The court ruling that opened up the opportunities for charities to get more active in public advocacy has opened questions in many charities about how we can, and can't, participate in the public sphere. In a country where there is always a municipal, Provincial, or National election on the horizon, it is timely to get better acquainted with these new rules. Recently, Imagine Canada sponsored a webinar with Susan Manwaring and Bill Schaper to help members of the charity sector to understand the new reality.
The old rules – “political activities”
In the past, political activities were not considered charitable. Charities were limited to using (in general) 10% of their resources on these activities. As part of filing their annual T3010 return required explanation and quantification..
It is worth noting that political activities did not encompass all of what we think of as “public policy” work. In theory, efforts limited to activities that engaged the public or expressed views in public e.g. letter-writing campaigns, petitions, op-eds were acceptable as long as they were nonpartisan.
Political activities – what was the problem?
The old rules were unclear to many charities. Each charity tended to interpret “political” as something different. Making things more complex, the CRA was unable to provide clear advice on certain aspects of advocacy. This lack of clarity included unclear views including things like how to treat research or how to quantify resources. Making matters worse, inconsistent application of rules by auditors made things more confusing. Part of the issue was that there was an unclear, and inconsistent definition of “partisan” activities for charities to rely on.
Consultation Panel
In 2016-17, the Federal government developed a consultation panel to review problem areas in the existing situation. After this process, in 2018, there was the Canada Without Poverty court decision. As a result, the Income Tax Act was amended. Key Income Tax Act changes included removing “Political activity” and replacing it with a more encompassing definition. Under the new rules, advocacy is now deemed charitable and can be carried out without limits as long as the activities are related to the charity’s purpose and are strictly nonpartisan. This change is in response to a Consultation Panel recommendation.
What does Policy dialogue and development activities (P2D2As - formerly referred to as political activities) include?
P2D2As include research on an issue or problem. They can also include development of proposals, or responses to proposals made by governments.In addition, direct interaction with decision-makers, committee appearances, tribunals, and meetings all fall under this new definition.
When engaging the public there are a few things to keep in mind. Foremost,any public policy work you do must be related to your organization’s charitable purpose. Your organization must also be directly nonpartisan and you should be wary of endorsing candidates or parties even “indirectly.” The proposed definition is narrower but still relevant.
It is worth noting that with this change, charities must adhere to other legal requirements including lobbying registration. Bear in mind that lobbying legislation is different at all levels of government - federal, provincial, municipal.
Outstanding issues
The Charities Directorate is accepting comments on the updates to the Guidance until April 23.
Susan Manwaring is a recognized leading expert advising social enterprises, charities and non-profits in her practice. Susan provides both general counsel and specialized tax advice to her clients across Canada and internationally. Susan is the national lead of the Social Impact Group at Miller Thomson.
Bill Schaper is the Director of Public Policy in Imagine Canada’s Ottawa office. In past lives he was a political staffer on Parliament Hill, the senior policy advisor to a federal cabinet minister, a policy analyst and GR practitioner for universities, an independent policy consultant, and a communications specialist for the United Kingdom’s Auditor General.
Ann Rosenfield (recap of remarks) is the Editor of Hilborn Charity eNews and a bit of a policy nerd.
