For the past two years, the Canadian Revenue Agency (CRA) has been conducting “special audits” on charitable organizations in an effort to determine the extent to which these organizations engage in “political activity.” According to the federal government, in order for a non-profit organization to maintain charitable status, no more than 10 per cent of its resources can be used for any such activity. But even before asking the question of why 10 per cent (as opposed to five or even 20 per cent) is an acceptable threshold, these audits beg the more obvious definitional question: what constitutes political activity, and in what cases is philanthropy not political?
Oxfam, one of the charities added to the audit list in 2014, has been informed by the CRA that “preventing poverty” is not an acceptable goal for a registered charity, and that it constitutes political activity. The CRA has justified its position by stating that “relieving poverty is charitable, but preventing it is not.” This is a perfect example of the ambiguoty of the ‘political activity’ definition. Oxfam seeks to prevent poverty because our governments have failed to successfully address the issue – and it is hard to argue that, despite the possible political nature of this task, it is not a necessary contribution to society.
Arguably, philanthropic organizations are inherently political. By definition, these organizations exist because of, and to address an observed inadequacy or discrepancy in the services and information provided to Canadians through traditional government structures and mechanisms. In auditing charitable organizations, the federal government is limiting the capacity of these non-governmental organizations to fill what can amount to significant gaps in its own service provision.
These audits began in 2012 when then-Finance Minister Jim Flaherty announced that $8 million would be directed to the CRA for a series of “special audits” focused on charities for a period of two years. The initial targets of these audits were largely environmental charities, including Tides Canada, West Coast Environmental Law, the Canadian Centre for Policy Alternatives, Environmental Defence, Equiterre, and the Ecology Action Centre. The budget for special audits has since been expanded to $13.5 million over a span of five years, and the pool of organizations being audited has expanded to include anti poverty, foreign aid, animal welfare, and human rights organizations – including the afore-mentioned Oxfam. There are 52 audits in process; the CRA is expected to reach a total of 60 by 2016.
In the face of growing controversy, the CRA has maintained that the charities selected for audit are spread out both by geography and organization type, and ultimately are chosen for audit through random selection. Revenue Minister Kerry-Lynne Findlay has repeatedly stated that:
“No direction is provided to the arm’s-length CRA about which charities to audit, and the initiative is simply to provide accountability.”
Despite these claims, it is hard to believe that political targeting is not at play in audit selection, especially given that the environmental charities targeted in the initial round of auditing were those opposed to the Harper Government’s oil sands and pipeline policies. The series of audits also closely followed statements by Joe Oliver, then-Minister of Natural Resources, that certain environmental groups should be closely watched due to “radical agendas.” Similar, early in 2014, Flaherty stated:
“If I were an environmental charity using charitable money, tax receipted money for political purposes I would be cautious.”
While certain organizations such as ForestEthics and Physicians for Global Survival have already been stripped of their charitable status, for many others the process of being audited is long and inhibiting, and the threat of losing that status hangs heavy. Harvey McKinnon, a Vancouver-based fundraiser, has pointed out that these audits are both costly and stressful, and that the Harper government’s attack on non profits is an unprecedented “bullying tactic.” Many others have argued that the government is simply using the CRA as a weapon against its opponents, and as a means to further partisan priorities in advanced of the 2015 federal election.
Tim Gray, the director of Environmental Defense, has pointed out that the audit process is a “difficult space to operate in” for an organization with already limited resources. Environmental Defence, thus far, has spend over $100,000 in associated legal bills at the expense of the organization’s programming.
Gareth Kirby, an MA student at Royal Roads University, refers to the effects of the CRA’s special audits as the “advocacy chill.” His data, collected from interviews with employees at various Canadian charities, shows that the federal government is in effect muffling or silencing the contribution of charities to the public well-being — as well as healthy public debate — by distracting them and soaking up their resources through the auditing process.
Is it merely a coincidence that the same charities that openly oppose the Harper Government are those being audited, or has the neutrality of the “arms-length” CRA in fact been jeopardized by this special audits assignment? The growing number of audits point to the danger to dissent in the current political environment; and in doing so, they highlight a deterioration of Canada’s democratic system. By targeting charitable organization for political activity, an ambiguously-defined term at best, the federal government is in effect cutting off a vital service to society.
Arielle Mayer is a 2016 Master of Public Policy candidate at the University of Toronto’s School of Public Policy and Governance. She previously completed a Bachelors degree in Political Science and English Literature at the University of British Columbia.