What's Good Isn't Necessarily
Charitable
One of the themes of this column is the disparity between
what most people consider charitable and its legal meaning. It
is Revenue Canada's unfortunate lot in life to be the keeper
of the legal gates. For many years, trying to find out Revenue
Canada's position on basic questions about charity has been a
sophisticated shell game. Just when you think you know where
the pea is located, the shells are expertly reshuffled.
A recent Revenue Canada publication goes a long way to change
that situation. RC4107 (Draft for public comment) Registered
Charities: Education, Advocacy, and Political Activities reviews
the Department's position on the meaning of education, advocacy
and political activities. And while many will be surprised at
what they read, with this information now clearly and publicly
available (http://www.rc.gc.ca/ ~dwdrink/rc4107ed.htm), no one
should be surprised if an application to register as a charity
is refused.
The draft explains the guidelines provided by the courts and
the Income Tax Act that Revenue Canada follows to decide
whether
· an organization's activities advance education in the
charitable sense; and
· an organization's advocacy and political activities
are acceptable.
What Kind of Education Is Charitable?
The Draft says, [t]he courts consider an activity as educational
in the charitable sense if it involves formal training of the
mind or formal instruction, or if it improves a useful branch
of human knowledge. Several examples are provided:
· establishing and operating schools, colleges, universities,
and other similar institutions;
· establishing academic chairs and lectureships;
· providing scholarships, bursaries, and prizes for scholastic
achievement;
· undertaking research in some field of knowledge (the
research must expand knowledge in that field, and the results
must be made available to the public).
The draft then examines a critical question: can simply providing
information be charitable? The short answer is no. The draft
observes, "[t]here is an important difference between educating
people in the charitable sense, and simply informing them. The
courts do not consider it educational to offer general and selected
information and opinions that do not contribute to a full examination
of a subject, since it lacks the necessary degree of training
or instruction." To be educational, an activity must be
more than merely presenting information. Education in the charitable
sense, as understood by Revenue Canada, involves some structure
and extensive analysis of a subject to encourage informed discussion
and debate. An organization that does nothing else except provide
information can only register as a charity if its activities
qualify as charitable in a category other than the advancement
of education.
But What of Advocacy and Politics?
The draft identifies four examples of advocacy:
1. To advocate on behalf of individuals - Revenue Canada usually
considers advocacy to be charitable when it involves helping
individuals in need.
2. To advocate on behalf of a group - On the other hand, advocating
the interests of a group is rarely charitable since a charity
exists for the benefit of the whole of society, not just narrow
sectional interests.
3. To advocate in order to change people's behaviour - In a similar
fashion to advocacy on behalf of a group, organizations sometimes
engage in advocacy in order to change people's behaviour. In
this context when Revenue Canada examines eligibility for registration,
the key question is most often whether their advocacy takes the
form of a well-rounded, reasoned presentation of the facts, or
whether it is instead based on slanted, incomplete information,
and an appeal to emotions.
4. To advocate in order to change people's opinions - Finally,
in Revenue Canada's view, advocacy can also be directed towards
convincing others to change their opinions. This type of advocacy
is unlikely to be charitable.
In Reprint 4 of this series, Definitions of Not-for-Profits and
Charities, we looked at the Federal Court of Appeal's decision
in Human Life International Inc. In that case the court reviewed
the law relating to political activity. This draft confirms the
views expressed in that case, but goes on to raise and deal with
a very interesting - and until the publication of this draft
- unanswered question: are all contacts with the government necessarily
political? It is worth quoting the draft at length:
"Not every activity touching on government or public opinion
is necessarily political. When a charity shares its views, knowledge,
and expertise with others in order to allow a full and reasoned
consideration of an issue, and not in order to sway public opinion
or to bring pressure on a government, its actions can constitute
charitable activities rather than political ones. Moreover, expressing
an opinion on an issue, at the invitation of a government body,
would also be considered part of the organization's charitable
activities. Nor would we consider conducting day-to-day business
with government agencies to be a political activity (e.g., a
hospital preparing reports for officials of a ministry of health).
For the purposes of the next section, we call these types of
activities 'government-related charitable activities'."
The importance of the next section is the statement that while
charities cannot use the amounts they devote to political activities
to help them meet their disbursement quota (within the allowable
10% rule). "Government-related charitable activities"
can be used to meet the quota, assuming they are not purely administrative
in nature.
RC4107 Registered Charities: Education, Advocacy, and Political
Activities is an important publication. Important for the
fact that it was published, as well as for what it says. All
charities should get a copy and review it carefully.
Laird Hunter is a lawyer with the firm Worton & Hunter
in Edmonton, Alberta
