Advocacy chill, CRA style

Government tax threats worry charities.

by Jody Dallaire

Sixty-seven registered charities lost their charitable status in 2012, most of them for failing to file required forms. Others have received warnings that their status is at risk unless they become less political.  

From what I’ve been hearing and reading, I think that both federal and provincial governments are creating extra difficulties for non-profit organizations and registered charities.

First, the Feds cut the public funding available for public education, research, public policy and advocacy work. Some examples include changes to eligibility criteria for projects that receive funding though the Women’s Program at Status of Women Canada, the abolition of the Court Challenges Program, cuts and changes to programs leading to less funding for environmental monitoring and less funding for scientific research generally.

Another significant blow fell when the Feds decided to limit the amount of reliable data by abolishing the mandatory long form survey of the Canadian Census. The repercussions of this decision alone will be felt for years to come, and not only by the non-profit and charitable sector either.

Then there was the 2012 Federal Budget, and the government’s announcement that  not only is it cutting several vital social programs,  it is also allocating $8 million dollars to police Canadian charities that will have to take up the slack.

Let me elaborate.

Under Canadian law, registered charities can only use 10 percent of their resources (money, volunteer time, etc) for non-partisan political activities which further their mandate. The rules define “non-partisan” as meaning charities can recommend policy initiatives but cannot openly support or reject one of the political parties in the process. The 10 percent rule, as it is commonly known, has been in place for several years now, applicable only to charities, because only charities can issue income tax receipts to their donors.

The penalty for not abiding by the 10 percent rule is that the CRA can revoke the charity’s ability to issue income tax receipts to its donors for one year. If the CRA determines that a charity failed to report its political activities adequately, the one year ban also applies.

Already there is an advocacy chill in Canada. According to a study done by Canadian Press of the Canada Revenue Agency`s Charities Database, only 450 of the 85,000 registered charities use any of their resources for political activities. This represents half of one percent (0.5 percent). Many are a long way from the 10 percent maximum. Also, only one legitimate charity has lost its tax status since this rule has been in place.

In short, charities that overstep advocacy restrictions do not appear to present a rampant problem in Canada.

Why then devote so much money to policing a law that is by-and-large respected? Many observers have suggested that the goal was to intimidate charities — especially in the environmental sector — so they won’t participate in public debate on issues.

I am not sure how the federal government reconciles this decision with this statement included in the budget documents: “Given their unique perspective and expertise, it is broadly recognized that charities make a valuable contribution to the development of public policy in Canada.”

Perhaps some insight can be drawn from an open letter written by Joe Oliver, Federal Minister of Natural Resources in January 2012. He characterizes environmental charities as, “environmental and other radical groups.”  Such a perspective almost makes  investing millions of dollars to police charities seem sensible.

All is not rosy on the provincial front either. Remember, the provincial government decided to abolish all of the funding allocated to the New Brunswick Advisory Council on the Status of Women, a decision made without any consultation whatsoever, and still contentious, as shown by general and sustained resistance.

Staff and directors at New Brunswick non-profit organizations  have told me they received calls from civil servants and elected representatives warning that their organization should either “be quiet or lose your funding.” And here I mistakenly thought that we lived in a free and democratic society where research, data and debate were valued and celebrated, not quashed.

© Copyright 2012 Jody Dallaire, All rights Reserved. Written For: StraightGoods.ca