Political Activities: What Fundraisers Need to Know

Transcription

1 WELCOME V A N C O U V E R C A L G A R Y E D M O N T O N S A S K A T O O N R E G I N A L O N D O N K I T C H E N E R - W A T E R L O O G U E L P H T O R O N T O V A U G H A N M A R K H A M M O N T R É A L

2 Political Activities: What Fundraisers Need to Know Andrew Valentine Nicole D Aoust V A N C O U V E R C A L G A R Y E D M O N T O N S A S K A T O O N R E G I N A L O N D O N K I T C H E N E R - W A T E R L O O G U E L P H T O R O N T O V A U G H A N M A R K H A M M O N T R É A L

3 Andrew Valentine Partner, Social Impact Group Acts for charities and not-forprofits Expertise in social enterprise and social finance Executive of Ontario Bar Association Charity and Notfor-Profit Law Section 3

4 Nicole D Aoust Associate, Social Impact Group Acts for charities and not-forprofits Editor, Social Impact Newsletter Contributing Editor, Canadian Tax Focus ndaoust@millerthomson.com 4

5 Overview 1. Why this topic? Implications for fundraisers 2. Background (2012 Present) 3. Differences between political activities, advocacy, and lobbying 4. Common issues and how to deal with them 5. Strategies and tips for ensuring compliance with the rules 6. How the rules could be clarified to give fundraisers more flexibility 5

6 Why this Topic? Implications for Fundraisers 6

7 Why this Topic? Restrictions on amount and type of political activities charities are permitted to carry on Restrictions apply to activities of volunteers, employees, and directors Fundraisers in Canada are: Leaders in the charitable community In constant communication with donors and members of the public Responsible for engaging and motivating people around a cause CRA audit risk Revocation of charitable registration 7

8 Background 2012 Present 8

9 Background: CRA Audits Since 2012, CRA has devoted significant resources to auditing charities for political activity News headlines: CRA targeting charities focused on foreign aid, human rights, and even poverty (The Toronto Star) Sierra Club latest environmental charity hit by audits (CBC News) Why CRA s crackdown on charities may be reasonable (Financial Post) Commentary: Stephen Harper s CRA: Selective Audits, Political Activity, and Right- Leaning Charities (Broadbent Institute) Canadian Charities and the Rules on Political Activity (R. Hayhoe and N. D Aoust) 9

10 Background: CRA Audits August 2015 CRA released Advisory on partisan political activities November 2015 mandate letter from Prime Minister Trudeau to Finance Minister, Bill Morneau Top priorities include working with the Minister of National Revenue, Diane Lebouthillier: to allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and non-for-profit sectors. This will include clarifying the rules governing political activity, with an understanding that charities make an important contribution to public debate and public policy. A new legislative framework to strengthen the sector will emerge from this process. 10

11 Background: CRA Audits January 2016 Minister Lebouthillier announced political activity audit program to be wound-down Confirmed in Budget 2016 Audit program update: 30 political activity audits completed (5 resulted in revocation) 24 more audits underway and scheduled for completion 6 remaining charities selected for audit not to be reviewed Dealing with audits resulted in significant costs to charities Of approx. 86,000 charities in Canada, approx. 500 report carrying on political activities on their annual information returns 11

12 Background: New Consultation September 2016 Minister Lebouthillier announced consultation process to explore CRA interpretation of political activity In-person meetings Panel will prepare report and make recommendations (early 2017): Marlene Deboisbriand (Boys and Girls Clubs of Canada, Imagine Canada) Peter Robinson (David Suzuki Foundation) Kevin McCort (Vancouver Foundation) Shari Austin (Former Executive Director, RBC Foundation) Susan Manwaring (Miller Thomson LLP, Pemsel Case Foundation) 12

13 Background: Charter Challenge Launched by Canada Without Poverty ( CWP ) in late August 2016 CRA began financial audit of CWP in 2011, expanded to political activities Constitutional challenge of the legislation: It clearly restricts free expression, which is contrary to the Charter. We think the government has to justify this restriction. (Leilani Farha, Executive Director) Restricts charity s right to freedom of association The restrictions are not demonstrably justified in a free and democratic society (section 1 of the Charter allows reasonable limits on rights) Tax benefits provided to corporations and individuals not contingent on limits 13

14 Political Activities, Advocacy, and Lobbying Understanding the Differences 14

15 Basic Rules Prohibited: Partisan political activities Permitted: Non-partisan political activities Within a range of 10% of a charity s annual resources Permitted: Charitable activities, including advocacy No limit on amount of resources devoted to charitable advocacy 15

16 Lobbying Lobbying is a specific activity generally defined as communicating with a public office holder in an attempt to influence (Ontario) or in respect of (Canada) legislation, regulations, policies, programs, privatization, outsourcing, grants or other financial benefits Lobbyist registration requirements Depending on the nature of communications, lobbying by charities can be: Permitted political activity; or Permitted advocacy Charities that are registered lobbyists may not carry on partisan political activity 16

17 Reasons for Restrictions Rules in the Income Tax Act (Canada) require charities: To be constituted for exclusively charitable purposes To devote all of their resources to charitable activities Charities established for the public benefit courts don t want to take sides in political debates, declaring one or the other view to be in the public benefit Tax-exempt status of charities Ability to issue charitable donation tax receipts 17

18 Prohibited Activities Charities may not take part in partisan political activities According to CRA a partisan political activity is one that involves direct or indirect support of, or opposition to, any political party or candidate for public office I.e., charities may not explicitly connect their views to any political party or candidate for public office What is partisan? Criticism of government policy? 18

19 Permitted Political Activities According to CRA, a charity may take part in political activities if they are nonpartisan and connected and subordinate to the charity s purposes (up to 10% of resources for most charities) CRA presumes that an activity is a political activity if a charity: explicitly communicates a call to political action (encourages the public to contact an elected representative or public official and urges them to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country) explicitly communicates to the public that the law, policy, or decision of any level of government in Canada or a foreign country should be retained (if the retention of the law, policy, or decision is being reconsidered by a government), opposed, or changed explicitly indicates in its materials (whether internal or external) that the intention of the activity is to incite, or organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country 19

20 Charitable Activities Advocacy includes public awareness campaigns and certain communications with elected officials that are needed to carry out the charity s mission Public awareness campaigns: Must be connected and subordinate to the charity s purposes; Must be based on a well-reasoned position, rather than information the charities knows or ought to know is false, inaccurate, or misleading; and Must not be undertaken using primarily emotive content Communications with elected officials (whether or not by invitation): Must be connected and subordinate to the charity s purposes; Must be based on a well-reasoned position (and submitted in a timely manner); and Must not contain information that the charity knows or ought to know is false, inaccurate, or misleading Communications that are made public must be published in their entirety 20

21 Takeaways Partisan political activities are prohibited Political activities are permitted, within a range of 10% of a charity s overall annual resources Resource limit increases for smaller charities Some averaging of resources permitted No limit on charitable activities, including advocacy Lobbying may involve political activity or advocacy (not partisan political activity) 21

22 Common Issues And How to Deal with Them 22

23 Common Issues Scenario 1: You meet with a prospective major donor and he or she likes to talk politics. It occurs to you that the donor would be encouraged to know there is a greater need to support the work of your charity given the current political climate. What are the potential issues? How should you approach this situation? 23

24 Common Issues Scenario 2: You are at an event and a donor introduces you to a City Councillor. You engage in a discussion with the donor and the Councillor about the work of your charity. The Councillor invites you to set up a meeting at his or her office to continue the discussion. What are the potential issues? How should you approach this situation? 24

25 Common Issues Scenario 3: You use social media as a means of connecting with work colleagues, existing and prospective donors. You retweet a post by an MP who supports a controversial government initiative that aligns with your charity s mission. It is unclear from your profile whether the account you are using is personal or professional. What are the potential issues? How should you approach this situation? 25

26 Common Issues Scenario 4: You have worked with the same charity for over 10 years and have built strong relationships with donors. You consider many donors to be your friends. In fact, you yourself are a donor. A donor invites you to attend a holiday party at her home. You share your personal views about the recent election and how the proposed changes will affect organizations like yours. What are the potential issues? How should you approach this situation? 26

27 Common Issues Scenario 5: Your organization s annual fundraising dinner is very well-attended and generates key donations. This year s keynote speaker is a candidate up for re-election in the next provincial election. The candidate is popular amongst your donors, given his position that more funding is needed to support social welfare organizations in the city. What are the potential issues? How should you approach this situation? 27

28 Strategies and Tips For Ensuring Compliance with the Rules 28

29 Strategies and Tips Familiarize yourself with the existing rules and stay current Hold education sessions, develop a policy Track political activities and know what s happening across your organization Consider whether your organization should be registered as a lobbyist Know whether your organization reports carrying on political activities to CRA Seek advice on how to achieve your organization s mission while remaining compliant with the rules 29

30 Need for Clarity To Give Fundraisers More Flexibility 30

31 Need for Clarity Lack of published commentary on how CRA interprets the rules Charities are generally fearful to engage in political activity, given the past audit program Need for new rules on partisan political activities: Under the current rules, any criticism of government policy can be construed as criticism of the government Rules in other jurisdictions 31

32 Conclusion 1. Why this topic? Implications for fundraisers 2. Background (2012 Present) 3. Differences between political activities, advocacy, and lobbying 4. Common issues and how to deal with them 5. Strategies and tips for ensuring compliance with the rules 6. How the rules could be clarified to give fundraisers more flexibility 32

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