In Part 1 of this series, Canadian charities were challenged to become more involved in political activities in order to encourage social change. The federal government allows charities to invest up to 10% of their resources for political activity. However, effectiveness requires intentionality, careful strategizing, and an understanding of what constitutes appropriate expenditures.
Speaking at the recent Blumbergs’ Canadian Charity Law Boot Camp, Mark Blumberg encouraged charities to be familiar with the rules under the Income Tax Act because: “Registered charities can engage in allowable political activities as long as they are non-partisan, related to their legal objects, and limited resources are used, which generally means less than 10% of resources.”
In fact, your charity may already be involved in political activities. Was that tweet sent out by your exuberant staffer to support more tax incentives for donations meant simply to educate your followers, or was it a political activity? Advocating for a specific change in legislation or government action is acceptable political activity, supporting a particular local candidate who supports that policy is not. Awareness of the laws enables your charity to make wise decisions and use political action effectively whether you use email, Facebook, Twitter, a full-page ad in a major newspaper, or a letter writing campaign.
While it is important to get the advice of a charity lawyer, a good question to discuss with the leadership of your charity is this: “Is our activity a call to action for the government, in Canada or abroad, to change a law, policy or budget?” According to the CRA’s own website, “Statements made to retain, oppose, or change a law, policy, or decision of government, are political.”
To aid your thinking, read these three scenarios and answer the question: is this political activity, and if so, is it allowed?
Scenario one
A grass roots environmental charity with revenue just under $100,000 runs a letter campaign at a cost of $11,000 asking the public to write their MP to persuade them to support tighter emission controls.
Your first reaction might be: Yes, it is political because it seeks to influence government policy. However, you question whether it is allowed because it is over 10% of the charities expenditures.
Charities with revenue under $200,000 are allowed to spend more than 10% on political activities and the amount is averaged over a couple years. Provided the charity did not spend over $15,000 on political activities in each of the previous two years, the $11,000 should be an acceptable expenditure.
“Registered charities whose annual income in the previous year was between $50,000 and $100,000 can devote up to 15% of their resources to political activities in the current year.” Also, “To allow it to overspend in one year, a registered charity can use the unclaimed portion of resources it was allowed to spend but did not spend on political activities from up to two preceding years.” (See section 9 & 9.1 of Policy Statement CPS-022, Political Activities.)
Scenario two
In part to accomplish its objectives, a charity directs 2% of its revenue to a charitable consortium that lobbies the governments of other countries to uphold the United Nations’ Universal Declaration of Human Rights.
Supporting current government policy and laws is not considered political activity, including the UN declarations supported by Canada. However, if the consortium was advocating for a new law, whether in Canada or another country, that would count as political activity and be subject to allowable limits. “When a registered charity makes a gift to a qualified donee and it can reasonably be considered that a purpose of the gift was to support the political activities of the recipient, the gift is considered an expenditure on political activities.” (See section 10 of Policy Statement CPS-022, Political Activities).
Scenario three
A charity that assists refugees with filling out government forms publishes a list of the five most frequently translated languages and shows that list to an elected official.
So long as the charity is merely reporting on its findings, and not asking that the government translate or pay for those translations, the activities of the charity are charitable and not political.
In summary
The federal government invites Canadian charities to continue to share information and research with elected officials, and to support current government policies, such as the UN Declaration of Human Rights. However, the government also encourages charities to take the added step to promote policies that will bring about positive social change. In those cases, the charity needs to ensure that it recognizes this activity to influence public policy as political. It must also complete the appropriate line on its T3010 to express that it has engaged in political activity.
In order to aid charities, the Canadian Revenue Agency provides a Political activities self-assessment tool. This helpful tool offers additional information to aid charities in their positive pursuit of political activity required to further their mission. It is also suggested that a charity seek appropriate legal advice when undertaking political activity.
This article is meant to encourage charities to examine their political activities or lack of, so that our political system benefits from their participation. It is not intended to be legal advice. You should always consult with a legal professional regarding your political activities.
Noel Draper, CFRE, is Director, Marketing and Sales for Charity eNews and knows how to stretch your budget for maximum ROI. He will tailor a package deal for you so your new marketing reaches key decision makers in the charitable sector. Contact him via noel@hilborn.com or @DraperNoel.
