by Dev User | Apr 25, 2019 | Uncategorized
Apr 2019 Charity & NFP Law Update
In April, the Special Senate Committee on the Charitable Sector (the “Committee”) continued to hear from witnesses on the impact of laws and policies on the charitable and not-for-profit sector and the impact of the voluntary sector in Canada. Videos of the hearings are available on the Committee website and transcripts are normally made available a couple weeks after the meeting.
On April 1, 2019, the Committee heard from various departments of the government, including the CRA, Public Services and Procurement Canada, Department of Finance, as well as Innovation, Science, and Economic Development Canada, amongst others. Other witnesses included the chief economist of Imagine Canada, the senior community planning consultant from the Social Planning Network of Ontario, and a professor in the department of politics and public administration at Ryerson University. A selection of topics discussed included government initiatives, such as the CRA’s IT Modernization Project (“CHAMP”), and attracting individuals to the non-profit sector. Employment and human resources in the non-profit sector were identified as being of particular significance and recommendations were made, for example, to implement a federal student loan forgiveness program for those working in the non-profit sector.
On April 8, 2019 the Committee heard witnesses from the volunteer sector, including representatives from United Way Canada, Association of Fundraising Professionals, Imagine Canada, and the Muttart Foundation. Topics discussed focused on adapting the understanding of volunteerism to include the contribution of the younger generation, issues of funding, and strategies to improve employment in the sector such as improving job stability.
The Committee also held a round table discussion with legal experts to discuss various matters relating to the regulation of charities. Amongst the topics discussed were: the types of registered charities; the “destination of funds” test; the 3.5% disbursement quota; and an “expenditure responsibility test” compared to the test for direction and control and donations of private shares and real estate.
The April 1 and April 8, 2019 meetings were the last series of meetings held by the Committee, which will now begin to prepare its report, which is expected to be released in September 2019.
Read the April 2019 Charity & NFP Law Update
by Dev User | Apr 25, 2019 | Uncategorized
Apr 2019 Charity & NFP Law Update
Employment and Social Development Canada (“ESDC”) is seeking public input through an online engagement process (“Consultation”) concerning support for social purpose organizations (“SPOs”) through a Social Finance Fund. The Social Finance Fund was initially proposed through the 2018 Fall Economic Statement, as discussed in Charity & NFP Law Bulletin No. 435. Through the Consultation, which was announced on March 18, 2019, ESDC indicated that it is exploring avenues for supporting SPOs “in building their capacity to innovate and move towards participation in social finance opportunities.” To carry this out, ESDC aims to offer support for SPOs over a two-year period, with the aim of helping them scale their practices and improve their participation in the social finance market.
The Consultation follows after the September 2018 release of the Social Innovation and Social Finance Strategy Co-Creation Steering Group’s report on social innovation and social finance (“Report”), discussed in the September 2018 Charity & NFP Law Update. The Report proposed twelve recommendations, including recommendations that would improve participation in social finance opportunities and specifically to “improve social purpose organizations’ access to federal innovation supports.”
A Discussion Guide has been published that provides a background on social innovation and social finance in Canada and discusses how ESDC’s Investment and Readiness Stream will support SPOs. In this regard, it indicates that the Investment and Readiness Stream will fund projects that support investment readiness, with a focus on four areas, including: (1) building SPOs’ technical capacity to access investments, funds and revenue sources; (2) impact measurement and knowledge mobilization; (3) emergence and growth of social finance intermediaries; and (4) early-stage innovations.
ESDC is seeking feedback, particularly from SPOs and associated groups; national and regional service delivery organizations, social finance intermediaries and associated groups; and entrepreneurs, social innovators, academics, experts and associated groups. The Consultation is open until May 31, 2019, and interested groups may respond by completing an online questionnaire, or by email to [email protected].
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by Dev User | Apr 25, 2019 | Uncategorized
Apr 2019 Charity & NFP Law Update
On April 18, 2018, a labour arbitration board in Saskatchewan (the “Board”) released its decision in The Town of Kindersley v Canadian Union of Public Employees Local 2740 in which the Board upheld an employer’s decision to dismiss a unionized employee for improper use of his medically prescribed cannabis. This decision is a reminder to charities and not-for-profits that the accommodation of an employee’s needs with respect to medical cannabis does not give an employee licence to use the substance in whichever way the employee sees fit. Rather, employees are expected to abide by company policies, rules, and workplace accommodation agreements and also conduct themselves responsibly in their use of the substance. While this decision was released in 2018, the principles relating to workplace accommodation and the use of medically prescribed cannabis are important, especially in light of the recent legalization of recreational cannabis in Canada in October 2018, and the potential of the increased use of both medical and recreational use of cannabis across Canada as discussed in Charity & NFP Law Bulletin No. 431.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 447.
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by Dev User | Apr 25, 2019 | Uncategorized
Apr 2019 Charity & NFP Law Update
On March 19, 2019, the Ontario Superior Court of Justice denied leave to a non-profit corporation, the Humane Society of Canada for the Protection of Animals and the Environment (the “Society”), to be represented by a person who is not a lawyer. This motion, which was decided in Canada Trust v Public Guardian and Trustee, 2019 ONSC 1768, was in the context of an estate matter where the deceased had willed the residue of her estate to be divided equally among four charities, including the Society. The executor sought court direction on the question of whether it would be in the public interest to execute the gift, worth approximately $90,000, to the Society due to the Society’s “serious deficiencies in its management” that resulted in its charitable revocation, as reported in the July/August 2015 Charity & NFP Law Update. The Society moved for leave to be represented by Mr. Michael O’Sullivan, a non-lawyer who is the chairman and CEO of the Society, the Humane Society of Canada Foundation, and also a director of a the Ark Angel Foundation, whose charitable revocation was reported in the February 2019 Charity & NFP Law Update. Mr. O’Sullivan further deposed that it was his view that “a charity’s money should not be spent on lawyers.”
In finding that Mr. O’Sullivan was not reasonably capable of advocating on behalf of the Society, the court looked to his past conduct representing the other corporations as well as his conduct so far in the present application. The court commented that Mr. O’Sullivan’s advocacy in one proceeding “doubled the Society’s liability to the plaintiff” because of unfounded allegations and frivolous requests, while another proceeding resulted in the award of substantial costs against the corporation “taking into account its vexatious conduct and unfounded allegations of impropriety against others.” In the present application, the court noted that Mr. O’Sullivan’s written materials demonstrated that he did not understand the issues nor how to present them to the benefit of the Society, which would result in frivolous positions and cost more money to the Society and parties impacted by the proceeding. Further, because he was also the sole witness to proceeding, the court found that taking on an additional role as an advocate would cause confusion.
As such, the court denied leave to the Society to be represented by Mr. O’Sullivan and ordered it to file a notice of appointment of solicitor within 15 days, exceeding which it would not be entitled to participate in the application. Further, the court awarded costs to the executor, fixed at $22,000, to be deducted from the gift at issue, and the remaining $68,000 to be paid into court until further order. The court also added the Public Guardian and Trustee (“PGT”) to the application as a party to have conduct over the application, despite the Society’s objection. The court commented that the PGT had a “long-established role in the exercise of the parens patriae function of the Crown”, had the expertise in the matter, and also conducted the investigation. As a result, the court stated that the “Public Guardian is the only logical candidate” to have carriage over the application.
It is not uncommon for charities to receive gifts from the estate of donors. When executing gifts from the estate to charities, the executor may raise concerns regarding the public benefit of such a gift if the organization has been shown to have issues in the way it is operated. As such, charities need to ensure that their assets and operations are properly managed. Further, the case serves as a reminder that it is best to consult with legal professionals when dealing with court proceedings. While being self-represented may appear to save money at the outset, a representative who is unfamiliar with court procedure or unable to advocate effectively for the organization may end up costing it more money and more reputational damage. Since the finance of charities come primarily from donors, the use of its assets, especially in court proceedings, should be spent responsibly and carefully.
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by Dev User | Apr 25, 2019 | Uncategorized
Apr 2019 Charity & NFP Law Update
On April 18, 2018, Bill 74, The People’s Health Care Act, 2019 (“Bill 74”) received Royal Assent. Schedule 1 of Bill 74 enacts the Connecting Care Act, 2019 (the “Act”), which will come into force on a date to be set by proclamation. While the Act is expansive, the following is a brief overview of select portions that may affect charities and not-for-profits.
The Act will establish a new province-wide health “super agency”, known as Ontario Health, which will ultimately take over the province’s Local Health Integration Networks (“LHINs”) – which themselves recently took over the former Community Care Access Centres – as well as a number of independent provincial health agencies, including Cancer Care Ontario. The Act also provides Ontario Health and the Minister of Health and Long Term Care (“Minister”) with broad powers to integrate the province’s health system. Ontario Health can integrate the health system through funding changes (subsection 31(a)), through facilitating and integrating the integration of persons, entities or services (subsection 31(b)) or by issuance of a facilitation decision pursuant to which parties or services are integrated by agreement of the parties (section 32).
Under section 33, the Minister may also make integration orders pursuant to which the Minister will require health service providers or integrated care delivery systems (“ICDs”, a group of persons or entities designated by the Minister that meets the conditions prescribed in the Act) to integrate, including:
- provide all or part of or cease to provide all or part of a service;
- cease operating, dissolve or wind up its operations;
- amalgamate with one or more persons or entities;
- co-ordinate services or partner with another person or entity; and/or
- transfer all or substantially all of its operations to one or more persons or entities.
While the Act is part of a larger health care reform plan through which ICDs, other groups of providers and other organizations will provide a coordinated continuum of care to a defined geographic population, the Act does not provide for any particular governance structure for ICDs, and notably does not require them to be not-for-profit.
There are some constraints currently in place for LHINs that will also be placed on the Minister’s integration powers regarding religious-based, not-for-profit and charitable providers, as follows:
- Paragraph 33(2)(a) of the Act provides that the Minister shall not unjustifiably, as determined under section 1 of the Canadian Charter of Rights and Freedoms, require a religious organization to provide a service that is contrary to the religion related to the organization.
- Paragraph 33(2)(b) of the Act provides that the Minister shall not require the transfer of property held for a charitable purpose to a person or entity that is not a charity.
- Paragraph 33(2)(c) of the Act provides that the Minister shall not require a person or entity that is not a charity to receive property from a person or entity that is a charity and to hold the property for a charitable purpose.
- Paragraph 33(2)(g) of the Act provides that the Minister shall not require a not-for-profit health service provider or ICD to amalgamate with for-profit health service providers or ICDs.
- Paragraph 33(2)(h) of the Act provides that the Minister shall not require a not-for-profit health service provider or ICD to transfer all or substantially all of its operations to a for-profit health service provider or ICD.
There are no similar constraints on the powers of Ontario Health under sections 31 and 32.
However, subsection 37(1) of the Act provides that if an integration decision requires a health service provider or ICD to transfer property that it holds for a charitable purpose, all gifts, trusts, bequests, devises and grants shall be deemed to be gifts, trusts, bequests, devises and grants to the transferee. Subsection 37(2) provides that, if such property being transferred was originally gifted for a specific purpose pursuant to a will, deed or other document, the transferee must use it for the specified purpose. From a charities law perspective, if the specified purpose can no longer be fulfilled, such as in a case in which the charitable property was originally gifted to support the operations of a charity that has been ordered to cease operations, the charity’s stakeholders may want to consider seeking legal advice in order to ensure that its charitable assets are dealt with appropriately and, as much as possible, in accordance with the donors’ intentions.
The sweeping changes introduced by the Act will likely result in several years of uncertainty in Ontario’s health care system, affecting thousands of organizations, entities and individuals. There may be risks to smaller providers, including charitable and not-for-profit providers, particularly if they have charitable assets that they wish to deploy in accordance with donors’ intentions. Charities and not-for-profits involved in the provision of health care in Ontario may need to obtain independent legal advice in order to develop appropriate strategies for managing or addressing these risks under the new legislation.
Read the April 2019 Charity & NFP Law Update
by Dev User | Apr 25, 2019 | Uncategorized
