Oct 3, 2018
Charities and Political Activities Part III
Torkin Manes LegalPoint
The news about charities and the regulation of their political activities continues. On October 2, 2018, the Canada Revenue Agency (CRA) published a draft guidance, Charities and public policy advocacy, (Draft Guidance) which is intended to replace the current CRA guidance (CPS-022) on the political activities of Canadian registered charities. The Draft Guidance follows on the heels of the proposed amendments to the Income Tax Act (Canada) (ITA) which were announced by the Department of Finance on September 14, 2018 (Proposed Legislation). You can read about the recent developments affecting Canadian registered charities and their political activities in our August article and September article on these topics.
As noted by the title of the Draft Guidance, CRA is switching its terminology from “political activities” to “public policy advocacy” in keeping with the proposed removal of the former term from the ITA. The Draft Guidance explains how the CRA plans to interpret, administer and enforce the Proposed Legislation, which would allow Canadian registered charities to carry out public policy advocacy activities that are incidental to their charitable purposes. In particular, the Draft Guidance:
- defines public policy advocacy activities as those activities that “seek to influence the laws, policies, or decisions of a government, in Canada or any foreign country”;
- clarifies that a public policy advocacy activity is incidental if it helps or supports the charity in carrying out its purposes, but not if it is a purpose itself or a reason the charity operates (which is similar to the CRA’s views on fundraising and other non-charitable activities);
- provides that charities may not undertake partisan political activities (that is, “the director or indirect support of, or opposition to, any political party or candidate for public office”) and that charities’ communications “only address the policy issue under discussion, and never a candidate or political party”;
- lists the indicators that the CRA will look at to determine if a charity has a political purpose, including whether its public policy advocacy activities are:
- unrelated to its charitable purposes;
- disproportionate in terms of the resources devoted to such activities when compared to the resources the charity expends to deliver a public benefit; and/or
- politically partisan; and
- provides questions charities can ask about their public policy advocacy activities to determine if they are unrelated, disproportionate or politically partisan.
In the Draft Guidance, the CRA reiterates its position that a political purpose includes any purpose that seeks to:
- “further the interests of a particular political party; or support a political party or candidate for public office” (that is, a partisan purpose); or
- “retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country” (that is, a purpose that is not incidental).
The Draft Guidance distinguishes between a permissible public policy advocacy activity (which seek to influence laws, policies, or decisions) and an impermissible political purpose (which seeks to retain, oppose, or change laws, policies, or decisions). Although the former refers to activities and the latter refers to purposes, the distinction in the language used to describe each is quite subtle. It is unclear where activities that seek to retain, oppose or change laws, policies or decisions will fall. Charities will also need to consider whether their public policy advocacy activities are “incidental” based on the “unrelated” and “disproportionate” indicators (with the help of the questions listed in the Draft Guidance under these indicators) to determine if they are on-side.
The Department of Finance will accept comments on the Proposed Legislation until October 13, 2018. The CRA will also accept suggestions on the Draft Guidance until the Proposed Legislation is tabled.
Given that the Proposed Legislation is not yet law, the Draft Guidance is still in draft, and the Canada Without Poverty appeal has not yet been heard or decided, the rules applicable to the political activities (or public policy advocacy) of Canadian registered charities have not been cemented yet. As such, charities should proceed with caution before revamping the manner and extent to which they undertake these types of activities.
We would be happy to answer any questions that you may have regarding charities and their activities.