Government contracts and funding agreements can be golden eggs in the non-profit sector, promising a tempting level of income stability for NPOs and charities.
Because of the public source of these funds, NPOs may have some nebulous ideas about the government being duty-bound to behave fairly or reasonably towards them. These NPOs may be surprised to learn just how much leeway the government has in unceremoniously cutting them off.
This reality was underscored by the recent Federal Court of Appeal decision in Canadian Arab Federation v. Canada.[1] If you have heard about this case in the news, the coverage was probably dominated by the sensational nature of the circumstances: the Canadian Arab Federation (CAF) was an NPO with a contract to provide language and social integration instruction to newcomers for the Department of Citizenship and Immigration. The then-Minister of CIC, the Hon. Jason Kenney, decided to block a renewal of the CAF’s contract based on his impression that the CAF appeared to support terrorism and promote anti-Semitism.
The allegations against the CAF are disturbing. But the real story for NPOs here is the way in which the Minister’s decision was made, and the Court’s validation of that process. This process applies much more widely than just to groups apparently involved in obviously egregious behaviour, and so should interest the entire sector.
Here are some highlights from the decision for all NPOs to keep in mind:
1. The Minister was not obligated to treat CAF with procedural fairness.
As a general principle, public authorities have a duty of procedural fairness when making a decision that affects the rights, privileges, or interests of an organization. However, it is hard for an NPO to argue that they have a relevant right/privilege/interest that merits procedural fairness when it comes to the government deciding whether to fund or contract with them.
NPOs by definition do not profit from these relationships and so cannot be said to have an economic interest in them. The CAF argued that its reputation (a very important asset for any NPO) was very harmed by the government essentially labelling it a terrorism supporter, but the Court ruled that reputational harm is not a strong enough interest to engage the duty of procedural fairness. The CAF also claimed the decision interfered with its ability to advocate, but the Court did not think the interference was substantial enough to matter.
Finally, and most unfortunately for NPOs, the Court asserted that the public interest in having a Minister with “the discretion to make swift decisions without being paralyzed for procedure” weighs very heavily against an NPO’s possible entitlement to procedural fairness. In plain English, the Minister’s freedom to do what he wants without bothering with fair procedure is more important that an individual or organization’s right to be treated fairly by public authorities.
Furthermore, if a public official doesn’t owe you a duty of procedural fairness, then it also doesn’t matter if his decision is biased. In this case, the original Federal Court decision mused that the Minister’s decision probably was biased, but that it was a moot point. The Federal Court of Appeal did not bother to address the issue.
The bottom line: When deciding whether to cut your funding, public authorities probably don’t owe you any kind of procedural fairness, and are thus free to make totally biased decisions.
2. The Minister was not obligated to consider CAF’s Charter rights.
The CAF tried to argue that its advocacy activities were protected speech under the Charter of Rights and Freedoms. Although the Court agreed that advocacy is protected speech, they clarified that it is not a “positive” right. That is to say, the CAF had no positive entitlement to funding based on this right.
Furthermore, as mentioned above, the Court did not consider the loss of funding a substantial interference with the CAF’s ability to advocate, and therefore its right to freedom of expression was not unacceptably infringed anyway.
The bottom line: Almost none of the rights in the Charter are positive rights. This means that NPOs that rely on public funds are probably not protected by the Charter if the government decides to decimate them by cutting them off.
3. The Minister’s decision was reasonable
The court decided that the Minister’s decision was based on the inherent criterion of whether the service provider was ‘appropriate’, and there was no other list of factors he was required to consider. His ‘policy view’ was that the government should not fund organizations, such as those that he thought promoted anti-Semitism.
The Court also considered the ‘appropriateness’ of a program that teaches newcomers the Canadian way of life to be a particularly important decision factor. This was based on the fact that the program’s curriculum guidelines included things like “respect for cultural distinctiveness” and “ways to combat racism and intolerance”. CAF’s representatives made public statements that appeared to support terrorism and could reasonably be considered to be anti-Semitic, and thus the decision not to select CAF was in line with the purpose of the program.
The bottom line: The courts give a wide margin of discretion to the government in making these kinds of decisions, allowing decision-makers to base them on broad government policy objectives and priorities. They are also reluctant to find the viewpoints underpinning a decision to be unreasonable, regardless of their basis in reality.
Ultimately, any organization receiving government funds should be aware that any materials or people it associates itself with (including web links in its materials and comments by its executives) can be taken into account by the government, and used to make a biased decision about whether the organization meets some broad policy objectives. In order to maximize the chances of keeping government funding, organizations should be aware of the overall purpose of the funding and, with that in mind, be sure to monitor their messaging and watch who they associate with. Once the funding is lost, there is little chance of recourse from the legal system.
[1] Canadian Arab Federation v. Canada (Citizenship and Immigration), 2013 FC 1283