Canada Reviewing Impact of Charity Sector

The Senate in Canada has appointed a Special Committee on the Charitable Sector to carry out a wide-ranging study of the sector and modernise how charities are governed.

The mandate is to “examine the impact of federal and provincial laws and policies governing charities, nonprofit organisations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada”.

It comes after Senator Terry Mercer introduced a motion in May 2017 calling for a Special Committee.

“The philanthropic sector has been a very important part of my life. From the back rooms to the front lines, the entire sector is so vast and diverse that I believe it is time that we take a look at the policies that govern the work non-profits and charities do and what we can do to encourage more volunteers and support the ones already there,” Mercer said.

“I believe we should approach this study by: examining the impact that volunteers have in our great country; studying the policies and laws that govern the work that non-profits and charities do; and exploring innovative ideas that could lead to change where needed.”

The motion looks to modernise the relationship between the government and the charitable sector, and how the two could work better together.

In comments to the Senate last year Mercer noted the major legislation that governs not for profits and charitable organisations in Canada, the basic provisions of the Income Tax Act, were introduced in the 1960s.

At the time, there were 35,000 registered charities in the country. There are now more than 170,000 charitable and non-profit organisations with 85,000 registered charities recognised by the Canada Revenue Agency (CRA).

Mercer cited a number of questions that the Special Committee, comprised of nine members, needed to address, including how the Income Tax Act is performing to support charities, not for profits and volunteers and how the current tax credits should be updated.

He also questioned how Canada could modernise the not-for-profit sector, what could be done to encourage more volunteering and donating, what ideas have been tried in the past, what continues to work and what does not work, how charities are regulated, whether there barriers to their success, and how government departments interact with charities.

Bill Schaper, director of public policy at Imagine Canada, a charity dedicated to providing charities and not for profits with programs, assistance, and resources designed to help them better support the Canadians and communities they serve, told Pro Bono News they were pleased with the announcement.

“We’re very pleased that the Senate is appointing a special committee to examine the effects of existing laws, regulations, and policies on the charitable and nonprofit sector,” Schaper said.

“We’ve seen a number of other countries – such as Australia, New Zealand, the UK, and Ireland – modernise how charities are governed, but in Canada we’re still operating under the regime that’s been in place since Elizabeth I. We’re finding it increasingly difficult to deal with 21st century challenges and solutions while operating under a 17th century framework.

“The Senate process gives us an opportunity to really delve into the issues, and to look at what we might be able to learn from other countries and apply in the Canadian context. And we’re hopeful that it will influence the thinking of the federal government, given that the government has committed itself to examining legal and regulatory reform.”

The latest announcement comes after the report of the Consultation Panel on the Political Activities of Charities, was released in Canada last May, calling for major tax-law changes to allow charities to freely carry out “political activities” that furthered their causes.

The report is closely modelled on charity law in the United Kingdom and stands in contrast to current fears among the Australian charity sector that the government has stepped up its pursuit of charities engaging in politics.

In the executive summary, the authors set out the benefits of charities playing an active role in public policy and recommended the CRA focus on charitable purposes, rather than activities.

“Charities bring commitment and expertise to the formulation of public policy, develop innovative solutions to issues and engage a diverse group of stakeholders, many directly affected by the matters under discussion. This is particularly valuable in an era of complex social and environmental challenges and constrained government budgets, where all informed perspectives and ideas are vital,” the report said.

“To enable and maximise the contributions of charities, we need a regulatory environment that respects and encourages their participation in public policy dialogue and development. This is not currently the case. The legislative framework for regulating charities in Canada is outdated and overly restrictive.”

The report, which followed online and in-person consultations with the public and the charitable sector and was hailed by some in the Canadian charity sector as ending an “advocacy chill” that had begun in 2012, made four recommendations:

• Revise the CRA’s administrative position and policy to enable charities to fully engage in public policy dialogue and development.
• Implement changes to the CRA’s administration of the Income Tax Act in the following areas: compliance and appeals, audits, and communication and collaboration to enhance clarity and consistency.
• Amend the ITA by deleting any reference to non-partisan “political activities” to explicitly allow charities to fully engage, without limitation, in non-partisan public policy dialogue and development, provided that it is subordinate to and furthers their charitable purposes.
• Modernise the legislative framework governing the charitable sector (ITA) to ensure a focus on charitable purposes rather than activities, and adopt an inclusive list of acceptable charitable purposes to reflect current social and environmental issues and approaches.

Speaking at the time the Minister of National Revenue Diane Lebouthillier, said it represented a “significant milestone” in the consultation process.

“The government remains committed to clarifying the involvement of the charitable sector in public policy dialogue and development,”  Lebouthillier said.

However a number of charities have expressed their concern that the Trudeau government has yet to respond to the report.

Community Council of Australia CEO David Crosbie told Pro Bono News some feared that progress had been too slow.

“In discussing this independent panel report and government progress on implementing the recommendations, a number of Canadian charities I have spoken with have expressed some concern that progress has been quite slow since the report and its recommendations were released,” Crosbie said.

“Some had started to pressure the government to take more seriously the concerns the charities sector had raised over the way the previous Harper government applied the auditing of political activity process and deregistered more than 20 charities as a consequence.  

“Announcements last week are welcome within this context and hopefully the new review of government and charity relationships means the government is now prioritising the need to reform the previous practices in which government sought to diminish the public voice of charities.”

The committee is expected to present a report by the end of the year.