A.
INTRODUCTION
The Policy Statement on Political Activities
by the Canada Revenue Agency (“CRA Policy Statement”) affirms
that charities may communicate with the public, as well
as elected representatives and public officials, on issues
of social concern, recognizing that:
“Canadians benefit
from the efforts of charities and the practical, innovative
ways they use to resolve complex issues related to delivering
social services. Beyond service delivery, their expertise
is also a vital source of information for governments to
help guide policy decisions. It is therefore essential that
charities continue to offer their direct knowledge of social
issues to public policy debates.”
The CRA Policy Statement also affirms
that charities which participate in social policy debates
must do so within certain parameters. In setting out the
parameters, the Policy Statement draws distinctions between
Charitable Purposes and Political Purposes; Charitable
Activities and Political Activities; and Permitted
Political Activities and Prohibited Political Activities.
As will be explained in this Charity Law Bulletin,
everything that appears to be “political” is not necessarily
political.
In brief, registered charities are required
to have exclusively charitable purposes and to further those
purposes through charitable activities carried on by them.
An organization that includes a political purpose in its
governing objects will not be registered as a charity. This
is so whether the organization has a single political purpose
or only one political purpose among several charitable purposes.
Even if a charity has no express political purpose, its
activities will be examined to see if what it is actually
doing indicates that the charity has adopted a political
purpose. Charitable organizations can, however, engage in
non-partisan political activities within certain limits
allowed by law.
B.
THE DIFFERENCE BETWEEN CHARITABLE PURPOSES AND POLITICAL PURPOSES
All charitable organizations are required
to have exclusively “charitable purposes”, which according
to common law are classified into four categories: the relief
of poverty, the advancement of education, the advancement
of religion and other purposes that are beneficial to the
community in a way that the law regards as charitable. The
charity must also be established for the public benefit.
According to CRA’s Policy Statement,
the courts have determined “political purposes” to be those
that seek to:
¨
further the interests of
a political party; or support a political party or candidate
for public office; or
¨
retain, oppose, or change
the law, policy, or decision of any level of government
in Canada or a foreign country.
The rational for courts prohibiting charities
from pursuing “political purposes” is that the courts would
have to assess whether the purpose is for a public benefit
and that is a role for Parliament.
For example, an organization set up to
relieve poverty by changing legislation that affects the
homeless would have a political not a charitable purpose.
By contrast, and as will be seen later, an organization
set up to relieve poverty by providing social housing, food
and other necessities and occasionally seeking to improve
related legislation or policies would be considered charitable.
C.
CHARITABLE ACTIVITIES ARE PERMITTED WITHOUT LIMITS
A charitable activity is considered by
CRA to be an activity undertaken to achieve or further a
charitable purpose. The CRA Policy Statement provides that
communication with the public or an elected representative
or public official is charitable in the following circumstances.
1.
Public Awareness Campaigns
The purpose of a public awareness campaign
is to inform the public about the work of a charity or an
issue related to that work. This activity will be presumed
to be charitable, provided it is connected and subordinate
to the charity’s purposes, is well reasoned and does not
contain information that the charity knows or ought to know
is false, inaccurate or misleading. Public awareness campaigns
are distinct from advancing education as a charitable purpose,
which requires some form of structure and targeted attempt
to educate others as well as an objective presentation of
viewpoints to the contrary.
2.
Communicating With an Elected
Representative or Public Official
The CRA Policy Statement makes it clear
that not every communication with an elected representative
or public official is a political activity. In fact, representations
to elected representatives or public officials, whether
invited or not, are considered charitable “even if the
charity explicitly advocates that the law, policy, or decision
of any level of government in Canada or a foreign country
ought to be retained, opposed, or changed.”
These representations must, however, relate to an issue
that is connected to the charity’s purposes, be well reasoned,
and not contain false, inaccurate or misleading information.
Releasing the text of the charity’s
presentation to the public through a website, media release
or newsletter will also be considered charitable; provided
that the full text of the presentation is made available
and there is no explicit call to political action
by the public in either the text or reference to the text.
If there is a call to political action, however brief, all
of the resources used to create the text could be considered
devoted to a political activity.
A distinction is, therefore, made between
a charity offering its expertise to elected representatives
in a forum such as a parliamentary committee or to an official
in a governmental department, and a charity calling on others
to persuade elected representatives to retain, oppose or
amend a particular law. Presumably, this different approach
is related to the recognized expertise of charities with
respect to social issues, referred to at the beginning of
this bulletin. It also reflects the reality that elected
representatives and public officials usually want some practical
advice about legislative initiatives, which may include
concrete suggestions about the wording of draft legislation
or advice on the implications of retaining or defeating
a legislative proposal. In other words, they want to know
what the charity thinks should be done with the legislation
based on their expertise or experience in the area. Limiting
charities’ participation in this process could hinder public
policy development.
3.
Examples of Charitable Activities
A home for women who are abused could
conduct a public awareness campaign by public service announcements
or by creating a website informing the public about the
various aspects of its work. A religious leader could deliver
a sermon or pastoral message on a topic such as marriage
or welcoming refugees from a faith perspective.
D.
PERMITTED POLITICAL ACTIVITIES WITHIN LIMITS
A charity may take part in political
activities if such activities are: non-partisan; connected
and subordinate to the charity’s purposes; and fall within
the expenditure limits under the Income Tax Act.
1.
Definition of Political Activity
The CRA Policy Statement presumes an
activity to be “political” if a charity:
¨
explicitly
communicates a call to political action – (i.e. encourages
the public to contact an elected representative or public
official and urges them to retain, oppose, or change the
law, policy, or decision of any level of government in Canada
or a foreign country);
¨
explicitly communicates
to the public that the law, policy, or decision of any level
of government in Canada or a foreign country should be retained
(if the retention of the law, policy or decision is being
reconsidered by a government), opposed, or changed; or
¨
explicitly indicates
in its materials (whether internal or external) that the
intention of the activity is to incite, or organize to put
pressure on, an elected representative or other public official
to retain, oppose, or change the law, policy, or decision
of any level of government in Canada or a foreign country.
2.
Examples of Permitted Political
Activities
A charity established for the resettlement
of refugees, organizes a rally on Parliament Hill or buys
a newspaper add in support of or opposition to a proposed
law.
A church leader issues a statement on
a topic from a faith perspective and calls on church
members to contact their elected representative to pressure
them to support or oppose a particular law.
3.
Expenditure Limits on Permitted
Political Activities
Unlike charitable activities, there
are limits on the resources that can be expended on political
activities. The Income Tax Act requires a charity
to devote “substantially all” of its resources to charitable
activities, which usually means 90%, leaving 10% available
for political activities, if desired. The CRA Policy Statement
provides some flexibility for smaller charities, offering
a higher percentage ranging from 12% to 20% for charities
which have an income ranging from $50,000 and $200,000.
In limited circumstances, expenditures on political activities
can be averaged over a number of years.
While the Act does not define “resources”,
CRA considers “resources” to include the total of a charity’s
financial assets as well as everything the charity can use
to further its purposes, such as staff, volunteers, directors,
premises and equipment. It is important for charities to
develop a consistent method of keeping track of expenditures
on political activities.
E.
PROHIBITED POLITICAL ACTIVITIES
Partisan political activities are totally
prohibited. According to the Income Tax Act and the
CRA Advisory on Partisan Political Activities,
partisan political activity involves the “direct or indirect
support of, or opposition to, any political party or candidate
for public office.”
A “candidate for political office” is
different from an “elected representative,” but support
or opposition of an “elected representative” may still be
seen as “direct or indirect support or opposition to any
political party.”
The CRA Advisory reminds charities that
“during election campaigns CRA steps up monitoring of activities
of registered charities and will take appropriate measures
if a registered charity undertakes partisan political activities….Charities
engaging in partisan political activities risk being deregistered.”
The following are some Do’s and Don’ts
for charities, particularly around election time – see the
CRA Advisory for more detail.
1.
DON’TS
¨
Don’t
make a gift of a charity’s funds to a political party that
supports the charity’s views
¨
Don’t
make public statements endorsing or denouncing a candidate
or political party
¨
Don’t
invite candidates to speak at different events in a manner
that favours a candidate or political party or host an all
candidates meeting in a partisan manner
¨
Don’t
publish voting records of only selected candidates or parties
on an issue
¨
Don’t
post signs in support of, or in opposition to a particular
candidate or political party
¨
Don’t
explicitly connect the charity’s position on an issue
to the position taken on the same issue by a candidate or
political party. Simply having a position on a topic that
is similar to the position of a political party is not partisan.
Many charities, particularly religious organizations, have
had positions on certain issues long before these issues
became “politicized.” The key is not to clearly link their
position to that of the political party.
2.
DO’S
¨
Do
make it clear that you are assisting a candidate or party
in your personal capacity if you are an employee, member
or leader of a charity and refrain from partisan comments
at charity functions
¨
Do
post information on candidates and political parties on
the charity’s website, provided that it is connected and
subordinate to the charity’s purpose, reflects the position
taken with regard to all political parties and candidates,
no political party or candidate is singled out favourably
or unfavourably, and there is no explicit direction of how
to vote
Charging fair market value rent to a
political party for occasional meetings in a charity’s facilities
is permitted so long as equal access and opportunity are
given to all political parties. However, this is a grey
area and prolonged association with one party may lead to
the conclusion that the charity favours that party.
F.
IMPLICATIONS FOR CHARITIES
The CRA Policy Statement provides a workable
framework for charities that have the expertise and desire
to contribute to public policy development in Canada. In
doing so, charities should ensure that their activities
are either “charitable” or are “permitted political activities”
that fall within the allowable expenditure limits. It is
also important to keep careful records of all expenditures
with respect to permitted political activities and to follow
a consistent methodology as much as possible.
Further, it is important not to lose
sight of the fact that the CRA Policy Statement was developed
in the context of recognizing the contribution of charities
to government policy. The introduction to the Policy Statement
affirms that “Through their dedicated delivery of essential
programs, many charities have acquired a wealth of knowledge
about how government policies affect people’s lives. Charities
are well placed to study, assess, and comment on those government
policies.”
