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Imagine Canada

Strong Charities. Strong Communities.

New Public Policy Advocacy Rules for Charities

Friday, November 30, 2018

The federal government is introducing a new set of rules to govern charities’ public policy advocacy.

You may be wondering: 

These Qs and As, developed jointly by Imagine Canada, Philanthropic Foundations Canada, and the Ontario Nonprofit Network, may be of help. 

What the proposed rules might mean for your organization

How much public policy advocacy would our charity be allowed to do?

The proposed rules say you would be able to engage without limitation in public policy dialogue and development activities* as long as those activities further your charitable purposes**.

Charities would still be completely prohibited from engaging in any partisan activities***.

* Public policy dialogue and development activities can involve research, convening discussions and conferences, and attempts to inform the public and shape public opinion. They can also involve trying to influence the laws, policies or decisions of a government.

** The definition of charitable purposes would not change. It still would not include political purposes. To learn more about charitable purposes, click here.

*** Partisan activities include supporting or opposing, directly or indirectly, any political party or candidate for public office.

The Canada Revenue Agency will be making available before the end of 2018 new guidance explaining how they would interpret these rules in practice.

Why is the Government proposing these changes?

The government has reaffirmed that “charities play an important role in bringing people together and building strong communities—as well as helping to inform public debate and the creation of public policy.” The Government has therefore proposed amendments to the Income Tax Act to change the rules for charities so that they have the full ability to pursue their charitable purposes by engaging in non-partisan political activities and the development of public policy.

Do we still need to keep track of the resources we dedicate to public policy advocacy for the Canada Revenue Agency?

The so-called 10% rule will no longer be applied. At this point we don’t know how the CRA will treat reporting of activities in the annual reporting form, the T3010. It is good practice to keep track of how as a charity you are administering your resources on all activities.

Would we be able to drop other activities and focus exclusively on public policy advocacy?

The Department of Finance, in explanatory notes to the legislative amendment that removes the limits on political activity, states that “an organization could therefore, for example, meet the test in new paragraph (a.1) of the definition “charitable organization” where some or all of its activities are public policy dialogue and development activities carried on in furtherance of a charitable purpose.” See Explanatory Notes Relating to the Income Tax Act and to Other Legislation.

These are only explanatory comments, not law. It remains to be seen how the Canada Revenue Agency and Courts would interpret the proposed rules. 
 

Would our policy advocacy organization now be able to become a charity when it couldn’t before?

Probably not.  While we cannot say for sure without knowing the facts of your situation, these proposed rules would not change what is deemed to be an acceptable charitable purpose by the federal government, pursuant on common law decisions.

Political purposes are NOT charitable purposes.

You should talk to a lawyer with experience in charity law for an answer specific to your situation.

What this might mean for the charitable sector

Would these changes open the door to many lobby groups getting charitable status?

No. there is no reason why a lobby group should obtain charitable status after these changes are made compared to before, if this group has political purposes, not charitable purposes. 

Canada is not the first country to allow charities to engage in unlimited public policy advocacy. 

  • Australia changed its legislation in 2013 and saw a slight decline in the number of “law, policy, and advocacy” charities (from 533 to 523). 
  • New Zealand’s rules were changed by a Supreme Court case in 2014. In the four years before the decision, on average, 19.6% of newly registered charities provided “information, advice, or advocacy”. In the four years after, the average dropped to 18.8%.

Would these changes open the door to wealthy donors inappropriately influencing elections through US-style Super-PACs?

No.

Super-PACs are organizations that have raised and spent billions of dollars in the US around elections to support or oppose political parties or candidates. They are not registered or organized as charities. The proposed rules do not open the door to charities as Super-PACs in Canada because Canadian charities:

  • are not allowed to engage in any partisan activities;
  • face the same election spending limits as other organizations;
  • must dedicate all their activities to advancing charitable not political purposes.

Election spending limits are imposed by the Elections Act.  This will not change.

Other countries that allow charities to engage in unlimited political activities (and even to have political purposes) have not seen any major problem of veiled partisan activities:

  • New Zealand’s charities database shows only 3 cases since 2014 dealing with political activities. None of these were about partisan activities.
  • In Australia, in 2017, the Australian Charities and Not-for-profits Commission reports complaints against charities related to political activities accounted for only 2.8% of total complaints. These complaints only resulted in 5 investigations.
  • In the United Kingdom, the Charities Commission for England and Wales published a report of its compliance work during the 2017 election. It did not report any super-PAC type concerns. In all cases, charities followed their advice and no more serious action than a warning was needed.

 

About Imagine Canada

Imagine Canada is a national charitable organization whose cause is Canada’s charities and nonprofits. Our three broad goals are to strengthen the sector’s collective voice, create opportunities to connect and learn from each other and build the sector’s capacity to succeed.

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For further information:

Bill Schaper
Director, Public Policy
Imagine Canada
416-597-2293, ext. 268
bschaper@imaginecanada.ca

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