below.

It comes from an interview on the CBC show Power and Politics, in which the host, Evan Solomon, asks current EthicalOil.org manager Kathryn Marshall a question she just can’t bring herself to answer:

Solomon: Some have said that Enbridge, which is building the Enbridge Northern Gateway pipeline, is a funder of Ethical Oil and that they’re using your group to disempower environmentalists that oppose this. Does Enbridge support or give your organization money?

Marshall: Look, we’re a small grassroots advocacy organization. This is about foreign special interests and their puppet groups who are trying to hijack a Canadian process. … This isn’t about our money, this is about foreign special interests who are trying to hijack the process.

We don’t take any foreign money. We take no foreign money. We are 100 per cent Canadian.

Solomon: Are you taking money from Enbridge?

Marshall: We’re a small grassroots organization. Our average donor is a regular hard-working Canadian who gives us 20 or 30 dollars through our website.

Solomon: I am not trying to disparage your donors. I’m trying to understand if the company that is building the pipeline is also funding you. If we’re talking about who is funding and the influence of that, I think it’s fair to be transparent about that.

Marshall: This is about foreign influence. EthicalOil.org is 100 per cent Canadian. Let’s talk about foreign money.”

[Minutes later, the host asks again.]

Solomon: You keep calling these other groups puppet groups. People will ask, are you a puppet group of Enbridge? Let me ask you again. Does Enbridge fund you to have a campaign against these other groups? Does Enbridge give your organization money?

Marshall: Look Evan, I am not going to respond to conspiracy theories, we are a small grassroots organization.  (Garbled by interruptions)

Solomon: Just to be fair. It’s not a conspiracy theory. If they don’t give you money, you could say they don’t. If they do, fine.

Marshall: I don’t respond to conspiracy theories. But look, this is about foreign interests trying to hijack a Canadian process.

Solomon: Ok, I can’t get an answer. I don’t know why that’s a conspiratorial question. If Enbridge funds Ethical Oil, I’d love to know.

Is this the kind of transparency that would give you confidence in how Enbridge might account for itself in the wake of an out-of-sight oil spill?

For that matter, do Marshall’s well-rehearsed talking points even make sense? The portion of income that any large Canadian environmental groups receive from foreign sources seldom changes – and seldom tops about 10 per cent. Yet Enbridge, which reports more than double that level of foreign ownership (23%) appears to be accusing others of having “special interests” or “foreign influence.”

Here you have a PR person who is prepared to embarrass herself, painfully and repeatedly on national TV rather than answer a simple question about Enbridge funding. We have a $5.5-billion project that has already attracted huge offshore support; we have a tar sand scar across northern Alberta that is increasingly owned by Chinese buyers (who really want this pipeline). And yet everyone from Prime Minister Stephen Harper to this hapless PR professional is saying it’s the Canadian environmental community that is somehow biased by its diversity of support.

Does this conform to your definition of “ethical”?

Take one more moment to think about what Enbridge is proposing. Northern Gateway would stretch 1,172 kilometres through some of the last untouched temperate rainforest in the world. Bearing in mind that Enbridge pipelines have leaked a recorded 132,000 barrels of hydrocarbons in 610 recorded spills between 1999 and 2008, are we convinced that Enbridge would account for every “little oops” that occurs deep in the BC wilderness? Or, after this incident, do you think they might rather hire Kathryn Marshall to tell us that she had no personal evidence of any spill – and that anyone who says different is probably being put up to it by foreigners?

Worse, what would Enbridge or their PR team say when the first oil tanker does an Exxon Valdez in Hecate Strait?

This whole Ethical Oil dodge is just one more reason to slam the door on this whole project.

Image credit: Henrik Lehnerer | Shutterstock

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