By: Arthur Drache
As the Liberals promised in their election campaign, they have effectively shut down the much maligned (rightly in our view) political activities audit programme which many believed was used to target organizations which were critical of the former government.
The controversial program was launched with fanfare in the 2012 Conservative budget, with funding that grew to $13.4 million and was supposed to ensnare 60 charities over five years. The program was launched as two Conservative cabinet ministers, Joe Oliver and Peter Kent, vilified environmental charities for interfering in the government’s pipeline and energy policies.
The first wave of audits hit environmental groups but later waves expanded to include poverty, human-rights and international-development charities. Critics said the audits not only were costly for poorly funded groups to defend themselves, but created an “advocacy chill” as some charities self-censored to appease auditors.
Diane Lebouthillier, the Minister of National Revenue, announced on January 20 the winding down of the review by the Canada Revenue Agency (CRA) of registered charities’ political activities. Her official statement on the subject was as follows:
“Our government recognizes the critical role charities play in our society and their valuable contribution to public policy and public debate on behalf of all Canadians. To help them continue this important work, charities must be assured they are operating in a regulatory environment that respects and encourages this contribution.
The results of the political activities audit program have shown substantial compliance with the rules regarding charities’ involvement in political activities. In light of these outcomes, the political activities program will be concluded once the remaining audits have been finalized.
Our Government’s commitment to openness and transparency includes providing more information on the regulation of charities to the public and the charitable sector in a timely manner and in ensuring the engagement of the sector.”
In order to achieve this, Lebouthillier also announced that the CRA will publish an annual report to provide the public with more information about its activities and its contribution to an effective regulatory framework for registered charities.
She said she is committed to engaging with key stakeholders and has asked CRA’s Charities Directorate to find ways to further clarify the rules governing a registered charity’s involvement in political activities. Details of the consultations will be made public as they become available. We might point out that one of the first actions of the Harper government was to eliminate the consultative group which met with some regularity with the CRA’s charities directorate. There are already indications that on a less formal basis, consultation between the department and the sector have started.
At the same time details of past and ongoing audits were released.
- To date, of the 30 completed political activities audits, only 5 resulted in a determination to revoke registration, all of which were primarily based on factors that were beyond their involvement in political activities. Any charity that has had its registration revoked always has the right to appeal the revocation.
We would ask the obvious question which is what happens with the appeals which are in various stages of the process. Will the charities be given a pass or will they have to carry on, perhaps even ending up in the Federal Court of Appeal?
- There are 24 more audits already underway and scheduled for completion. These audits will continue so that the CRA can address any serious deficiencies, consistent with the approach used in the regular charities audit program.
- The six remaining charities that were selected for audit will not be reviewed under the political activities audit program.
- The rules regarding the political activities of charities have been in effect since 1985, and are outlined in the CRA’s Policy Statement CPS-022, Political Activities, which was published in 2003.
- Of the approximately 86,000 charities in Canada, about 500 report carrying out political activities on their annual information returns to the CRA. (We might add that a lot of organizations which report no political activities do in fact carry on such activities but choose not to recognize the nature of them and thus don’t report them.)
- As part of its regular audit program, the CRA audits approximately 800 to 900 charities every year.
The sector will for the most part be greatly relieved by the announcement