During this year’s long-haul federal election campaign, the rules about charities’ involvement in political activities have been tested left and right. A major challenge to the interpretation of the rules came from the Green Party, who fought back against the exclusion of their leader, Elizabeth May, from the Munk leaders’ debate on September 28.
This was not the first national debate to decline to invite May. But unlike previous debates, this one was put on by a registered charity, the Aurea Foundation, and the Green Party used that fact as a toehold to push for May’s involvement. Their lawyers filed an aggressive complaint with the Canada Revenue Agency, essentially requesting a revocation of the Aurea Foundation’s charitable registration – which would also mean the Foundation would lose all its assets.
The Green Party’s argument is that the Aurea Foundation undertook a prohibited partisan political activity by sponsoring the debate. This is an accusation that puts the Foundation’s charitable registration in serious jeopardy. But is it true? This area of charity law is largely based on guidelines invented by the CRA without a firm basis in legislation or precedent. It is therefore hard to say how a court would choose to rule; there is not much legal authority to refer to when trying to clarify the grey areas.
What Does the Law Say?
The Income Tax Act effectively creates two subcategories of “political activities” (a term that is not, itself, defined). One specific set of activities are entirely prohibited, and anything else that is a political activity is subject to a set of strict limitations. Prohibited activities are “direct or indirect support of, or opposition to, any political party or candidate for public office”. If a charity undertakes any of these, the CRA may suspend its ability to issue charitable donation tax receipts for one year or revoke its charitable registration entirely.
What Does the CRA Say?
The above definition of “prohibited activities” is the only piece of information the CRA has to work with in determining whether something is prohibited or not. The CRA has thus developed its own internal policies to expand on what they believe the ITA is referring to. Their current policy position as it pertains to the Aurea Foundation’s activities is as follows:
When a political party or candidate for public office supports a policy that is also supported by a charity, the charity is not prevented from promoting this policy. However, a charity in this situation must not directly or indirectly support the political party or candidate for public office. This means that a charity may make the public aware of its position on an issue provided:
- it does not explicitly connect its views to any political party or candidate for public office;
- the issue is connected to its purposes;
- its views are based on a well-reasoned position;
- public awareness campaigns do not become the charity’s primary activity.
These guidelines, and much more detail besides, can be found on the CRA’s website.[1] Since the CRA has largely made up the distinction between the acceptable and unacceptable, there’s no ground on which to challenge their decisions in court.
What Does This Challenge Mean for Charities?
The Green Party’s complaint came far too soon before the debate to allow for any action to be taken, and we are not sure what imaginable outcome would have been helpful to the Green Party as opposed to merely causing serious problems for the Foundation.
But the larger question remains: does this argument effectively mean that charities cannot fund debates at all? Is there a way to hold a political debate that would be acceptably “non-partisan”? If excluding a candidate makes the event partisan, then any compliant debate would be obliged to provide a platform for any conceivable candidate who decides they want to attend. This is clearly not a sustainable model – think of all of the fringe candidates and chances for exploitation!
Even more broadly speaking, the definition of what is too ‘political’ for charities in Canada to undertake is becoming increasingly wider, which is bewildering for a developed nation in a world where many other nations are moving towards giving their charitable sector more political freedom.
For now, the CRA still appears to be processing the complaint. If the issue ends up in court it should result in some interesting clarifications to the definition of political activities – whether they would be broadened or narrowed remains to be seen.
Finally, a reminder to charities: these political activity rules apply 365 days a year, not just during campaigns. In fact the CRA is still in the middle of a multi-million dollar audit of charities examining their political activities. It would be wise for charities to have up-to-date internal policies on the matter.
[1] Policy Statement CPS-022, http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html