On June 1, 2017, Mowat NFP, the Mowat Centre not-for-profit research hub, published “Turning a Corner: Laying the Groundwork for Charity Regulatory Reform in Canada” (the “Paper”). The Paper is part of Mowat NFP’s Enabling Environment series of papers that focus on developing a modern federal policy framework for the NFP sector, and specifically “seeks to help the sector and the architects of the federal regulatory regime…create a more enabling regulatory environment.”
The Paper begins with a review of how the Charities Directorate regulates charities in Canada, and outlines regulatory problems for charities. In this regard, the Paper found that Canada’s legislative framework constrains charities, such as by restrictions on earned revenue and by preventing collaboration through restrictions on partnerships with non-charities. It also found that the Charities Directorate, in its opinion, favours technical compliance over an approach that “balances the risks of wrongdoing with the benefits of flexibility”, and found a general lack of transparency with its decision-making process.
After a brief review of past Canadian reform efforts and lessons from charities regulators abroad, the Paper provides recommendations for reform towards a more responsive regulatory framework. These include agreement between the federal government and NFP sector on the basic elements of a good regulator, focused more on enabling than constraining, to assist with designing a new approach and rules, as well as more practical suggestions, such as easing the path to appeal by “shift[ing] the first appeal court from the Federal Court of Appeal to a lower court”, and increasing transparency by publishing some registration letters.
The Paper comes in the wake of the Report of the Consultation Panel on the Political Activities of Charities, discussed in our Charity & NFP Law Bulletin No. 403, both of which contribute towards discussion between the NFP sector and the federal government and call for legislative and policy reform. Charities and NFPs with an interest in policy and legislative reform will want to watch out for the next paper in Mowat NFP’s Enabling Environment series.