With the Canadian election in full swing, Canadian registered charities need to be paying greater attention to their activities and whether any of them are “political activities”.
The rules for charities during an election are largely the same as when there is no election. However, there is increased scrutiny of anyone including charities engaging in political activities and charities also need to be aware of the registration requirements and spending limits under the Canada Elections Act for third-party election advertising if at all applicable.
There are three sets of rules that Canadian charities need to pay attention to and it is confusing because the concepts, definitions and requirements for each set of rules are different.
1. Income Tax Act
First there are the rules for Canadian registered charities conducting political activities that relate to the Income Tax Act (Canada) (“ITA”). These are found in the CRA Guidance CPS-022. Essentially, Canadian charities can only carry out political activities when they are related to their legal objects and utilize generally less than 10% of the resources of the registered charity. Also registered charities must scrupulously avoid partisan political activities. These rules only apply to registered charities. Here is a recent article entitled “Canadian Charities and Political Activities: Keeping room temperature in a chilly environment” that we wrote on the CRA rules. CRA has also placed a number of articles on Canadian charities and political activities on their website.
2. Lobbyist registration
Second there are the lobbyist registration requirements. The federal government, the provinces and certain municipalities require lobbyist registration when certain thresholds are met. For example, on the federal level if your charity has more than the equivalent of 1/5 of a full-time employee working on lobbying activities focused on the federal government when combining all staff time on such lobbying then you would need to register. You can visit the Office of the Commissioner of Lobbying of Canada if you want more information.
3. Third-Party Election Advertising
Third, once an election is called or the “writ is dropped” the Canada Elections Act (“CEA”) requires that organizations including charities that conduct certain third-party election advertising be registered with Elections Canada. The CEA restricts the amount that can be spent and imposes certain additional reporting requirements. This applies to entities, including charities, spending more than $500 during an election on election advertising. Elections Canada has a handbook on third-party election advertising.
What is election advertising?
Election advertising means the transmission to the public by any means during an election period of an advertising message that promotes or opposes a registered party or the election of a candidate, including one that takes a position on an issue with which a registered party or candidate is associated. [my emphasis]
Charities would be prohibited from most “election advertising” as they are mostly partisan activities. However, it is possible that some charities would be paying for advertising relating to certain issues where the charity “takes a position on an issue with which a registered party or candidate is associated” and therefore they may be covered by the CEA.
Just because a charity and a political party have the same or different position on a matter does not mean that the charity has to be quiet with respect to the issue. According to CRA “However, a charity in this situation must not directly or indirectly support the political party or candidate for public office. This means that a charity may make the public aware of its position on an issue provided: it does not explicitly connect its views to any political party or candidate for public office; the issue is connected to its purposes; its views are based on a well-reasoned position; public awareness campaigns do not become the charity’s primary activity.”
Not many charities have third party election advertising expenses and therefore few will likely be affected by the CEA. However, more likely the CEA may apply to an associated non-profit that is not a registered charity and that conducts election advertising and that associated non-profit may have to register.
Certain activities are excluded from the definition of election advertising under the CEA:
There is also an exception for certain election advertising that cannot be cancelled and that are planned and arranged before the writ is dropped but not later than a certain number of days before the election is held.
A large amount of political activities that are allowable for charities would not fall under the third-party election advertising rules. For example, charities can still meet government officials and elected representatives and this will probably be considered a charitable activity. Also, there is a list of exclusions as noted above.
If your charity wants to be involved with third-party election advertising or wants to do significant political activities then CRA suggests in CPS-022 that the registered charity may wish to set up an independent non-profit that is not a registered charity. Such a non-profit would have significantly greater flexibility in terms of political activities but it would not be entitled to issue official donation receipts.
Although I am an advocate for charities being involved in political activities, for charities that have not been previously involved in political activities, an election may not be the best time to get your feet wet.
If your charity will be involved in political activities whether before during or after the Federal election and you are concerned about compliance issues then discuss them with your legal counsel. Preventing compliance problems is easier than fixing them. Also when charities conduct political activities in contravention of the rules, it reflects poorly on the charity and the whole sector.
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. He can be contacted at firstname.lastname@example.org or at 416-361-1982. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca or www.globalphilanthropy.ca
This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.