By: Arthur Drache
The charities sector has been atwitter about the Liberal promises to re-examine the issue of political activities.1 There has been an assumption by some that the whole issue had its genesis in the perception that the Harper government was targeting ”progressive” organizations, notably those which seemed to espouse polices which were contrary to those of the government.
But as we pointed out to a younger colleague, these issues have been around for many decades and at one point Pierre Trudeau played a role.
The best way to highlight what happened in the 1970s is to look at an article we wrote in 1979 and which was published in The Philanthropist under the title “Political Activities: A Charitable Dilemma”.2
The section from a much longer piece is worth reproducing:
A Recent History
While ostensibly the problem has always been with us, the issue leaped into the limelight in early 1978 when Revenue Canada issued an Information Circular, IC 78-3 which purported to set out the law (and did in fact set out Revenue Canada’s views) on what forms of activity were acceptable and what forms were unacceptable. The Circular in question is reproduced as an appendix to this article.
When the charities learned of the issuance of the Circular, the screams were loud and long as it appeared effectively to forbid virtually any comment about public issues. Even writing a letter to the editor of a newspaper seemed to be forbidden.
The issue was raised in the House of Commons and in the Senate. Finally, Prime Minister Trudeau announced that the Circular was being withdrawn, but he commented that the withdrawal would be of no consequence. What he appeared to mean was that if the Circular merely restated the law as it was understood, the question of whether the Circular was “outstanding” or not made not a whit of difference. While he was probably correct in law, his attitude did seem to soothe the fevered charitable brows. Revenue Canada indicated that the Circular would be rewritten and issued again, but more than two years later, this has still not happened. [Our current emphasis.]
But there has been a marked change in Revenue Canada’s policy on the issue of political charities from the pre-1978 period. In effect, Revenue appears to have been operating in the post-withdrawal period in a fashion much more stringent than was previously the case.
An example may be drawn from the author’s own experience.
A charitable organization was created as a non-share Ontario corporation. Its objects were to press for a “return to basics” in the educational system. Nothing on the face of the Charter nor in the by-laws, nor in the material submitted to Revenue Canada indicated that it intended to use a “political route” to achieve its ends. Rather, it intended to “educate” the public to the nature of the curriculum in the schools and to let nature take its course.
Revenue Canada refused to register the charity on the grounds that its objects could not be attained without indulging in political activity. Representatives for the charity pointed out that to do so would be a violation of its charter, by-laws and the Income Tax Act and thus would not take place. Revenue officials countered that while all this was true, it was possible for the charity to do things which were in fact outside the law.
In other words, Revenue Canada put the onus on the charity to prove the negative, to prove that it would not break the law. The charity, of course, could not fulfil such an onus and registration was denied. An appeal was filed with the Federal Court of Appeal but the matter was “amicably” settled before the case was heard.
We suspect that the experience of dealing with the Charities Directorate hasn’t substantially changed in the past 35 years!
Now the irony is that Justin Trudeau can be the force which does in fact change the law. Our understanding is that the community, perhaps through the Canadian Bar Association’s Charities Sub-section, will press the government to revisit the issue and perhaps get a change in policy (or better, law, through legislation) to try to settle the political activities issue once and for all in a manner consonant with this being 2015…or 2016!
1 See the December 2015 issue of The Not-For-Profit News at page 92.
2 The Philanthropist, Volume 2, issue # 4 with a publication date of January, 1980. http://thephilanthropist.ca/1980/01/political-activities-