An Ontario court decision rendered on July 16th may completely change the rules about political advocacy by Canadian charities. The decision struck down the law limiting a charity's non-partisan political activities. This affects every Canadian charity hoping to get public support for policies relevant to its charitable purposes and activities.
The action was brought by Canada Without Poverty ("CWP"), registered as a charity in 1982. Its charitable purpose is to relieve poverty by, amongst other things, carrying out and publishing research into poverty in Canada and providing information to the public about how to more effectively relieve poverty.
Canada Revenue Agency ("CRA") conducted a "Political Activities Audit" of CWP, and concluded that virtually all of CWP's activities involved political activities because they were public communications advocating law reform and policy changes to reduce poverty. According to CRA, such activity was unlawful.
Certain sections of the Income Tax Act (Canada) (the "Act") state a charity must devote substantially all its resources to charitable activities. According to CRA, this meant a maximum of 10% of the charity's resources could be used for political activities, and those activities must all be non-partisan. Submissions to the government are regarded by CRA as charitable, but public advocacy is regarded as political. A charity that exceeds the 10% limit could have its charitable registration revoked.
CRA used a broad definition of "political", concluding a charity acts politically whenever it issues a call to political action, or publicly advocates for changing or maintaining any law, policy or decision at any level of government in Canada or a foreign country. In the present case, it did not matter whether the advocacy was related to something charitable. In other words, a charity was very limited in speaking out about public policy in its area of expertise.
CWP brought a legal challenge to the Act's provisions limiting political activities. CWP argued that these provisions violate the Canadian Charter of Rights and Freedoms (the "Charter"). In particular, CWP argued, these limits violate the right to freedom of expression. CWP observed that it was granted charitable status to fight poverty by communicating to the public, but was then told by CRA that it could not speak publicly about the causes of poverty and possible solutions.
This is not the first time the noted provisions of the Act have been criticised. In 2016, the Minister of National Revenue appointed a Consultation Panel, one of whose members was Miller Thomson's Susan Manwaring, to look at the question of political activities and registered charities. The Consultation Panel reported in March 2017, recommending that the law be amended to permit charities to fully engage in non-partisan public policy, dialogue and development, provided that these activities are subordinate to and furthers their charitable purposes. The Panel said "The participation of charities in public policy dialogue and development should be recognized and valued, and seen as an essential part of the democratic purpose."
In its decision, the Ontario Superior Court of Justice agreed with CWP, finding that the restrictions seriously impaired both CWP's freedom of expression and its ability to pursue its charitable purpose.
Some limits on Charter rights are permitted if there is a serious enough reason for those limits. The Court said the restrictions on CWP's Charter rights in this case were not justifiable; they were not there to further any pressing and substantive objective.
The Court said there is no logical reason to treat some public advocacy organizations as charitable and some as political, as long as the advocacy is done in pursuit of a charitable purpose. In other words, advocacy intended to reduce poverty is both political and charitable. The Court struck down the Act's distinction between political and charitable activities, and declared the limits in the Act to be of no force and effect. The prohibition on partisan political activities is unchanged by the decision. It is still unlawful for a charity to support a particular political party or candidate.
The decision can be appealed until August 15th, so this may not be the final word on the matter. However, if the decision stands, it will give charities a new freedom to speak to the public. Charities must be careful, of course, to keep such advocacy within their charitable purposes.
Miller Thomson's Social Impact Group advises Canadian charities on all aspects of the law, including the laws regarding public advocacy.
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