Last year at this time I was dreaming of sugarplums obviously when I ended my December 2014 article with hope for legislative reform to reduce red tape and help our charity and not for profit clients. Then on budget night in the early months of 2015, I was disappointed as it seemed that not much was going to happen. But now my hopes have been raised as I read the recent Government of Canada Ministerial Mandate letters. Hark the Liberal Angels Sing!
The ministerial department that can create relevant policy, the one that writes the laws, and the enforcing department of those laws have been mandated to work together and get down to business to “modernize the rules governing the charitable and not-for-profit sectors.” Hallelujah!. They say good things come in threes. Recall the three kings of orient and then remember the three ships that someone once saw sailing in. So if these three departments of the Government of Canada can work together as mandated then the bells should really be ringing.
Here are the actual excerpts from the Government of Canada Ministerial Mandate letters that have me singing:
- Minister of National Revenue Mandate Letter – See more at: http://pm.gc.ca/eng/minister-national-revenue-mandate-letter#sthash.zlgRuhsx.dpuf
“Allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and not-for-profit sectors, working with the Minister of Finance. This will include clarifying the rules governing “political activity,” with an understanding that charities make an important contribution to public debate and public policy. A new legislative framework to strengthen the sector will emerge from this process. This should also include work with the Minister of Families, Children and Social Development to develop a Social Finance and Social Enterprise strategy.”
What do I hear? The chill over the charitable sector about speaking out on matters of importance may soon come to an end and indeed charities may be invited to come to the table to help solve the issues of the day. They may be able to speak out and engage Canadians in the discussion. Furthermore, the positive action that is encouraged and the use of Capital Letters in referring to Social Finance and Social Enterprise and then calling it strategy gives me hope that there will be active steps taken to justify entrepreneurship and businesslike activities to financially strengthen these organizations.
- Minister of Finance Mandate Letter – See more at: http://pm.gc.ca/eng/minister-finance-mandate-letter#sthash.TL6pQhjB.dpuf
“Work with the Minister of National Revenue to allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and non-for-profit sectors. This will include clarifying the rules governing “political activity,” with an understanding that charities make an important contribution to public debate and public policy. A new legislative framework to strengthen the sector will emerge from this process.”
The Charities Directorate inside Revenue Canada will be no doubt be hearing from the department of finance to talk about the confusion in the sector, not only about what is allowed in the realm of political activities but how to allay the confusion surrounding the role that charities and not for profits play in a modern society. They can then set about the work of modernizing the few sections of the Income Tax Act that deal with these kinds of organizations. In their modernizing talks maybe they will discuss the fact that the Charities Directorate has morphed into the all-encompassing regulator of everything charitable due to its unique role of having the tool of the Income Tax Act at its disposal to use as a sword, unlike the provincial governments, who have no control over the tax exemption of charities but are given the constitutional power to administer them by virtue of our Canadian constitution in relation to the “Establishment, Maintenance, and Management of … Charities” Will they talk about the organizations that are not registered Charities but just plain vanilla not for profit (or “non for profit” as you see used in this specific mandate letter – maybe a new word here)? Does modernizing the rules governing this latter group of organizations mean clarifying the whole area of what a not for profit can do to become self-sustaining? Will they be able to carry on activities that generate revenue and then use the revenue to carry on their good work? This question has been the subject of much debate, uncertainly and CRA audit activity since at least 2009.
- Minister of Justice and Attorney General of Canada Mandate Letter – See more at: http://pm.gc.ca/eng/minister-justice-and-attorney-general-canada-mandate-letter#sthash.0975Lciw.dpuf
“Work with the Ministers of Finance and National Revenue to develop a modernized regulatory and legal framework governing the Charitable and Not-for-Profit sectors.”
Finally the ministry that employs what is often boasted as the biggest law firm in Canada is to work with the two ministries that have the biggest impact on the charity and not for profit sector. Along with their own legal minds devoted to the task, this new government with its sunny ways will no doubt be consulting with lawyers who actually work in and for the sector who can explain how difficult it is to advise clients when the rules are made by the regulator administration and not necessarily by the courts or the legislature. I am hopeful.
Do you hear what I hear when reading these ministerial mandate statements? If so then deck the halls! Despite the songs that we hear during this season with titles that claim that all they want for Christmas is either someone else or their two front teeth, many songs revolve around wishes and coincidentally three wishes. So I have the following three small wishes to come out of these three ministries working together through their new mandates:
- Look at the realities of the economic engine today and take the best from the experience in other countries. For all the contribution the charitable and not for profit sector makes, the rules governing it are still coming out of the common law hundreds of years old overlaid with rules cobbled together by a single regulator. Other countries have made strides – even England where our common law comes from – and so can we.
- Recognize that the charitable and not for profit sector needs some help to do its work. Reducing the red tape and clear the path to ensure it takes its place in the future growth of the Canadian economy. The business community is not going to save the day while focussed on shareholder value but organizations driven to serve the common good may be the key to our Country’s and indeed the planet’s happy future.
- Legal framework. With the use of the term “new framework”, which I take to refer to a foundation or back to the basics, I am hoping that a new federal /provincial structure will be discussed and created. The laws to run a for profit business from coast to coast to coast in this country are much easier to understand and comply with than trying to operate a not for profit organization when it needs to cross provincial or territorial borders. Much work will need to be done.
If these three ministerial ships really do come in together my wishes may eventually come true. Although there was nothing specific in the throne speech that caused me to sing “Joy to the World”, it still gave me hope for something to come. “O Come, All ye Faithful”.