Charities and public policy advocacy

The Department of Finance is accepting comments until October 13, 2018 on the draft legislative proposals. The Canada Revenue Agency (CRA) accepts suggestions to guidance documents on an ongoing basis. As the legislation progresses further, suggested changes will continue to be accepted by the CRA until new legislation is tabled by the Department of Finance.

The Income Tax Act requires a charity to be constituted and operated only for charitable purposes, and devote all its resources to charitable activities that further its charitable purposes. A charity’s activities and purposes must, taken together as a whole, deliver a public benefit. In other words, a charity's focus and reason for operating must always be to deliver a benefit to the people or groups it helps.

As long as a charity operates only for charitable purposes, it can carry out activities, including public policy advocacy activities, that are incidental to those charitable purposes.

The Canada Revenue Agency (CRA) considers an incidental activity to be any activity that helps or supports a charity in carrying out its charitable purposes. Any resources devoted to incidental activities are considered to be devoted to charitable activities. An incidental activity cannot become a purpose in itself, or the charity’s reason for operating. Other types of incidental activities include fundraising, management and administration activities, and related business activities.

Activities considered to be public policy advocacy seek to influence the laws, policies, or decisions of a government, in Canada or any foreign country. For example, a charity might, as one way of furthering its charitable purposes, tell a government or the public about the impact of a law, or engage with the public to persuade a government to change a decision.   

Public policy advocacy activities must always be incidental, non-partisan, and support a charity in carrying out its charitable purposes. If a charity’s public policy advocacy activities are more than incidental, the charity likely has a political purpose, which is prohibited under both the Income Tax Act and the common law.

For more information on the limits on a charity’s public policy advocacy activities, see Section C. For more information on the public benefit requirement, see Policy statement CPS-024, Guidelines for registering a charity: Meeting the public benefit test.

A. A charity can carry out a wide range of public policy advocacy activities

Informing a government

A charity can communicate directly with elected representatives or public officials to give them information that will help them make decisions, such as, for example, the expected consequences of a policy, or problems resulting from the absence or existence of regulation in a certain area. As long as these activities remain incidental, a charity can call on representatives and officials to change laws or policies as part of these communications.

Examples: informing a government 

  1. A refugee settlement charity meets with elected representatives to share its observations on the effectiveness of a government settlement program, and urges them to make changes.
  2. An elderly care charity participates in a consultation with officials from a government department on the development of better healthcare services.
  3. A youth charity shares its observations and experience with a Senate committee on cyberbullying, and recommends a change to legislation.
  4. A poverty relief charity hires a lobbyist to engage with a government and press for changes to a social assistance program.

Informing the public

There are many ways a charity can inform the public about laws or policies, including their effects and consequences, as an incidental activity.

Examples: informing the public 

A charity can…

… give people information to help them make informed decisions on issues related to laws or government policies.

    1.    A charity publishes statistics on accidents caused by distracted driving, along with the legal penalties for distracted driving in all provinces.

…express opinions on matters relating to its charitable purposes.

    2.    A charity working overseas shares its opinion in a series of blog posts on the root social and political causes of inequality and poverty for the area where it operates.

…invite all competing candidates for public office to speak at the same event, or request that they provide their positions on an issue in writing for publication, in a non-partisan manner.

    3.   A charity that provides emergency shelter invites all candidates in a municipal election to a public debate on how to fix the city’s affordable housing shortage.

In certain specific cases, a charity’s activities to inform the public about laws and policies do not have to be incidental, and can be its focus and reason for operating. See Policy statement CPS-029, Research as a charitable activity, and Guidance CG-001, Upholding human rights and charitable registration.

Example 

A charity advances education as a charitable purpose by carrying out unbiased research into public policy on social assistance programs. It devotes all its efforts to examining the approaches of different jurisdictions, and publishing its reports, informing the public about the laws and policies of Canada and other countries as its focus and reason for operating.

Engaging with the public to persuade a government

As an incidental activity, a charity can engage with the public to attempt to persuade a government by explicitly stating that a law, policy, or decision should be kept, changed, or removed. For example, a charity could hold a public rally or demonstration, or use social or print media, petitions, or a blog to:

  • explain to its supporters and the public why a law, policy, or decision should be kept, changed, or removed
  • tell its supporters and the public to contact an elected representative and express their support for, or opposition to, a law, policy, or decision

Examples: engaging with the public 

  1. A charity circulates a petition calling for a recent government decision to be reversed, and also hires a communications firm to run a media campaign on the issue.
  2. A charity works with another non-partisan organization to prepare a rally on Parliament Hill to express support for a change in law.
  3. A charity explains in one of its podcasts why it is important the provincial government adopt a certain official policy.

B. Charities must always be non-partisan

A charity can never use any of its resources to directly or indirectly support or oppose any political party or candidate for public office, which the CRA refers to as a partisan activity. This rule is particularly important to remember during an election period, when charities may want to express their views on the policy issues that matter to their supporters.

As a general guideline, a charity’s communications should only address the policy issue under discussion, and never a candidate or political party.

Example: acceptable incidental public policy advocacy activity 

During an election period, a charity fighting homelessness sends information and statistics about the status of low-income housing to all candidates and the charity urges citizens to sign a petition to persuade a government to increase funding for low-income housing.

Example: prohibited partisan activity 

The charity asks its members to vote for the candidate that has promised to increase funding for low-income housing.

A charity can still express opinions on matters relating to its charitable purposes even if either of the following occurs:

  • The charity opposes or supports a policy that a political party or candidate also opposes or supports (as long as the charity does not refer to the political party or candidate).
  • A political party or candidate later repeats or refers to the charity’s opinions or communications. This is not an activity of the charity, and would not be a concern for the CRA.

Example: acceptable incidental public policy advocacy activity 

A charity publishes its experiences working with newly arrived refugees to Canada, a topic on which a provincial political party has expressed its own views.

Example: prohibited partisan activity 

The charity promotes a candidate’s comments on its research on its website during an election.

Example: not an activity of the charity 

A candidate in a municipal election calls for new local government programs to help refugees, and cites a charity’s publications on the issue as support.

C. What are the limits on public policy advocacy activities?

A charity’s public policy advocacy activities must always remain incidental to its charitable purposes. An incidental activity is one that is always subordinate to a charitable purpose, and the only reason it is carried out is to serve that charitable purpose. An incidental activity cannot become a purpose in itself, or the reason why a charity operates.

If a charity’s public policy advocacy activities are more than incidental, the charity likely has a political purpose. A charity is prohibited from having a political purpose by both the Income Tax Act and the common law.

This is in part because the courts have decided any benefit to the public that might result from informing or influencing the laws, policies, or decisions of government are too speculative and remote to be determined. Since a charitable purpose must deliver a public benefit, the courts have held that political purposes are not charitable.

What is a political purpose?

Following the principles laid down by the courts, the CRA considers a political purpose to include any purpose that seeks to:

  • further the interests of a particular political party; or support a political party or candidate for public office (partisan); or
  • retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.

There are a number of indicators the CRA looks for when determining whether a charity has a political purpose. In other words, the indicators are used to assess whether a charity’s public policy advocacy activities are partisan (that is, directly or indirectly supporting or opposing a political party or candidate), or more than incidental (that is, a purpose in themselves).

If any indicator is present, this does not necessarily mean a charity’s public policy advocacy activities reveal a political purpose. However, the more indicators the CRA finds, the more likely it is the charity has a political purpose. The CRA examines each indicator in the context of everything a charity does, and the purposes for which it is registered, in order to assess its importance.

The indicators the CRA looks for to determine if a charity has a political purpose include whether its public policy advocacy activities are:

  1. Unrelated to a charitable purpose. For example:

    a)    Is there a lack of a clear connection or link between the public policy advocacy activities and the charity’s charitable purposes?

  2. Disproportionate, meaning that the resources used for public policy advocacy activities are disproportionate to the resources used by the charity to deliver a public benefit. As a general rule, the more resources a charity uses to carry out public policy advocacy activities, the more likely it has a political purpose. For example:

    a)    Taking all of a charity’s activities into consideration, do the charity’s public policy advocacy activities appear to be its primary focus, or delivering a benefit to the people or groups it helps?

    b)    Does the charity’s primary focus appear to be to sway public opinion, promote an attitude of mind, create a climate of opinion, or exercise moral pressure to keep, change, or remove a law, policy, or decision of government?

    c)    Are the charity’s public policy advocacy activities carried out frequently, and over a long period of time?

    d)    If the charity stopped carrying out its public policy advocacy activities, would any activities that provide a public benefit remain?

    e)    Do the charity’s external communications materials (for example, website, fundraising materials, social media messages) or internal records (for example, minutes of directors’ meetings) show that its public policy advocacy activities are its focus and reason for operating?

  3. Politically partisan. For example:

    a)    Is the charity mostly funded or operated by individuals known to be closely associated with a political party or candidate’s election campaign?

    b)    Does the charity work closely with another organization that is established to support or oppose a political party or candidate?

    c)    Does the charity carry out and disseminate research into public policy on only a narrow range of topics, and that aligns with a prominent issue of a political party’s platform?

    d)    Does the dissemination of the charity’s research regularly coincide with public announcements of a political party?

Example 1 

A charity promotes health mainly by providing one-on-one counselling and support. The charity’s remaining activities include regular and ongoing meetings with Members of Parliament of all parties to press for changes in legislation, and publishing opinion pieces on its website comparing a regulatory approach on a particular public health issue unfavourably to the approaches of other jurisdictions.

In this case, the charity does not appear to have a political purpose, as its public policy advocacy activities are:

  • related, being linked or connected to the charity’s charitable purpose;
  • proportionate, as while they are carried out regularly and consistently, the greatest part of the charity’s effort goes to delivering a public benefit; and
  • non-partisan, as there is no apparent connection to a particular political party or candidate.

Example 2 

A charity has for many years been advancing religion through a number of activities, such as distributing literature and providing community outreach, and has typically carried out very little public policy advocacy. The municipal government makes a decision related to a certain human rights issue, and for about a year the charity instead focuses mainly on conducting non-partisan public policy advocacy to engage the public in pressuring the city council to change its decision, and communicate the impact and effects of the decision, rather than on delivering a public benefit. After this year, the charity refocuses its efforts back to its core mandate.

In this case, the charity does not appear to have a political purpose, as its public policy advocacy activities appear:

  • related, being linked or connected to the charity’s charitable purpose;
  • proportionate, while the charity may have focused significantly on these activities for a year, taken in context of all its activities and years of operation, they are outweighed by its delivery of a public benefit; and
  • non-partisan, as there is no apparent connection to a political party or candidate.

Example 3 

A charity that has been operating for many years advances education by providing scholarships for post-secondary education. The charity typically focuses most of its activities on researching public policy concerning provincial funding of universities and colleges, and informing the public about a pressing need to review these policies. Many of the views expressed through its research align with a prominent issue in a political party’s platform, and the publication of its research typically coincides with public announcements of that political party. The charity often postpones delivering scholarships to focus on these efforts, and most of its fundraising materials and website content discusses the need for change in the law.

In this case, the charity may have a political purpose, as while the public policy advocacy activities are related to the charity’s charitable purpose, they also appear:

  • disproportionate, as the charity may be prioritizing these activities over delivering a public benefit; and devoting most of its effort to public policy advocacy activities over the long term; and
  • partisan, as they may further the interests of a political party.

Example 4 

A charity has for many years promoted public safety by increasing awareness of the dangers of distracted driving and encouraging people to turn off their phones while driving. As reflected in the minutes of directors’ meetings, a new board of directors determines the charity’s efforts have not been sufficiently effective. They have decided that the only way to address the issue of distracted driving is at its root is through political means. The charity begins a fundraising and public awareness campaign reflecting this new approach, and over the next few years focuses all its resources and efforts on campaigns advocating for new provincial legislation.

In this case, the charity may have a political purpose, as while the public policy advocacy activities are related to the charity’s charitable purpose, and appear to be non-partisan, they may not be incidental, as they are:

  • disproportionate, given the charity’s public and internal materials show it is prioritizing these activities over delivering a public benefit; and devoting most of its effort to public policy advocacy activities on an ongoing basis.
Note: Further examples related to social media will be added following the consultation.

D. The CRA’s compliance approach

The CRA has a responsibility as a regulator to ensure that registered charities meet the legislative requirements for obtaining and maintaining charitable registration. This ensures that the benefits of charitable registration are available only to organizations that operate and are constituted exclusively for charitable purposes.

In the CRA’s experience, the vast majority of charities want to follow the rules, and are prepared to make changes to ensure they comply. The CRA therefore generally takes an education-first approach to help charities follow the rules. In less serious cases of non-compliance, the CRA’s first step is typically to help get a charity back on track.

It is rare for the CRA to revoke the registration of a charity that is willing and able to take steps to follow the rules. The CRA prefers to work with charities to help them comply. However, serious consequences, up to and including revocation, may be appropriate for organizations that are so engaged in trying to influence laws and policies that they do not operate for exclusively charitable purposes.

For more information about the CRA’s compliance approach, see the CRA’s webpage on Compliance and audits.

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