This resource has been prepared by Nicholas dePencier Wright of Wright Business Law for educational purposes. This information is current as of the date of writing and does not constitute legal advice, which should be obtained prior to relying on anything herein.
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In Canada, registered charities play a vital role in addressing societal issues and advocating for change. However, their ability to engage in political activities is governed by a specific legal framework under the Income Tax Act and regulated by the Canada Revenue Agency (CRA). This article explores the rules surrounding political activities by charities, the historical context, and recent changes that have expanded the space for charities to engage in advocacy.
Defining Political Activities
Political activities refer to actions aimed at influencing public policy or laws at any level of government. These activities can range from public awareness campaigns to lobbying for legislative change.
Historically, Canadian charity law distinguished between:
1. Charitable Activities: Activities directly furthering a charity’s purposes, such as providing services to those in need.
2. Political Activities: Activities intended to influence public policy or legislation, previously restricted to a minor portion of a charity’s resources.
3. Prohibited Activities: Partisan political activities, such as endorsing or opposing political parties or candidates, which remain forbidden.
Historical Context: Political Activities and Advocacy
Before 2018, charities were permitted to engage in political activities as long as these activities were non-partisan and did not consume more than 10% of their resources (known as the “10% rule”). This restriction was widely criticized for limiting the ability of charities to advocate for systemic change in areas aligned with their missions.
In 2018, following a landmark decision in the Canada Without Poverty v. AG Canada case, the Federal Court struck down the 10% rule, citing it as an unconstitutional restriction on freedom of expression. The court emphasized the importance of advocacy in achieving charitable purposes.
Legislative Changes: Removing the 10% Rule
In response to the court decision, the Canadian government amended the Income Tax Act (Canada) in 2019 to provide greater flexibility for charities engaging in political activities. Key changes include:
1. No Limit on Political Activities: Charities can now engage in public policy dialogue and development activities (PPDDAs) without a quantitative limit, provided they are in furtherance of their charitable purposes.
2. Focus on Charitable Purpose: The emphasis has shifted to whether political activities are directly connected to and support the charity’s stated purpose.
3. Prohibition on Partisanship: Charities remain barred from endorsing or opposing political parties, candidates, or platforms.
Examples of Permitted Political Activities
Under the new rules, charities can engage in a range of activities, including:
• Conducting research and publishing reports to inform public policy.
• Meeting with government officials to advocate for legislative change.
• Running public awareness campaigns to highlight issues and mobilize community support.
• Participating in consultations or advisory committees on policy development.
The Line Between Advocacy and Partisanship
While the rules have been relaxed, charities must remain vigilant to ensure their activities are non-partisan. Examples of prohibited activities include:
• Endorsing a political candidate or party during an election.
• Criticizing or supporting political platforms in a way that could be interpreted as partisan.
• Using charitable resources to fundraise for political campaigns.
To maintain compliance, charities should avoid actions that could be seen as aligning with a specific political agenda or promoting partisan interests.
Best Practices for Charities
To effectively engage in political activities while adhering to legal requirements, charities should:
1. Define Their Charitable Purpose: Clearly articulate how political activities support their mission and objectives.
2. Document Activities: Keep detailed records of all advocacy efforts to demonstrate alignment with charitable purposes if audited.
3. Develop Non-Partisan Policies: Train staff and volunteers on non-partisan advocacy and ensure communication avoids partisan language.
4. Engage in Education: Focus on raising awareness and empowering stakeholders to make informed decisions, rather than directing them toward specific political outcomes.
5. Monitor Legislative Compliance: Stay informed about CRA guidelines and seek legal advice if uncertain about the permissibility of activities.
Best Practices for Charities
To effectively engage in political activities while adhering to legal requirements, charities should:
1. Define Their Charitable Purpose: Clearly articulate how political activities support their mission and objectives.
2. Document Activities: Keep detailed records of all advocacy efforts to demonstrate alignment with charitable purposes if audited.
3. Develop Non-Partisan Policies: Train staff and volunteers on non-partisan advocacy and ensure communication avoids partisan language.
4. Engage in Education: Focus on raising awareness and empowering stakeholders to make informed decisions, rather than directing them toward specific political outcomes.
5. Monitor Legislative Compliance: Stay informed about CRA guidelines and seek legal advice if uncertain about the permissibility of activities.
Challenges and Opportunities
Challenges:
• Balancing advocacy with operational demands.
• Navigating complex and evolving legal requirements.
• Avoiding the perception of partisanship, especially in polarizing political climates.
Opportunities:
• Amplifying the voices of marginalized communities and driving systemic change.
• Contributing expert knowledge and research to public policy debates.
• Building public trust and engagement through transparent advocacy efforts.
Conclusion
The ability to engage in political activities is crucial for charities striving to address root causes of societal challenges and influence systemic change. The removal of the 10% rule has created a more enabling environment for advocacy, allowing charities to dedicate resources to public policy work without fear of overstepping arbitrary limits.
By embracing their role as advocates, Canadian charities can contribute to shaping a more just and equitable society while remaining compliant with the legal framework. Through thoughtful, non-partisan engagement, they can drive meaningful progress on issues that matter most to their communities and the causes they serve.