POLITICS NEWSLETTER

The recent announcement of a Federal election on June 28 th has prompted me to put our next series ("Operating Inter-provincially") on hold, and deal with the issue of charity participation in political activities. As political advocacy by charities could lead to the possible revocation of registered status, charities must be cautious about their entry into the public debate, particularly at election time. This newsletter deals only with the general question of charity involvement in political advocacy and does not address any other legal issues that may be involved such as the effect such involvement may have on disbursement quotas. Therefore, please use this newsletter as a reminder of some of the general issues involved in this topic and, as always if you have any specific questions please contact me directly.

As always, please feel free to circulate this newsletter to anyone who may be able to use its contents.

Charitably,

Adam

Politics and Charities Don't Mix

As a rule, Canadian law prohibits charities from engaging in political activity. However, as charities are often the repositories of front line information about the implementation of social policies, the law in Canada allows for political activity where that activity is both connected and subordinate to the charity's objects (see below). Unfortunately, as the rules for involvement are complex and the penalty for transgression could result in revocation of the charity's tax status, many charities simply refuse to become involved in the public debate. This 'advocacy chill' is regrettable, because many charities are particularly able to inform Canadians about important issues. However, charities should remember that if they adhere to the law they could get involved in the public debate for the good of all Canadians without harming their tax status.

What Qualifies as Political Activity?

The legal definition of political activity is non-exhaustive and includes activities which:

(i) further or oppose the interests of a particular political party (or candidate).

(ii) procure or oppose changes in the laws of Canada or a foreign country; and

(iii) procure or oppose a reversal of government policy or of particular decisions of governmental authorities in Canada or a foreign country.

As I said above the general policy involving charities is to allow them some freedom to contribute to the public debate on issues in which they have particular expertise. In doing so, charities will inevitably engage in political activities as defined above, hence the law restricts allowable activity but expressly prohibits others (see below).

Partisan Politics

The law prohibits charities from campaigning for or against a particular candidate or party. Charities must also be careful not to indirectly support a party in any way, such as by providing a larger audience or greater advertising for the visit of one candidate over another. (Nor can charities advertise solely the platform of the party that it supports (e.g. through publication of its voting record)). This rule is absolute and any involvement by charities with candidates or specific party platforms must be done with the greatest of care to avoid even the appearance of partisan campaigning.

Often a charity will support the same policy as an elected official or candidate for public office, and will want to advocate for this position. This is appropriate, but must be done with care. A charity must ensure that it is not directly or indirectly engaging in partisan political activities (for example by publishing its position along with the position of any or all the candidates).

Permissible Activities

Where the charity does not engage in partisan politics but does engage in political activity (such as advocating for a change in the law) the charity must ensure that the activity is a) connected and b) subordinate to the charity's objects. These are two separate criteria. An advocacy activity is connected to the charity's objects where the activity relates to and supports the charity's objects, and represents a reasonable way to achieve them. For example, a charity whose objects deal with the environment cannot wade into the debate about homelessness. Nor can a charity whose purpose it is to provide meals for the homeless in Thunder Bay advocate for a complete reorganization of Canadian society to eliminate homelessness altogether (as such a plan is arguably not a reasonable way to achieve its objects).

A charity's political activity must also be subordinate to it s objects. The Agency defines subordinate as :

Activities that are subservient to a charity's dominant charitable purpose or are a minor focus of the charity.

In other words, a charity must always remain charitable and cannot become primarily a political vehicle, even if its advocacy is connected to its objects.

In the past, the Agency has capped the amount of resources (financial, human and other) a charity could dedicate to subordinate political activities at 10%. Since then the Agency has come to realize that this cap is far more restrictive on small charities than on large ones. Hence, the Agency uses its discretion and has set the following administrative guidelines on the amounts that can be spent by charities on their political agendas without having its registration revoked by the Agency.

Options

There are a variety of ways a charity may get involved in the political process without transgressing the limitations imposed by the Income Tax Act . One of the options available to some charities includes the incorporation of a separate and distinct entity that is not a registered charity nor funded by a charity and therefore able to participate in the political process at will. Another possibility may be to change the objects of the charity so that the particular purpose is connected to the charity's current objects. However, these options are specific to each charity and have consequences, therefore they must be explored thoroughly before decided upon as a course of action.