The current media interest in the application of the political activities test for charities is indicative of the lack of nuance in our charity regulatory system. As we have written before on the history of the political activities test as it applies to charities, the provision in question, which allows charities to contribute up to 10% of their resources to advocacy, is in fact a relieving provision. In other words, but for the existence of this provision a charity would be denied from participating in any advocacy at all (with the arguable exception of advocacy in pursuit of the organization’s charitable objects.) This is because a charity is otherwise obligated to use all of its resources on charitable works.
We have also written before about the federal Parliament’s lack of jurisdiction to engage in any charity regulation that is not reasonably related to the collection of an income tax. (In our opinion, and that of many other experienced lawyers as well, the application of a political activities requirement does not meet this test. But because this is a relieving provision, most are disinclined to challenge it.) This lack of jurisdiction is also a problem in creating a nuanced statutory test. To illustrate the problem, consider that we currently have the same political activities test for organizations as diverse as think tanks and food banks.
Food banks are at the forefront of the effort to feed the hungry. One would expect that their advocacy would be limited to situations where either the federal Parliament or a provincial Legislative Assembly is discussing legislation related to the poor. This happens on occasion and is fairly limited in scope. Think tanks constantly produce pieces designed to evaluate public policy and provide some commentary on whether or not the laws should be changed. It would be counter-productive to limit them in the types of topics they consider, the conclusions they draw, or the method and timing through which those conclusions are released. Clearly, a separate understanding of the rules must apply to these groups.
That think tanks do not currently face revocation of their charitable status based simply on their operations is arguably due to the use of some discretion in applying the law by the enforcement body, the Charities Directorate. However, the law should not be decided in this way by unelected public servants, and the Charities Directorate should not be in the position of using their discretion so they cannot be accused of bias – the exact situation which is currently playing itself out. It is the purview of our elected officials to decide which laws should be applied in which matter. It is for this reason that the provinces, those with the actual jurisdiction to legislate in this area, must be involved in the creation of a regulatory regime which applies specifically to charities.
The Ontario Securities Commission, the senior security regulatory body in this country, has a variety of means at its disposal to produce a system of the rules and regulations that are applicable in nuanced ways to various sectors and to corporations of various sizes. One cannot imagine that charities as diverse as small churches, internationally active recognized universities, and large foreign aid organizations should all have similar rules that apply to them in all circumstances. A regulatory regime is not designed to apply the same rules to all circumstances. It is designed to ensure that organizations have the proper regulations to serve the purpose for which they are created, and in this case also for the purpose of ensuring that the role the charities serve in society is served as efficiently and as close to the public trust as possible. We have argued before that provinces must step up the plate as one cohesive body to ensure that charities have the proper regulatory structure. The current fracas is just one more reason.