Imagine a charitable organization wanted to build awareness around poverty in Canada and its impacts on marginalized communities. 

Now imagine that the same organization is trying to fight for Canadians’ human rights to housing and basic living conditions — by creating awareness amongst a public that holds the democratic power to pressure the government to make better policy choices and changes that could actually help peoples’ lives. 

Canada Without Poverty (CWP), a non-profit charitable organization, works to do exactly that: through conducting research to create further awareness, public policy development, and educational programming. 

CWP was simply doing its job in 2014, when the Canada Revenue Agency (CRA) came knocking on its door –– like dozens of other charitable organizations across the country –– in the name of the Income Tax Act (ITA), raining on the proverbial parades of this and similar social purpose organizations within Canada’s charitable sector looking to advance their work. 

But the rules changed in 2019, and it’s no longer off-limits for registered charities to enter the political arena. 

A monumental change

According to the CRA, “To be eligible for registration [as a charity], the Income Tax Act requires a charity to be constituted and operated exclusively for charitable purposes, and all the charity’s resources must be devoted to charitable activities carried on by the charity itself.”

Prior to 2019, this definition of a charity mostly excluded “political activities” — which the federal government defines in a briefing paper as “activities a charity carries on to participate in the public policy development process, or facilitate the public’s participation in that process.” Specifically, charities were restricted to only devoting 10 percent of their resources to engaging in any activities that were overtly political every year.

This 10 percent rule was enforced by the CRA, with a $5 million budget allocated by the 2012 majority Conservative government that expressed concerns about “‘radical’ environmental and human rights organizations registered as charities… using charitable donations to advocate against government policies,” according to the ESCR-Net case law database. Dozens of charities across Canada were suspected of and audited for exceeding limits on public policy advocacy by the CRA. 

One such organization that was audited, Canada Without Poverty (CWP), saw its charitable status revoked as the CRA found its activities — to eradicate poverty by engaging with low income communities to push for policy change — to be too political in nature, deeming that 100 percent of the organization’s dollars were going toward this work. 

CWP took their argument to court in 2018, arguing that the limitations on their work were in direct violation of their Constitutional right to freedom of expression. The Court found that the CRA’s interpretation and enforcement “of the ITA restricted virtually all of CWP’s public communication regarding law and policy reform for its charitable purpose of the relief of poverty.” According to the ESCR-Net case law database, “The Court ordered that restriction be eliminated and that the term ‘charitable activities’ in the Act be read as to include non-partisan political activities that are in furtherance of an organization’s charitable purpose.” 

This resulted in an historic shift in the CRA’s perception of Public Policy Dialogue and Development Activities (PPDA) for charities, when the majority Liberal government decided in 2019 that charities could engage in an unlimited number of PPDAs “in furtherance of a stated charitable purpose.” In 2019 — the latest available data — 791 charities told the government (via a T3010 Registered Charity Information Return form) that they carried out political activities, while 75,092 said they didn’t.

Charities can express their opinions on public policy, create public awareness campaigns around public policy, inform their communities about political parties’ positions on issues related to their charitable purpose, conduct and share research on public policy, advocate for changes to laws and policies (and urge their communities to do the same), make representations directly to elected officials developing policy, convene political candidates or officials to discuss issues related to their charitable purposes, and do all of these things on social media, too. 

Charities are, however, prohibited from “directly or indirectly supporting or opposing a political party or candidate for public office” — for example, endorsing a particular candidate, or even targeting messages toward a candidate’s riding without mentioning the candidate (an example of indirect support). 

A new definition

When this historic removal of the limit on PPDAs was instituted in 2019, the ITA was amended too –– to include PPDAs as activities that an organization can use to further their charitable purpose.

The term “political activity” and all references to its definition were also removed from the ITA. According to the CRA, this means that the rule that says “charitable purposes” include the disbursement of funds to a qualified donee has now been amended to “remove the exclusion for disbursements that are gifts made to the qualified donee as a ‘political activity.’”

It also means expenditures on PPDAs that are made to advance a charity’s charitable purposes will now be included in deciding if that charity [specifically in the case of charitable foundations] has satisfied the annual disbursement quota. 

And finally, while the Minister of National Revenue can no longer suspend the ‘tax-receipting privileges’ of registered charitable organizations dedicating their resources to “political activities” in excess of the former limits, the Minister can suspend these privileges when they devote “any part of their resources to the direct or indirect support of, or opposition to, any political party or candidate for public office.”

While previously, charitable organizations’ activities were monitored, audited and such organizations had their charitable status revoked for being too political in nature, this new definition allows for the same organizations to carry out their inherently political work — especially amidst COVID-19’s devastation and aftermath — without facing the CRA’s wrath. 

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