By Terrance S. Carter

A report out of New Zealand, prepared by Sue Barker for the New Zealand Law Foundation (the “Report”), sets out in its title a question that many common law countries have wrestled with: “What Does a World-Leading Framework of Charities Law Look Like?” Published on April 10, 2022, the Report answers this question by setting out draft legislation that would amend New Zealand’s Charities Act 2005. In the course of establishing the basis for the draft legislation as well as providing commentary on 70 recommendations, the Report provides a very helpful review and analysis of the regulation of charities in several common law jurisdictions, including Canada.

There are several interesting aspects that the Report explores in its analysis of the Canadian charitable framework. In a few instances, the Report highlights some of the challenges inherent in Canadian charitable legislation. For example, the Report considers how legislation relating to charities in Canada is largely characterized “by an overemphasis on controlling the extent of a perceived ‘tax expenditure’ through a classic tax regulatory approach of tax audits accompanied by intricate and specific rules.” The Report concludes that this approach is both harmful to charities and creates a never-ending loop of increasingly complex rules. The Report also quotes the Report of the Special Senate Committee on the Charitable Sector, as well as the Advisory Committee on the Charitable Sector (“ACCS”) to illustrate that Canada’s complex rules pertaining to charities’ business activities inhibit rather than enable social enterprise. In light of such complex and inhibitory rules, the Report concludes that New Zealand should “exercise considerable caution” before importing something similar.

The Report, though, also covers some of the strengths of Canada’s charitable framework. While Canada’s historical legislation limited charities’ engagement in so-called “political activities” the law nevertheless evolved. Once Bill C-86 was passed into law in December 2018, revised rules relating to non-partisan political activities of charities allowed them to engage in public policy dialogue and development activities. This change, the Report notes favourably, “brought the law in Canada into line with that of all comparable jurisdictions, with the notable exception of New Zealand”. Additionally, the Report commented favourably on the creation and involvement of the ACCS which “has been heralded as government and sector working together and ‘making progress on some really tough questions’ for the first time in 40 years.”

While the overall focus of the Report is, understandably, on the law of charities as it pertains to New Zealand, it is interesting to see how Canada’s legal system compares with the frameworks which regulate charities in other common law countries such as Australia, England and Wales, Ireland, New Zealand, Northern Ireland, Scotland, and the United States. Charities and others who are curious about “What does a world-leading framework of Charities Law look like?” are encouraged to read this excellent and very thorough report.

​Read the April 2022 Charity & NFP Law Update