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Proceedings of the Special Senate Committee on the
Charitable Sector

Issue No. 9 - Evidence - November 26, 2018


OTTAWA, Monday, November 26, 2018

The Special Senate Committee on the Charitable Sector met this day at 9:04 p.m. to examine the impact of federal and provincial laws and policies governing charities, non-profit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada.

Senator Terry M. Mercer (Chair) in the chair.

[English]

The Chair: My name is Senator Terry Mercer from Nova Scotia, chair of the committee. I’d like to start by asking senators to introduce themselves.

Senator Omidvar: Ratna Omidvar, Ontario.

Senator R. Black: Robert Black, Ontario.

Senator Duffy: Michael Duffy, Prince Edward Island.

[Translation]

Senator Maltais: Senator Maltais from Quebec.

[English]

The Chair: Today the committee will continue its study to examine the impact of federal and provincial laws and policies governing charities, non-profit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada.

For our witnesses today, we’d like to welcome Ms. Gloria DeSantis, Assistant Professor, Founder/Facilitator, Voluntary Sector Studies Network, University of Regina. As well, we have Mr. Terrance Carter, Managing Partner, Carters Professional Corporation.

Thank you for accepting our invitation to appear. I’d also like to apologize for the long delay as we waited for Royal Assent to be given to a bill in the chamber which would allow us to sit in session.

Thank you for appearing. I’d invite the witnesses to make presentations. I remind everybody the presentation should be five to seven minutes. Then we will get to questions from my colleagues. In the question and answer session, I’d ask everybody to be as short as possible so we can get as many questions and answers in as possible. We’ll start with Ms. DeSantis.

Gloria DeSantis, Assistant Professor, Founder/Facilitator, Voluntary Sector Studies Network, University of Regina, as an individual: Thank you very much. Good evening. Thanks for the opportunity to appear this evening. This is a rather important national conversation about charitable legislation in Canada. I applaud your effort here and hope this is the beginning of a new era for us all as we begin to work together in co-creating legislation.

The material I offer this evening is the outcome of my experiences working and volunteering in the non-profit sector for almost 30 years in Ontario and Saskatchewan and more recently as a scholar actively engaged in research and teaching about the sector, its advocacy work, democracy and justice. I’ve been invited to present my research and advocacy, specifically two things: First, my article entitled Voices from the Margins: Policy Advocacy and Marginalized Communities, published in 2010 in an academic journal, which also explains some of the results of my PhD research with human service organizations.

Second, my co-edited book, The Shifting Terrain: Nonprofit Policy Advocacy in Canada, which was released in 2017, written with my colleague Nick Mulé.

In general, advocacy may be defined as the act of speaking or of disseminating information intended to influence individual behaviour, public opinion, public policy and law. Advocacy means speaking up in a situation that is viewed as undesirable, unfair and changeable. The 39 human service organizations I interviewed believe the main goal of this advocacy is to improve people’s lives through changes to government systems, policies and programs. My research results clearly show the complex nature of advocacy in our communities and hence the problematic nature of current legislation and terminology.

First, the results show the organizations’ decisions to embark on advocacy and the type of advocacy strategies chosen were informed by their daily, front line one-on-one work with their clients. Second, public policy advocacy is not a discrete phenomenon with clear dividing lines but rather a fluid process with many decision points along the way involving many different strategies and a diversity of constituents such as clients, volunteers, other non-profit organizations, funders and the media.

In terms of fluid processes, depending on the situation respondents explain they might have been advocating for a change in a government policy but then had to switch to advocating for a research initiative to find answers to some questions that further informed the policy development initiative. In some cases they had to roll out a media campaign in order to bring about awareness of this particular issue in the community.

Third, advocacy differs in visibility and scale across organizations and can best be described using a continuum. At one end are organizations that did advocacy but actually hid it. On the opposite end was yet another group of organizations whose advocacy work was very large scale, formal and visible to everyone.

Fourth, and oddly enough, there is a negative ripple effect from the CRA at the federal level on to provincially registered non-profits.

Finally, before leaving these results it is noteworthy that the confusion about CRA terminology and what is and is not permitted and how organizations try to avoid risk similarly affects small, medium and large organizations.

Thus my recommendation number 1 is key. Nonpartisan public policy dialogue and development should be seen as charitable because it is based on the organization’s front-line service delivery work, which is their charitable raison d’être. My recommendation number 2 is to remove conditions and terminology that limit organizations’ advocacy work because these create confusion, fear and more work for organizations.

Now I’ll turn briefly to my co-edited book. At the level of society, or on a macro scale, I and many other scholars as well as others who work in the charitable non-profit sector believe public policy advocacy is a form of civic engagement and participation.

It is a form of participatory democracy and directly tied to governance.

When legislation limits advocacy, it also limits democracy. The chapters in my book reveal how advocacy has achieved significant progressive policies and programs across Canada that focus on many marginalized societal issues; for example, Northern telecommunications in very sparsely populated areas and the new Saskatchewan disability income support system. But my book also shows devastating results, such as the flooding of Lake St. Martin Anishnaabe community in Manitoba, when collective advocacy was almost non-existent.

It is noteworthy that the term “advocacy” has been soiled over the past number of decades; it has become a dirty word in Canada. There are five main mechanisms that have created this situation: one, confusing government rules; two, charities’ perceptions and misunderstanding of these rules; three, muzzle clauses that exist in government funding contracts; four, personal muzzling and threats to stop speaking out; and five, government funding cuts to organizations.

Further, there are some interesting shifts in discourse unfolding. There is a shifting discourse away from using the term “advocacy” to using terms such as policy co-construction, policy dialogue and collaboration on policy. In addition there are shifts in advocacy norms taking place such that we see organizations adopting new labels for their advocacy work such as “doing public education or doing evidence-based research practices.” These are likely not captured on the T3010 form as political activities.

My recommendation number 3 is, given advocacy is a form of civic participation important to our democracy, charities should be permitted to do so this nonpartisan work with the understanding they make important contributions to public policy.

In closing, it is important to remember advocacy has always been a core function of the sector. The sector is known to be a social seismograph, leading the way in identifying problems in our communities.

I’d like to cite Angela Glover Blackwell’s point in the Stanford Social Innovation Review, because it reminds me of what advocacy achieves. She described the “curb-cut effect” as “Laws and programs designed to benefit vulnerable groups, such as the disabled or people of color, often end up benefiting all of society.” When people with physical disabilities advocated in urban planning departments decades ago for sidewalk curbs to be cut and ramped at intersections in cities, a “wall of exclusion came down” and “everybody benefited—not only people in wheelchairs” but “parents pushing strollers,” seniors with walkers, “workers pushing heavy carts,” business people with briefcases on wheels and travellers wheeling luggage.

All of this is the embodiment of charitable purpose.

Thank you. I look forward to questions you may have.

The Chair: Thank you very much, Ms. DeSantis. I remember when they changed the policy of sidewalk construction in cities.

Mr. Carter, please go ahead.

Terrance Carter, as an individual: I’d like to express my thanks to the honourable senators for the opportunity to appear today. As a matter of background, I have had the privilege of practising charity law for 38 years and, in the course of doing so, I have found Canadians are generous in spirit, time and resources, and want to support the public good through private actions. I applaud the committee members for the important work they are doing in assisting the charitable sector in facilitating a passion for the purpose.

I have been asked to present today on the topic of political activities involving charities, in particular with regard to an article I co-wrote in 2015, as well as an earlier paper I co-authored and presented at NYU in 2010, copies of which have been given to you.

The topic of charities and political activities has had a long and complicated history. I will, therefore, try to provide a high-level overview of where we have been and where we are at present concerning political activities by charities, as well as provide some thoughts concerning the proposals contained in Bill C-86 on political activities the Senate will be considering.

The key point to remember is charity law is grounded on the concept of “charitable purposes” as articulated by the courts over many years. The means or activities by which a charity achieves its charitable purpose is not the focus. Rather, the focus is on the purpose to be achieved through the charitable activities undertaken by the charity.

The difficulty the charitable sector has faced in this regard is the Income Tax Act has been drafted over the years with a focus on charitable activities rather than charitable purposes. When the government introduced the existing provisions in the Income Tax Act in 1985 to deal with advocacy by charities, they used the term “political activities” without defining it, which has led to much confusion. As well, charities wanting to engage in political activities were required to comply with a substantially all test that has generally limited charities to expending no more than 10 per cent of their resources on nonpartisan political activities.

The 1985 amendments resulted in a long list of court cases in the 1990s restricting charities in the area of political activities. This, in turn, led the CRA to develop its current policy statement on political activities in 2003. While not perfect, the policy statement did a good job in explaining what charities could and could not do as a result of the 1985 amendments.

The relative calm came to an end in January 2012, when the federal government at that time targeted environmental and other radical groups as threatening to “hijack the regulatory system.” This led to the 2012 federal budget that imposed sanctions on charities that exceeded the 10 per cent limit on political activities, as well as provided the CRA with $13 million in funding to undertake “education and compliance activities.”

As a result, 54 political activity audits were subsequently conducted to the dismay of the charitable sector. The upshot of these political activity audits left the charitable sector feeling vulnerable and confused about the role they are able to play in public policy dialogue in Canada.

This takes us to the present and a consideration of the recommendations in the report of the consultation panel on the political activities of charities, which you are familiar with, that was released by the Minister of National Revenue in May 2017.

Although the government has been slow to respond to the report, the Minister of National Revenue and the Minister of Finance finally issued a joint statement on August 15, 2018. Notwithstanding the government’s appeal of the July 2018 decision in Canada Without Poverty, the joint statement indicated the government would be proceeding with removal of the quantitative limits on political activities in accordance with recommendation number 3 in the report, provided that charities would still be required to have exclusively charitable purposes and the prohibition on partisan political activities would remain.

This announcement led to draft legislation proposals being introduced on September 14, 2018, to remove the 10 per cent quantitative limit on political activities. However, the Department of Finance also indicated political activities would only be permitted if they were “ancillary and incidental” to the charitable purposes of the charity. This led to a backlash from the charitable sector that this approach would lead to the imposition of a new quantitative test based upon the vague common law notion of “ancillary and incidental” that would be inconsistent with the recommendation in the report that charities should be allowed to participate in public policy dialogue without limitation.

As a result, on October 25, 2018, the Department of Finance introduced new proposed legislation dealing with political activities by charities in Bill C-86. The key aspect of the changes provides that charities can be involved in “public policy dialogue and development activities” without limitation. The issue before this committee and the Senate as a whole is whether Bill C-86 has got it right — or whether it goes too far.

It is my opinion that Bill C-86 has gotten it right for the following four reasons:

One, Bill C-86 will avoid charities having to deal with complicated quantitative thresholds that would otherwise be required with either an ancillary and incidental common law test or a more generous subordinate test that some have suggested as an alternative approach. With either, the question would be how to define the threshold. Is the limit to be 20 per cent, 49 per cent or 51 per cent, for instance, and what is the threshold to be calculated upon? Is it to be a percentage of resources of the charity, as is the case now, or something else? If so, how do you define “resources”? What does a charity do when dealing with intangibles like volunteer time as a resource? How do charities monetize their resources? The questions are many but the answers are few.

Two: Bill C-86 makes it clear that a charity must be constituted and operated exclusively for charitable purposes and that public policy dialogue and development activities must be carried on in furtherance of charitable purposes. This means that a registered charity must be established to further one or more legitimate charitable purposes in accordance with the common law.

As well, public policy dialogue and development activities can only be done without limitation if done in support of those charitable purposes. The CRA will be able to provide guidance concerning what is meant by furtherance and support in their forthcoming publication on the legislation.

Three: Similarly, since public policy dialogue and development activities are not defined in Bill C-86, what those terms mean in practice can also be clarified by the CRA, likely in accordance with the broad description of such terms as reflected in the report of the consultation panel that extends well beyond simply undertaking political advocacy.

Four: The approach reflected in Bill C-86 is consistent with what is taking place in other common law jurisdictions, such as England, Australia and New Zealand, without concern being raised in those countries that lobby groups are able to obtain charitable status.

The suggestion Bill C-86 might lead to the development of Super PACs in Canada, as has happened south of the border in accordance with the Citizens United decision by the U.S. Supreme Court, is not a concern in Canada. This is because Citizens United was a decision dealing with election expenditure issues by a non-charity in the U.S., whereas, in Canada, charities are prohibited from being involved in any type of partisan political activities.

Based upon the above, I believe the proposals in Bill C-86 are a very positive step forward for the charitable sector and hopefully will be supported by the Senate when it considers the bill in the days ahead.

If the proposals in Bill C-86 are adopted, the charitable sector will have much greater flexibility in achieving its charitable purposes as well as clarity in what they can do, although, as a consequence, charity lawyers may unfortunately have much less to do.

The Chair: I’ve never known it to be a bad thing that lawyers have less to do. I’ve always considered that to be a success story.

Senator Omidvar: I take it from both your presentations that you both support the measures to lift limits on nonpartisan public policy dialogue activities, whatever term we use.

Last week, we heard from a witness who was not in agreement with you and, in fact, raised a great deal of concern in his witness statement.

He gave an example. He talked about how lifting limits on public policy advocacy would allow charities to promote views that are polarizing and extremist. For example, he said there could a charity whose purpose is to advance education and research in immigration policy. In reality they could be promoting white supremacist views, anti-Jewish views, anti-Muslim views, et cetera.

What’s your response to that?

Mr. Carter: I would be happy to respond.

Those examples miss the point that when we’re talking about public policy dialogue and development, it’s to be done in support of and in furtherance of a charitable purpose.

The situation you’ve described is not a charitable purpose. A charity has to meet the common law definition of what is charitable. Supporting white supremacists or other types of extreme situations like that are not reflective of what is charitable in common law.

Everything that’s contained within Bill C-86 is focused on supporting and furthering the charitable purpose. The issue that has to be looked at is what is the charitable purpose? That is the issue.

Senator Omidvar: I understand. The hypothetical situation that was described is this organization has charitable objectives, it’s been approved by the CRA and it then proceeds to go about doing its work in a way that is promoting extremist views.

How do you prevent this?

Mr. Carter: Well, the charities, doing charitable purposes still have to comply with the law. If you have an organization that is promoting hatred, we have laws in Canada that deal with that. Charities are not exempt. They have to comply, like every other charity or Canadian organization.

Ms. DeSantis: I was going to add to that. The Criminal Code of Canada deals with hate speech, et cetera. I think there’s a dovetailing of different laws that organizations need to be held to account for.

Senator Omidvar: If I may make the point that was made last week — I do not support that point of view, but want your opinion on it — you’re making an assumption, rightfully so, that all charities will abide by the law.

The question is around possibly the small number of charities that will use charitable status after they have gained it to engage in activities that are clearly off the limits. You don’t agree with the previous witness. Tell us why, again.

Senator Duffy: Did you read it?

Mr. Carter: Yes, I did. I watched the testimony. I saw both and I read both.

What we’re talking about, again, is purpose and activity. Activities have to be in compliance with Canadian law, whether it be human rights legislation, Criminal Code provisions — whatever. So every charity, in achieving a charitable purpose, has to comply with the law. It does not get a free pass because of what’s contained within Bill C-86.

All Bill C-86 is saying is in order achieve the purpose, it will be possible to do so in accordance with public policy dialogue and development activities.

If you go back to the recommendations contained in the panel report from May 2017, you’ll see it talks about more than just influencing the government, more than just a change of law. There are many aspects of dialogue which charities can have in the process. All of those should be seen in the broader context and spectrum of what constitutes public policy dialogue and development activities.

Senator Duffy: Just picking up on that, under charity law — I’m not a lawyer and you are and maybe you, Professor DeSantis — they have these heads of charities. One of the aspects of defining a charity is if it works for religious purposes, educational purposes or the relief of poverty.

Under education, could we not see, with this wide open proposal, a group that wants to educate Canadians about the benefits of gun ownership and how safe gun owners are and how it’s something that everyone should be involved in? If we had lots of money coming in from outside pouring into an education program to teach people that guns were good, it’s not hate speech, but it’s a point of view.

Would that not concern you? And we could go on, whether we pick abortion or other topics on which most Canadians think the debate has been settled.

Mr. Carter: Thank you, senator, for the further question. Let me try to answer that.

I think we still have to separate the purpose and the activity. Bill C-86 is talking about broadening the tools or the activities that are available. Your question, which is a good question, is dealing with the head of charity, the purposes that have been reflected by the common law.

Is it possible to have an organization get charitable status that is attempting to educate the public on either the use of guns or gun control? There, you have to go back to what the courts have said concerning what constitutes advancement of education.

The Supreme Court of Canada, in the 1999 decision on the Vancouver Society of Immigrant and Visible Minority Women, provided context for what advancement in education involves. It needs to have a structure and a purpose. It needs to have an ongoing process. That is the mark of what constitutes advancement of education.

What you would have to do is look to see whether the applicant was meeting the common law requirements for advancement of education. Do that process. The Canada Revenue Agency does a good job of it. They are careful in going through that process. Then you layer on top of that whether or not you can have activities that involve public policy dialogue and development. That is a totally different discussion. That is trying to provide more flexibility to the charitable sector to achieve their purpose. I think you need to separate the two.

Ms. DeSantis: I am also thinking about this whole notion around to what degree would this happen? At this point, there is the capacity for organizations to probably make their way and do this anyway. As we have noted, there are some who end up with their charitable status revoked as a result of some of the problems that end up coming to light. Those numbers aren’t large. There are procedures in place to deal with that.

Senator Duffy: I think senators look at what has happened south of the border, where millions of dollars are poured into “educating” the public on certain points of view. Basically, those organizations that carry those messages are controlled or financed by a few wealthy people who stay in the shadows while their paid staff go out and advocate these positions.

Senators, certainly myself, would want to be assured we weren’t inadvertently Americanizing Canadian public discourse.

Mr. Carter: If I can speak to that, senator, thank you for that question. I made brief mention of the situation south of the border in my comments. Let me elaborate a bit further.

The decision Citizen United by the U.S. Supreme Court was dealing with an organization that was not a charity. It was a 501(c)(4), which is different. It is like a non-profit organization. It was dealing with political expenditure limitations. It was not dealing with what a charity does. Charities in the U.S. have rules somewhat similar to ours.

With the situation in Canada, you could not have a Citizen United because we have had and will continue to have prohibition against partisan political activities. It is impossible for a charity right now, directly or indirectly, to support a political party or a candidate for office. The wording contained within Bill C-86 repeats that.

The situation south of the border cannot, senator, be repeated here in Canada. Raising that as an example was not an appropriate comparison to the situation in Canada.

Senator Duffy: Is there an appropriate comparison?

Mr. Carter: Appropriate comparison dealing with what?

Senator Duffy: Non-profits or other advocacy groups.

Mr. Carter: Non-profit organizations are not registered charities. They do not have, at the present time, any limitations concerning what they can do in political activities. That is the situation with non-profit organizations. We are talking about registered charities. Bill C-86 is dealing with registered charities and the involvement of political activities.

Ms. DeSantis: To add to that, again, the question is an important one as we think about the diversity of potential responses to new legislation.

When I think about the organizations I am familiar with in Saskatchewan, there are the provincially registered non-profits where these kinds of groups already exist. There are rural gun owner clubs like there are motocross clubs, et cetera. There are a whole variety of groups that don’t even come close, they are not registered charities, and they exist. To what extent do they sound like some of the organizations south of the border? I don’t know. I don’t know enough about them because my focus is on the human services sector.

For provincially registered non-profits, the potential is already there for that to be going on.

[Translation]

Senator Maltais: Ms. DeSantis, thank you for presenting your brief in Canada’s two official languages.

In your brief, you quoted a woman, Ms. Blackwell. Who is she?

[English]

Ms. DeSantis: Angela Glover Blackwell wrote an article for the Stanford Social Innovation Review that focuses on a model or a way of thinking about the value-added the charitable sector offers. She talks about this curb-cut effect, about sidewalks and how it is easier for people with disabilities to get around communities but, by extension, all kinds of other folks benefit.

[Translation]

Senator Maltais: I won’t talk to you about non-profit organizations, or NPOs, because I’m not interested in them. However, when we talk about charitable organizations, it affects human beings. In your study, you met with 19 or 20 groups in Saskatchewan. What was the main problem you analyzed? These are people who were on the ground every day. They met the elderly, the homeless, people in need. What do you learn from this experience on a human level without taking into account the financial aspect?

[English]

Ms. DeSantis: To give you a sense of some of the organizations’ issues, for sure they were involved in anti-poverty and housing work, et cetera; work on the domestic violence act; the development of new domestic violence courts and advocating for a separate court system; supportive housing for adults with cognitive disabilities; working to advocate at the Ministry of Justice for First Nations spirituality in correctional institutions; and city-based anti-violence bylaws Quite a variety of things. I think that also speaks to this notion that these organizations do cross different boundaries. People work together on different things. Some of us refer to that as cross-fertilization of issues because if we are talking about homelessness, housing and poverty, they often go together.

These charities support each other in their work. Sometimes collaboration like this around advocacy is frowned upon. Funders are often encouraging charities to work together. It is an interesting contradiction sometimes. They work together to advance these issues using a variety of different approaches. Some of them are visible in the media right through to quiet conversations in small towns. Some of the advocacy work I looked at had people talking to each other in grocery stores. That happens in small towns.

Questions about whether or not we should be talking with people in that way is interesting.

[Translation]

Senator Maltais: Ms. DeSantis, if I may, I must say that I don’t believe in charitable corporatism at all. However, I believe in people who do charity work. You have met many people and I congratulate you on that, but apart from the financial aspect, what are their needs?

[English]

Ms. DeSantis: Many of the policies and programs I just mentioned were fundamental changes they needed to see changed in order to make people’s lives better.

For example, the one around First Nations spirituality in correctional facilities, the general assumption is we should have traditional spiritual healing in facilities; and yet, what was happening is many Indigenous peoples grew up in Christianity. If they ended up in a correctional institution, the assumption was they should have traditional healing. There was advocacy work to get the Minister of Justice to change that policy so it was more open. People in these facilities had access to what they needed. That is a policy change within the Ministry of Justice.

That is an example that it touches real lives, it has a huge impact on how people’s lives unfold. With regard to the social assistance policy area, there was a regressive welfare system in Saskatchewan and there was a need to separate out people with disabilities from people who are considered employable. They felt like they were being treated badly and they didn’t need to have their disability constantly questioned.

Senator R. Black: Just out of curiosity, under the current existing income tax rules, do you have any idea percentage-wise how many charities might currently exceed or even have expressed a desire to exceed that 10 per cent rule? Any ideas? Are we talking a lot? Are we talking a few? Do we even know?

Mr. Carter: I don’t have statistics. What I can tell you is what I know based upon discussions and what I have read from CRA. The numbers are not a lot who report political activities on their T3010. Again, the numbers are somewhere around maybe 500, 700, in that range, out of 86,000 charities.

For those that do report they are carrying on political activities, they are obviously wanting to make sure they are staying under the 10 per cent limit.

What I find is charities being worried about that 10 per cent resource limit become less interested in participating in public dialogue, policy dialogue because of the rules. They are worried about how do you calculate that 10 per cent? As a result, there is a holdback with getting involved in discussions where charities should be participating.

Senator R. Black: Thank you.

Ms. DeSantis: To add to that, I had originally looked at trying to pull out the political activities data when I was working on my PhD. I think I arrived at a number of something like, focusing specifically on Saskatchewan charities, which the number at that time was around 4800 organizations, only 3 per cent ticked off the box of political activities. That doesn’t even get into talking about beyond the 10 per cent. That is fascinating.

When we look at Imagine Canada and the research that David Lasby does, similar kind of thing, where they went out and interviewed people, CEOs and managers, about the advocacy work they do. The number was closer to I think two thirds engaged in this thing called advocacy. Again, the focus is on nonpartisan work.

Quite frankly, for me when I finished doing this research, the fact that there is such a fluid process whereby it is really hard to discern whether or not, okay, did this meeting that took place over here, was that the beginning or was it three meetings ago when a coalition of people first started talking about getting together? It is really hard. This is this thing about quantifying, whether or not we are talking about a 10 per cent rule or an incidental number or whatever it may be.

Personal experience for sure, the same. As we count our resources, where are the beginning and ending lines in a lot of this work? Many organizations opt to use different language as I alluded to. They are not even thinking about political activities in the way that we may have current legislation that exists. That is a fascinating thing to think about.

When we set out to do this book, we did not find any studies that systematically looked for systemic studies on exactly that — people don’t seem to be able to quantify that perspective.

Mr. Carter: In the paper I referred to in 2010, the conclusion I came to was political activities were a bit of a sleeper issue for charities. If you worked through what was contained within the CRA policy statement, there was a fair bit of flexibility for charities to participate in dialogue. The difficulty is the definition of “partisan political activities,” or at least the prohibition on that, and the 10 per cent rule in the Income Tax Act from 1985 created a lot of confusion and is still there. As a result, in 2012, when there was a focus by the government to crack down on environmental charities, then they were able to use those tools in the act to put a number of charities through a very extensive political activity audit.

This is an opportunity collectively for Canada to get up to speed with the reality of what there needs to be in place to engage charities in a public policy dialogue. This is a good thing for Canada. This is a good thing for charities. This is a huge turning point. It is very exciting, frankly, I think for this discussion to take place now because of the Senate committee and because the legislation is going through. This will be a historic opportunity for the government today to be able to empower charities to participate in a meaningful way, a full way, in public policy dialogue.

Senator R. Black: Thank you.

The Chair: It seems to me so many times charities have to engage with governments, whether it be municipal, provincial or federal, as an ordinary way of doing business. Do you count that interaction with government, with politicians, as political activity? The definition of political activity, I as a political operative define political activity differently than perhaps someone in CRA. I always use the example when I as executive director of the kidney foundation. In those days we didn’t have organ donor cards on driver’s licences in Nova Scotia. We lobbied government. We met with politicians. We twisted arms. We presented briefs, et cetera, to people to have that changed. As matter of fact, we were successful. As a sidebar, the interesting person we had to convince was the Minister of Transport, who now happens to be a colleague of mine in the Senate.

We were being very political. There were Conservatives and Liberals in that particular time. The Conservatives were in power. If it was going to change, we needed to talk to Conservatives.

Mr. Carter: Senator, if I could respond. What you have just described shows the confusion there is concerning political activities. Under the 2003 guidance, what you have described in making representation to government to change the law is permitted but not as a political activity, it is permitted as a charitable activity. It is specifically provided for in the guidance. However, when you add on to that a call to action, to march on Parliament Hill, to ask individuals to write in to their MP. The addition of a call to action turns what has been labelled as a charitable activity into a political activity. When you get into a political activity, then you have to watch your P’s and Q’s because you have got a 10 per cent resource count.

The point is it is confusing. We need to make it simpler. We need to make it easier for charities to do the work they are doing. Sometimes in order to achieve a charitable purpose, you have to change the law.

William Wilberforce, with the abolition of slavery on behalf of the churches in England, had to change the law. If we are going to be trying to prohibit human trafficking, we have to change the law. Sometimes to achieve the charitable purpose requires we have to change the law. Charities need to be able to speak to that with clarity and without fear they are going to be facing serious compliance issues with Canada Revenue Agency.

This is not a problem with the regulator. The Canada Revenue Agency is simply doing what they are told to do under legislation. This is why the legislation needs to change in order to allow the charities to achieve their purpose.

Senator Omidvar: I have so many questions. I am challenged to try and get them in. I want to pursue the issue of indirect partisanship. This is when a charity may hold a position that is similar or becomes similar to that of a political party.

Let me give you an example. The Fraser Institute, which is a legitimate charity, is advocating for lower taxes. That may be aligned to a political party or Canada Without Poverty, which is maybe at the polar opposite end, may be advocating for higher taxes. That may be aligned to a political party.

Ms. DeSantis, if you could help us clarify. Does Bill C-86 sufficiently deal with helping charities figure out if they will be indirectly partisan, or will that be contained in the guidelines of the CRA?

Ms. DeSantis: At this point, I imagine it needs to be clarified further in the guidelines. I am thinking about the way Bill C-86 is, or my reading of it. It does free organizations, which is, just to reiterate the previous comment. I think that’s what is needed. Right now it’s way too complex for organizations. Whether you are the Fraser Institute or Canada Without Poverty, both are completely legitimate organizations to do as they see fit.

What I have seen in my research is organizations — and this is the thing about how norms are shifting with these kinds of approaches to advocacy in they appear to be becoming more sophisticated and clear about what is doable or not doable when it comes to directly connecting. You are talking about indirect political support, if you will.

What I am seeing is there is a lot of this work already rolling out in communities. I wonder if our legislation has even caught up to it. By the nature of the way practice is unfolding is my point. The organizations are already doing a lot of this. The organizations that are actively engaged in front line legislative change are figuring out ways to move things forward and not even ending up on the radar screen, if you will, of CRA.

Both those organizations you just referred to are prime examples of organizations that have figured it out.

Whether we are talking about these fluid processes where the question about the beginning and end to engaging in the previously defined “political activity” or not is interesting.

Bill C-86 moves us, in a way, forward. It relieves pressure on other ends of things when it comes to reporting. As soon as you say “yes” and tick off the box with “political activities,” then you are required to explain things, which is why a lot of organizations aren’t ticking that box.

Mr. Carter: To provide some clarity, the prohibition of partisan political activities in Bill C-86 is the same as has been in place since 1985. That is not changing.

The issue is whether or not it should refer to direct or indirect support of a political party or a candidate for office.

The report that came from the panel reviewing political activities recommended there be removal of the reference to direct or indirect. The concern was it could be subjective interpretation. To be fair, Canada Revenue Agency has put out a number of publications and different policies that have tried to clarify the matter. They have done a pretty good job.

If you leave it to the regulator, I think they will do a fair job. Would it be helpful to remove direct or indirect? I think there is merit to that. Either way, I think it can be managed because, for example, CRA, in dealing with what is problematic, if you have a charity that has a policy and that policy is the same as a political party, the fact that the charity is supporting a policy that happens to be the same as a political party is not problematic. However, if the charity was to say, “We support the policy, therefore, we support the party,” then you’ve stepped over the line.

A lot of it is common sense. My preference would be not to have reference to direct or indirect. At the same time, I think the regulator has done a fairly good job. They can always do better, mind you. I wouldn’t be losing a lot of sleep over that in particular.

The Chair: One of my concerns, Mr. Carter, is as we burden the CRA with more regulations, that is where we will get tripped up, by putting in words and people in the future interpreting it. They can’t read the minds of the writers of the legislation or the politicians who pass the legislation at any one time. We have to be careful how to word it so it can’t be toyed with in the future.

Mr. Carter: Words mean something. The addition of the words “direct or indirect” compared to simply “you can’t support political parties” means something. Could it be better by removing the words? Yes, it could.

Senator Omidvar: Mr. Carter, you talked about this legislation being a turning point not just for charities but for public discourse in Canada.

We were warned last week that this legislation would open the floodgates of either right-wing money or left-wing money coming into the public sphere, creating a cacophony and noise. My question is not about the legislation but in your belief in our system and whether we have the resiliency to withstand these polarizing pushes and pulls on our deliberations.

Mr. Carter: The answer is, instead of my speculation or someone else’s speculation of what could be, if we take a look at the examples of what has happened over the last 10 years in the U.K., Australia and New Zealand, all common law jurisdictions that have allowed charities to be involved in unlimited involvement in political discourse, they have not encountered what you have just described. It has not been the experience in those jurisdictions.

Again, because we are dealing with specific words, the words are public policy dialogue and development in support of a charitable purpose. Canada Revenue Agency will have an opportunity to be able to explain what support means. What does furtherance of the charitable purpose mean? What do those particular terms of public policy dialogue and development mean? It will provide an opportunity for the regulator to provide context. Everything has to be focused on what? Achieving the purpose. These are only talking about activity, a means to an end.

Senator Omidvar: Thank you.

The Chair: Mr. Carter and Ms. DeSantis, thank you very much. This has been very helpful. I want to thank you for being here. I also want to thank you for your patience. Our viewers will not see this, but the start of this session was well over two hours late because of the goings-on in the Senate Chamber that required us to be there. Unlike the House of Commons, our committees are not allowed to sit when the Senate is sitting. That is why, when you watch Senate proceedings when they start to be broadcast in another two months, you will notice there are people in the seats in the Senate when debates are going on, whereas sometimes in the House of Commons, there are not as many because they are out at committee meetings.

I would encourage both of you as you watch our proceedings, if you see we have missed something, feel free to let us know via the clerk. If when you go home you say, “I should have mentioned this or that,” please feel free to do that as well, again via the clerk. He will then get it to us for our consideration. It will be part of our deliberations. Thank you.

(The committee adjourned.)