Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities
Imagine Canada has put out a very interesting report on a survey of Canadian charities and their answers relating to political activities. The Sector Monitor report is prepared by David Lasby of Imagine Canada and is well worth reading. One of the conclusions was "Likelihood of reporting negative effects increased with intensity of engagement in public policy. However, while negative effects are common, this does not appear to have resulted in decreased engagement in public policy."
Apparently 78% of Canadian registered charities reported that the increased scrutiny by CRA had no effect in curtailing their involvement in public policy activities. Also "The percentages of charities reporting public policy activities did not change significantly between 2010 and 2015, nor did the frequency with which they reported engaging in these activities."
This report also confirms my concern that the real problem is not the perhaps 20 charities who are spending more than 10% but the thousands of charities spending almost nothing on political activities who should be engaged in political activities and spending significantly greater resources on allowable political activities. Unfortunately with all the bandwidth taken up by discussions around changing the rules there will be little time to deal with real issues that charities actually have some direct control over like allocating more resources, using better GR practices, being more aware of the existing rules, etc..
Here are some of the highlights contained in the report with my comments in square brackets and italicized:
Some general comments:
1) These sort of voluntary surveys probably obtain greater feedback from those most motivated by the issues at hand so the results may be indicative to some extent of groups that have a passionate view on the subject. Still it yields some interesting data and perspectives.
2) The report notes "As part of the rules around engagement in public policy activities, charities are required to report their political activities on the T3010 Registered Charity Information Form they must file annually with CRA. Comparing survey responses to charities’ T3010 filings, it is clear that political activities are significantly under-reported. Overall, while 31% of survey respondents engaged in political activities, just 3% of survey respondents reported political activities on their previous year’s T3010 return. Looking specifically at survey responses and reporting of individual respondents, just over nine in ten charities (92%) reporting political activities on the survey did not report them on their T3010 return."
3) Apparently small and big charities are more likely to correctly report political activities than medium size charities!
4) The report notes "Finally, about 1% of charities reported that they had experienced some form of active scrutiny from CRA, up to and including audits. This required significant amounts of additional staff time and frequently professional services from accountants and lawyers." That number is low when one thinks of all the thousands of charities that have changed their objects over the last few years (which results in CRA asking questions about activities) or the 4000 or so charities that have faced regular audits and the 60 who faced audits under the political activities audit.
5) The report notes "Likelihood of experiencing the chill does not appear to vary much according to organizational characteristics of charities. The major exception to this general statement is that Quebec charities were substantially less likely to report negative effects than charities in the rest of Canada (see Figure 11). There is very little statistically significant variation by any of the other organizational characteristics included in the survey. Interestingly, once one controls for higher and lower levels of engagement in public policy activities, organizational size (as measured by annual revenues) appears to have mediating effects, in that larger organizations were actually somewhat less likely to report negative effects of the increased scrutiny. We suspect this is driven by larger organizations having a better sense of the rules around public policy activities and being better resourced to respond to potential negative effects." [Is Quebec not the most progressive province? You would think that their progressive charities would have felt greater scrutiny - whether it was there or not. These sort of questions remind me about the public's perception of crime. It has little to do with actual crime and lots to do with media coverage and scare mongering]
6) On page 19 of the report it notes "Compensating for the methodological changes from 2010 and looking at the comparative subset of respondents, there appears to have been very little change in the level of engagement in public policy over time, at least among the populations of charities looked at. Once methodological differences are adjusted for, the percentages of charities engaging in public policy in 2010 and 2015 are virtually identical (76% 2010; 77% 2015), as are the percentages of organizations engaging in charitable (73% both years) and political (39% 2010; 35% 2015) activities (see Figure 12)." [Not much of a chill going on here. Thankfully all the Harper cronies combined with a few environmental and other organizations could not do enough of a job of scaring Canadian charities into believing that it is very dangerous for a charity to conduct political activities. The voices of moderation calling for charities to be engaged in political activities but to do so within the rules seemed to have won out in the end.]
7) "Looking at specific activities, the overall picture is very similar, with virtually no indications of statistically significant changes in the percentages of charities reporting each activity (see Figure 13). The only exception is a slight increase in the percentage of charities reporting hosting an all-candidates meeting (9% of charities in 2015 vs. 6% in 2010), which can easily be attributed to the 2015 survey being fielded immediately after the longest Federal election campaign in modern history. Overall, there is no evidence of a shift in the number of charities carrying out charitable or political activities, at least amongst the charities surveyed." [my emphasis]
8) Turning to look at measures related to intensity of engagement in public policy, our findings closely parallel the pattern above, in that there are no statistically significant differences in how frequently charities reported engaging in either charitable or political activities between 2010 and 2015. Similarly, the percentages of charities that reported involving each specific level of government in their activities are essentially identical, both with charitable and political activities. What is different since 2010 is that some barriers to engaging in public policy appear to have increased. Probably the most important is concern about violating the rules for charities around public policy. Since 2010, the percentage of charities identifying this barrier as very or somewhat important has increased from 56% to 64% (see Figure 14). Charities are also more likely to report they lack the skills required to engage in public policy (from 55% in 2010 to 62%) and a lack of relevance of public policy activities to the organization’s cause (39% to 48%) as barriers. Other barriers have either not seen statistically significant changes or, as in the case of concern about losing corporate support, have receded somewhat (from 56% in 2010 to 51%). [my emphasis]
9) In the summary Imagine Canada notes "From the survey results presented above, it seems clear there are a considerable number of charities active in the public policy sphere. In fact, the number is so large—representing two thirds of charities —that engagement in public policy should probably be considered the norm for charities. Contrary to common assumption by the public and policymakers, public policy is not something practiced by a small number of charities intentionally executing specialized strategies that emphasize government relations. Instead, survey responses show that most charities are active in public policy as an adjunct to their day to day activities. They engage in only a few sub-activities and they do so relatively infrequently. Rather than being active primarily at the Federal level, where most public attention has focussed, charities are more likely to engage provincial and municipal governments. And finally, rather than seeking to drive the policy agenda and dramatically reshape it to their ends, they seek primarily to inform."
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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.