The
Potential Effects on Charities of Proposed
Anti-Terrorism Legislation (Bill C-16)
By Aaron Leahy, B.A., LL.B
CHARITY
LAW BULLETIN No. 6– May 7th,
2001
Editor:
Terrance S. Carter, B.A., LL.B
INTRODUCTION
On March 15, 2001,
a new piece of legislation, Bill C-16, received its first reading in
Parliament. If passed, Bill C-16, known
as the Charities Registration (Security Information) Act ("The
Act"), would provide an added layer of scrutiny for registered charities
and organizations seeking registered charity status. The Act seeks to disallow organizations that directly or
indirectly provide support to terrorist activities from attaining or keeping
charitable status. The unique feature
of the Act is that it allows the Solicitor General and the Minister of National
Revenue ("Ministers") to rely upon security or criminal intelligence
reports as well as information obtained from foreign sources in considering
whether an organization is providing support of terrorist activities. The following is an examination of the Act
including a discussion of some of the potential effects that it could have upon
charities in Canada.
HOW THE ACT WORKS
Certificate
Signed By Ministers:
Under the Act, the
Ministers can sign a certificate stating that in their opinion there are
reasonable grounds to believe that a registered charity or an organization
applying for registered charity status is involved in supporting terrorist
activity. The Ministers may rely on
security or criminal intelligence reports ("Intelligence Reports"),
as well as information obtained in confidence from a foreign based government,
institution or agency; or from an institution or agency of an international
organization of states ("Foreign Information"). Supporting a terrorist activity could include
having directly or indirectly made available resources to an organization or
person that was at the time, and continues to be, involved in terrorism or
activities in support of terrorism.
Such involvement also could include an organization that is making, or
that will make, available resources to an organization or person that engages,
or will engage in terrorism or activities in support of terrorism.
Certificate
Submitted To Federal Court:
Once the Ministers
have signed a certificate in respect of an organization, the certificate must
be served upon the organization and submitted to the Federal Court. If the Federal Court determines that the
certificate is reasonable, the organization named in the certificate will be
ineligible to receive charitable status or, if it is a registered charity, will
have its charitable status revoked. A
certificate deemed by the Federal Court to be reasonable must be published in
the Canada Gazette. Once a
certificate is adopted, it will be effective for a period of three years from
the date it is determined to be reasonable.
Evidence
Considered By Federal Court:
In considering a
certificate, the Federal Court may examine the Intelligence Reports on which
the Ministers based their opinion, and any other relevant information
regardless of whether that information would be admissible in a court of
law. Upon an application by the
Ministers, the court may also consider Foreign Information if the judge
determines it to be relevant. The judge
may not disclose any Foreign Information to the organization which is the
subject of the certificate, or its counsel, in order to protect national
security and the safety of persons.
Reasonable
Opportunity To Respond:
The organization
which is the subject of a certificate is to be given a reasonable opportunity
to be heard by the Federal Court. Prior
to that opportunity, the judge is to provide the organization with a summary of
the information available to be considered by the judge, except for any Foreign
Information, and except for any other information the disclosure of which the
judge deems would injure national
security or the safety of persons.
Material
Change in Circumstances:
An organization
which is the subject of a certificate found to have been reasonable may apply
to the Solicitor General of Canada for a review of the certificate by the
Ministers based on a claim that there has been a material change in
circumstances regarding the organization since the certificate was
adopted. If the Ministers determine
that there has been a material change in circumstances, they may decide either
to continue or to cancel the certificate, with that decision being appealable
to the Federal Court. However, the
decision of the Federal Court on an appeal of the Ministers' decision in this
regard is not subject to further appeal or judicial review. If a certificate that has been found to be
reasonable is subsequently cancelled by virtue of a material change in
circumstances, notice of that cancellation must be published in the Canada
Gazette.
COMMENTARY
The following
comments regarding the potential effect of the Act may be useful to be
considered by charities and organizations wishing to attain charitable
status.
Potential
Effect Upon Donors:
The version of the
Act presented for the first reading in the House of Commons contains the
following statement of the purpose of the legislation:
The purpose of this Act is to show Canada's commitment to participate in concerted international efforts to deny support to those who engage in terrorism, to protect the integrity of the registration system for charities under the Income Tax Act and to maintain that the confidence of Canadian taxpayers that the benefits of charitable registration are made available only to organizations that operate exclusively for charitable purposes
The Act is driven
by a policy to curb the support of terrorist activities by registered
charities. It could be argued that this
type of policy could have a positive effect on the public perception of
charities. However, the legislation
will more likely create an unnecessary and exaggerated sense of alarm in the
public which could result in a “chill effect” on donations to any organization
that according to the public’s perception, and social stereotypes, might be
involved in terrorist activities.
Some
Evidence May Not Be Disclosed:
The Act provides
that organizations which are the subject of a certificate must be given a
reasonable opportunity to be heard. The
Act also provides that the organization is to receive a summary of the
information available to the Federal Court judge. However, the Act allows the judge to omit from that summary any
information the disclosure of which would threaten national security or the
safety of persons. The result of this provision
is that the organization may not have an opportunity to respond to and
challenge the credibility of all of the information relied upon by the
judge.
Certain
organizations have raised concerns over this limitation, especially in light of
the fact that the Act permits the judge to consider Foreign Information. The fear of some organizations is that those
foreign entities that provide information considered by the judge may wish to
stifle the efforts of certain charitable organizations for political reasons
and therefore may manipulate the information they provide in order to achieve
this end. Therefore, some organizations
maintain that in order to achieve due process of law it is essential that the
Act provide the ability to challenge the credibility of all information relied
upon by the judge, including Foreign Information.
Limited
Appeal Provisions:
Under the Act, the
decision of the Federal Court regarding the reasonableness of a certificate is
not subject to appeal or judicial review.
The only means for an organization to challenge a certificate that has
been adopted is by bringing an application to the Solicitor General to have the
certificate reviewed by the Ministers based on a claim that there has been a
material change in the circumstances of the organization. The Ministers' decision in this instance is
appealable to the Federal Court whose decision is not subsequently
appealable. Charities should therefore
be aware that absent a material change in circumstances, there is no means by which
an organization can appeal a certificate once it has been adopted.
Terrorism
Not Defined:
In its current form, the Act does not provide a definition of "terrorism" or "terrorist activities." If the Act is passed without including a definition of these terms, then charities and organizations wishing to apply for charitable status will have to ensure that they are not directly or indirectly supporting any activity that could fall within an undefined and arbitrary definition of terrorism or terrorist activities. In this regard, these organizations will have to guard against the potential of an unnecessarily broad definition of these terms being adopted by the Ministers and the Federal Court in scrutinizing the activities of such organizations.
Public
Disclosure:
The Act requires
that a certificate found to be reasonable must be published in the Canada
Gazette, and that if a certificate is subsequently quashed because of a
change in material circumstances, notice thereof must also be published in the Canada
Gazette. However, there is no
provision in the Act which ensures that the names of organizations in respect
of which certificates are being considered remain confidential. Therefore, the risk would exist for an
organization's public image to be affected by virtue of it being the considered
subject of a certificate, whether or not the certificate is eventually adopted
and the organization is barred from having charitable status.
Potential
Effect of Social Stereotypes:
One potential
concern regarding the Act is that some organizations may be disproportionately
targeted for scrutiny under it. The
concern is that stereotypes may exist in society which link certain cultural,
religious or ethnic organizations with terrorism more than other groups. Therefore, the fear is that those
organizations may be targeted for scrutiny based more so upon those stereotypes
rather than being based solely on the availability of greater evidence to
implicate them. This, in turn, could
unfairly affect the overall public image of those organizations if they are
disproportionately the subject of scrutiny.
Potential
Complications Re: Dual-Nature Foreign Organizations:
Another concern
which has been raised by some organizations is that the Act may have the
practical effect of stifling the only channels through which humanitarian aid
can be provided to certain countries.
The concern is that in some countries the only organizations that
administer the provision of humanitarian aid, and through which Canadian
organizations can channel support for humanitarian aid, may also be involved in
terrorism or the support of terrorist activities. Even if the Canadian organizations were to specify that their
support was only to be used for humanitarian aid, and even if the local organizations
only used it for such, the fact that the local organizations were involved in
terrorist activities could result in the Canadian organizations being denied
charitable status. The Act does not
appear to consider how Canadian organizations intend, or direct funds to be
used by foreign organizations in this type of scenario. Consequently, this could result in the
stifling of humanitarian aid being reached by those countries. Again, it is not the purpose of this current
discussion to comment upon whether or not this concern is justified.
CONCLUSION
If passed in its
present form, the proposed anti-terrorism legislation could have a considerable
negative impact on the ability of organizations to obtain and keep status as a
registered charity. According to some,
this effect could be disproportionately felt by certain organizations more than
others. All of the observations brought
forth by numerous organizations regarding Bill C-16 should be considered closely
by Parliament to ensure that the proposed legislation, if passed, will achieve
its purpose of discouraging the support of terrorism fairly, effectively, and
in a way that will be least disruptive to organizations that provide legitimate
charitable purposes.
Aaron Leahy is an
articling student at Carter & Associates in Orangeville, Ontario. Terrance
S. Carter practices at Carter and Associates and is affiliated with and Counsel
to Fasken, Martineau, DuMoulin LLP in Toronto, Ontario. His practise is
primarily focussed on charity and not-for-profit law.
DISCLAIMER:
This Charity Law Bulletin is a summary
of current legal issues provided as an information service. It is distributed with the understanding
that it does not constitute legal advice or establish the solicitor/client
relationship by way of any information contained herein. The contents are intended for general
information purposes only and under no circumstances can be relied upon for
legal decision making without first consulting with a lawyer and obtaining a
written opinion concerning the specifics of your particular situation. Comments
and suggestions are welcome.
BARRISTERS, SOLICITORS & TRADE-MARK AGENT
211 Broadway, P.O. Box 440
Orangeville, Ontario, L9W 5G2
Telephone: (519) 942-0001
Fax: (519) 942-0300
tcarter@carterslawfirm.com
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