Imagine Canada

Strong Charities. Strong Communities.

Making Sure your Charity Reports Political Activity Correctly

Friday, December 9, 2016
Sector Monitor
Taxes, Laws & Regulations
Sector Research

Imagine Canada’s latest Sector Monitor survey found that far more charities are engaging in political activities than has commonly been believed. Fully 31% of charities responding to the survey indicated they had engaged in at least one political activity over the previous year. However, only about one in ten of them reported this political activity to Canada Revenue Agency (CRA) on their T3010 Information Return. To help charities avoid this pitfall, we look at reasons for this under-reporting and offer some practical tips to aid reporting.

Tip 1: Review the definition of political activities.

The most common reason charities under-report political activity is they don’t fully understand what it is. As defined by CRA, a political activity: 

  • explicitly communicates a call to political action; 
  • explicitly communicates to the public that a given law, policy, or decision of any government (i.e., in Canada or abroad) should be opposed, changed or retained (if retention is being considered); and/or
  • is explicitly carried out for the purposes of pressuring elected representatives or government officials to oppose, change, or retain a given law, policy or decision of any government (in Canada or abroad).


Table 1: Click to view full size

The Sector Monitor survey asked charity leaders whether their organization had engaged in any of five specific activities meeting the definition of political activity over the previous year. At most, only about a fifth of charities saying they had engaged in a given political activity on the Sector Monitor also reported political activity on their T3010 (18% of charities saying they had conducted or disseminated research including a call to action reported political activity on their T3010). For most other activities, only about a tenth of charities reporting them on the survey also reported political activity on their T3010 (see Table 1).

In 2003, CRA published a policy statement explaining how political activity is defined and containing a number of helpful examples illustrating various aspects of the definition and how political activity is differentiated from charitable public policy activities. It is available on the CRA website and charities should consult it for more information. Charities should also remember the definition applies to activities involving all levels of government (including foreign governments), not just the Canadian federal government.

Tip 2: Be conscious that even low levels of activity should be reported.

Table 2
Table 2: Click to view full size

Another reason for under-reporting is that most charities are involved only in a few specific political activities and carry them out very infrequently (see Table 2). Nearly two thirds of charities reporting political activities on our survey said they were involved in only one or two specific activities. But just 7% of these charities reported political activity on their T3010. Similarly, over three quarters of charities reporting political activities on the Sector Monitor said they carried them out a few times a year or less. But only about 5% of these charities reported political activity on their T3010. 

In contrast, heavily engaged charities are much more likely to correctly report their political activity. Nearly two thirds of charities saying they were involved in political activities on a daily basis and almost a quarter of charities saying they carried out five or more specific activities on the Sector Monitor survey reported political activity on their T3010. However, very few charities are this heavily engaged.

One concern identified by charity leaders is whether it would look suspicious to report political activity without devoting significant organizational resources to it. In fact, this pattern of reporting is very common. On average, charities reporting political activity on their T3010 said they allocated around 2% of their total expenditures to it – much less than the 10% generally permitted. Nearly half said they spent $1,000 or less on political activity and only about half reported allocating any measureable staff or volunteer resources. Our survey findings and T3010 reporting both indicate that devoting low levels of resources to political activities is the norm and charities shouldn’t be afraid to report this.

Tip 3: Be particularly vigilant if your charity is in a category where under-reporting is common.

Table 3
Table 3: Click to view full size

Some types of charities are more likely to under-report political activity than others. For instance, just 2% of Arts, Culture, Sports & Recreation charities indicating political activities on the Sector Monitor reported their political activity to CRA, as did 3% of Education & Research, and 5% of Social Services charities (see Table 3). Charities that generate most of their revenue from earned income (3%) are also particularly likely to under-report, as are charities from Alberta (3%). Charities in these categories should be particularly vigilant to ensure that any political activities they engage in are properly reported.

With regards to organizational size, medium-sized organizations are more likely to under-report political activity than both smaller and larger organizations. This seems likely to be due to two factors. First, as seen above, more heavily engaged organizations are more likely to correctly report their political activities. All things being equal, larger organizations tend to be more heavily engaged and, by extension, more likely to report political activities correctly. Second, smaller organizations tend to involve fewer people in their operations. Intuitively, this means it is less likely they will engage in political activities without the person completing the organization’s T3010 being aware of it. Regardless of the specific causes, medium-sized charities should be vigilant to ensure their activities are reported.

Conclusion

Overall, the most important thing to keep in mind when it comes to reporting political activity is how common it is. Contrary to common stereotype, is not something engaged in only by a small number of heavily invested specialist organizations. Instead, it is widely practiced, usually at low levels, by a significant number of charities. Above all, charities should keep this reality at top of mind both in their reporting to CRA and their day to day activities. If charities are to increase public understanding of the roles we play in public policy, we need to make our role more visible.

Back to Blog Retour au blogue

Comments

Submitted by Mark Blumberg on
David, this is a very helpful article. Thank you very much for writing it. Mark

Submitted by François Poulin on
Thank you Mr Lasby to address the issue of political activities and reporting. Many directors, staff and volunteers experience difficulty in understanding when they actually lead political activities from CRA perspective. The fact that more charities report more political activities might be indicative the notion is better understood than it used to but obviously a lot more work is required.

Add new comment

Our National Partners

  • great west life
  • Lawson Foundation
  • Muttart Foundation
  • RBC Foundation
  • Suncor
  • TD Bank
  • investors group

Learn more about our National Partners and other supporters.

Charitable Registration Number: 119218790 RR0001