Canada Without Poverty charter challenge to political activity rules of Canadian charities

September 06, 2016 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, Political Activities and Canadian charities

A Canadian charity has launched a charter challenge against the restrictions on registered charities in carrying out political activities. They argue that it violates freedom of speech and assembly amongst other things.  The CBC covered it in an article entitled "Anti-poverty group launches challenge of political-activity limits".

Here are various documents that have been filed:  Notice of Application and Affidavit

We will wait to see the response from the Canadian government.  

I am not a constitutional expert but I think/hope that the application does not succeed.  The US had a similar case in the Supreme Court and it was called Citizens United.  We don't need to look too far to see the disastrous consequences of Citizens United.

Citizens United has a role to play in the current US presidential election.  Donald Trump wants US charities to have a greater role in political activities and to be able to engage in partisan activities.  He supports the US Supreme Court decision in Citizens United.  The Democrats on the other hand want to overturn “Citizens United” to limit “free speech” i.e. spending by the super wealthy on political and partisan activities.

The Chronicle of Philanthropy recently noted:

“…the Republican Party platform urges the repeal of the Johnson Amendment, which bars charities and foundations from spending money in election campaigns. The Democratic Party platform, on the other hand, calls for a constitutional amendment to overturn Citizens United, the 2010 U.S. Supreme Court case that allowed advocacy groups to raise and spend unlimited amounts of money on behalf of candidates in elections. The parties have thus taken opposing sides in the latest round of the debate over the proper balance between public authority and private resources in American elections.”

I doubt that the Canadian application will be successful.  However, if it is successful it will either result in a large amount of funds entering the charity sector for partisan purposes with all attendant tax benefits that ironically primarily benefit the super wealthy.  Alternatively, the charitable system - just like a chair, is not going to stay in the same place if you remove a leg or two.  If the application is successful there will be tremendous pressure to eliminate the charitable tax deduction and make a far narrower deduction for a smaller set of organizations.  Perhaps the $4 billion in tax incentives for donations can be used instead to provide more programs for those who are disadvantaged in our society. 

With the Harper government gone I was mildly hopefully that we could move on from the ‘charities and political activities’ issue.  The issue has been characterized by ridiculous extremes – some saying charities should not be involved in any political activities of any kind and others wanting essentially unlimited political activities by charities.  There was also a third group, perhaps a subset of the second group, who essentially said that the rules are impossible to understand and therefore should not be enforced.

The rules as they are currently drafted provide Canadian charities with huge opportunities to be involved in political activities. It is very important that charities are involved in political activities as many important structural issues will only change with political action. That being said only five hundred charities typically claim that they're doing political activities when we know that for more or involved in political activities according to studies by organizations such as Imagine Canada.  

We also know that Canadian charities claim to have spent approximately $25 million per year on political activities. Yet if Canadian charities have expenditures of over $245 billion a year in theory Canadian charities could in fact spend almost $25 billion on political activities. In other words, Canadian charities under the current rules can spend 1000 times more funds on political activities than that which they claim to spend.  Obviously that will never happen but fundamentally the issue holding back charities is not the rules.

Organizations that are committed to primarily being engaged in political activities should not seek charitable status in Canada.  Unfortunately a small number of "charities" are causing a lot of stress and distraction for the rest of the charitable sector. 

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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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