CRTC adds to CASL FAQ discussion of meaning of “primary purpose” to raise funds for reg. charities

July 05, 2014 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Canadian Charity Law, Ethics and Canadian Charities

The CRTC recently updated their FAQs to include a discussion of an exemption related to Canadian registered charities.   If a commercial electronic message (CEM) sent by a Canadian registered charity has the "primary purpose" of raising funds for the charity then that message will be exempt.  The CRTC definition of "primary purpose" is consistent with the ordinary meaning of "primary purpose" and not some other meanings that have been suggested by some.   The CRTC notes in their FAQ "The “primary purpose” of a CEM means the main reason or main purpose of the CEM. There could be a secondary or additional purpose to the message, but the principal purpose of the CEM must be to raise funds for the charity."  Some of the brief examples provided by the CRTC are not that clear.   

There is also a rather cryptic message from the CRTC "Given that legitimate messages sent by registered charities raising funds are exempt under the Act, the CRTC will focus on messages sent by those attempting to circumvent the rules under the guise of a registered charity."  I am not sure what "legitimate" messages are - perhaps they are referring to those that are exempt because their primary purpose is to raise funds for the registered charity. This seems to be an indication, perhaps, that when it comes to registered charities the CRTC will focus (perhaps 'primarily'!) not on those little charities who make a mistake when emailing but on those "attempting to circumvent the rules under the guise of a registered charity."  While this statement may be soothing for some the use of the word "focus" does not preclude actions against other registered charities.  

Perhaps the CRTC is concerned that some spammers may use registered charities as a way to send CEM. While that may be a legitimate concern I think it would have been better for the Federal government to exempt registered charities from the consent requirements and rather have the Charities Directorate deal with a few registered charities that may be manipulated by spammers.   Keep in mind that registered charity status is a privilege and not a right and people misusing charities for any number of reasons should not be shocked that they lose their registered charity status.  Obviously if a Canadian registered charity lost its charitable status it would no longer be entitled to rely on the primary purpose exemption.

The compliance costs of CASL for many registered charities will be significant and probably out of proportion to any benefit that the public receives.  Keep in mind that all that IT work is "administration".   I guess on the plus side CASL may make some charities think carefully about their email practices including adding unsubscribe features and in some cases cleaning up old lists and being careful how often they email people.  Of course many of the good charities have being doing this for years anyway.     

Here is the CRTC FAQ related to charities and I have highlighted the part relating to "primary purpose" raising funds for the registered charity below:

Registered Charities

Does section 6 of CASL apply to messages sent by non-profit organizations?

Yes, CASL applies to activities of non-profit organizations, such as sending commercial electronic messages (CEMs) and installing computer programs. However, there is an exemption under the Governor-in-Council Regulations for CEMs sent by or on behalf of a registered charity, as defined under the Income Tax Act, where the primary purpose of the CEMs is to raise funds for the charity.

Does section 6 of CASL apply to messages sent by registered charities?

Yes, section 6 of CASL applies to registered charities when sending commercial electronic messages (CEMs). However, there is an exemption under section 3(g) of the Governor-in-Council Regulations for CEMs sent by or on behalf of a registered charity, as defined under the Income Tax Act, where the primary purpose of the CEMs is to raise funds for the charity.

Given that legitimate messages sent by registered charities raising funds are exempt under the Act, the CRTC will focus on messages sent by those attempting to circumvent the rules under the guise of a registered charity.

When will a CEM sent by a registered charity be seen as having, as its “primary purpose”, the raising of funds for the charity?

The “primary purpose” of a CEM means the main reason or main purpose of the CEM. There could be a secondary or additional purpose to the message, but the principal purpose of the CEM must be to raise funds for the charity.

What are some examples where (a) raising funds is the primary purpose of a CEM? (b) raising funds is not the primary purpose of a CEM?

Where the primary purpose is raising funds:

Example 1: A CEM, sent by or on behalf of a charity, which promotes an event and/or the sale of tickets for an event – such as a dinner, golf tournament, theatrical production or concert or other fundraising event – where the proceeds from ticket sales flow to the registered charity.

Example 2: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or an upcoming campaign, and does not contain any material that seeks to encourage the recipient to participate in a commercial activity, then the message would not be a CEM for the purpose of CASL.

Example 3: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or an upcoming campaign, but which also contains a section which solicits donations and may also mention corporate sponsors who supported the charity (but does not encourage the recipient to participate in a commercial activity with that sponsor). While this message may be considered a CEM under CASL, the primary purpose of the message may be viewed as raising funds; therefore, the exemption in the GiC Regulations would apply.

Where the primary purpose is not raising funds:

Example: A registered charity sends, by e-mail, a newsletter which provides information about the charity’s activities or about a particular social issue. If this e-mail also advertizes the corporate sponsors of a charity’s event and encourages the recipient to participate in a commercial activity with that sponsor, then section 6 of the CASL may apply without any exemption. The primary purpose of the message may not be to raise funds for the charity.

Can registered charities rely on implied consent to send CEMs?

Yes, consent under CASL is implied if you have an existing business relationship or an existing non-business relationship with the recipient.

An existing non-business relationship, as defined under CASL, is created when a person makes a donation or gift to the registered charity, or performs volunteer work or attends a meeting organized by the charity. A registered charity would have implied consent to send CEMs to this person for two years following the event that starts the relationship (e.g. gift or donation made).

Also, under the section 66 transitional provision, consent to send CEMs is implied for a period of 36 months beginning July 1, 2014, where there is an existing business or non-business relationship that includes the communication of CEMs. During the transitional period, the definition of existing non-business relationship is not subject to the limitation period of 2 years mentioned above. Note however, that this three-year period of implied consent will end if the recipient indicates that they no longer consent to receiving CEMs.

For the full FAQ see the CRTC's "Frequently Asked Questions about Canada’s Anti-Spam Legislation":  

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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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