The overwhelming response to Ryan Prendergast’s article on Canada’s Anti-Spam Legislation (CASL) made one thing clear: Canada’s charities are confused about the requirements of the new legislation. And they have every reason to be. Credible observers of our legal scene say some of the regulations have been so poorly drafted that even the judges may be confused.
Fortunately, the regulations are clear about one thing: Messages sent by a registered charity with the primary purpose of raising funds for that charity are exempt.
When is fundraising not fundraising?
But what about status updates? Newsletters? Lottery tickets? Messages that combine updates, gala ticket sales announcements and some fundraising? An e-blast all about souvenir t-shirts or other mementoes? How about one that just mentions them?
Charity law specialists have their doubts. They are perhaps most fully expressed by Susan M. Manwaring, J. Andrew Sprague and Andrew Valentine of Miller Thomson, who comment:
[T]he language in the exempting provision raises a number of questions as to the scope of the exemption. First, it is unclear whether “raising funds” – the language used in the CASL Regulations – has the same meaning as “fundraising” for the purposes of T3010 reporting by registered charities. Many charities publish and distribute newsletters and other communications to their supporters and stakeholders that are primarily in furtherance of their charitable purposes, but which also include a short appeal for donations. Under CRA’s Guidance on Fundraising by Registered Charities, charities can report such expenditures as charitable or, if appropriate, allocate the expenditure between charitable and fundraising expenditures on their T3010.
It is also possible that the phrase “raising funds” will be interpreted more broadly than “fundraising” for charity tax reporting purposes. If so, communications that could result in funds being raised for the charity – but which would not normally be viewed as “fundraising” – could be caught by the exemption. For example, communications related to tuition fees for universities or ticket sales by arts charities could be considered to have a primary purpose of raising funds, even though such communications would not normally be considered fundraising from a CRA reporting standpoint.
Various questions are raised by the wording. For example: When will such donor communications be considered to have a “primary purpose” of “raising funds” for the purposes of CASL? Must the entirety of the expenditure be allocated to fundraising? Will the exemption apply if more than 50 per cent of the expenditure is allocated to fundraising?
A warning to arts charities
IT law specialist David Canton reinforces the warning to arts organizations in particular. “[A] charity that is in the arts that sends an email promoting an upcoming exhibit, play or concert would have to comply with the Act,” he confirms. No grey area there – the community theatre promoting its next play is sending what the legislation calls “commercial electronic messages” and must fully comply with all provisions of CASL.
Learning from the world of software
Some experts consider CASL to be not just poorly defined but excessive. Vancouver lawyer Steve Szentesi calls it “overkill” in an interview with Canadian Lawyer.
“The costs and annoyance for companies significantly outweigh the purported benefits,” he says. “It’s a proportionality issue - $1-million individual fine and $10-million corporate fine for spam? We’ve had corruption law for 15 years and we’ve had one or two prosecutions. When you compare price-fixing of auto parts versus spam – what, you can’t just delete the message?”
It appears that with CASL, Canada’s legislators have taken a lesson from some software developers. Release the product – and let the users discover the bugs.
