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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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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A new video from five of British Columbia’s leading environmental groups challenges candidates in the provincial election to do better on climate change initiatives.

“British Columbians already have a policy that is fighting climate change and helping to create secure and well-paying jobs: the carbon tax,” says a video from the group entitled Better Future BC. “With a few upgrades, it can be made even more effective, and it can also drive a potent investment engine that we’re calling the Better Future Fund.”

“It’s clear that BC is at a crossroads,” says David Suzuki Foundation science and policy manager Ian Bruce. “In the past, BC has shown leadership on climate change although that has waned over the last few years. There’s certainly a threat that the next government could prioritize boom and bust industries like the oil and gas industry.”

Better Future Fund – The Time is Now from VoVo Productions on Vimeo.

Bruce says that it can sometimes be a challenge to show how a policy like a carbon tax can have a tangible impact on people's lives. He believes that showcasing proponents like Pulse Energy CEO David Helliwell and North Vancouver Mayor Darrell Mussatto will give people an idea of the concrete benefits of the plan.  

As of today, all four major parties have announced their plans for a carbon tax. The Liberals announced that they planned to freeze the tax while the Conservatives planned to do away with it entirely.

The Green party was the was the most progressive, with plans to raise the tax to $50 per ton of greenhouse gas emissions. The NDP followed with a promise to extend the tax to the oil and gas industry. 

The initiative echoes a recent study by the Pembina Institute that finds that Canada is missing out on a $3 trillion clean energy economy. 

The video entitled Better Future Fund – the Time is Now outlines upgrades to the carbon tax system that would put BC back in the lead on climate change:

1. Close the Carbon Loophole: There is currently “no incentive for companies to clean up their act” on carbon, says the group.
2. Keep on Growing: raise the carbon tax by $5 per year, a move that will raise at-the-pump prices by only 4.4 cents per litre by 2016.
3. Invest in Solutions: The increase in revenue provided by the rise in carbon tax should be put in to a Better Future Fund that would invest in “climate change solutions” such as public transportation, renewable energy and green initiatives.

In a letter to the Vancouver Sun, as well as an editorial he co-authored with Helliwell in the Victoria Times-Colonist, Bruce asserts that by following these steps, the BC government can generate $1 billion in new revenue for transit, energy efficient homes and technological innovation. 

"We all benefit from cleaner air, less traffic and jobs that matter, and the province gets to demonstrate what environmental leadership really means."

Visit Better Future BC for more details.

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