Some of our readers have mentioned the difficulty of activism, with regard to seals and other animals, north of the border. In this report, lawyer Terry Berger explains why things are particularly rough for the Canadian advocate, and considers how activists might rally for change.
Charities have traditionally provided services that governments consider worthwhile — services that the governments themselves decline to provide. So governments try to extend charities a courtesy by exempting them from various taxes. But governments also traditionally protect property interests. What happens when charitable ideas and property interests collide?
In Canada, if a group has a negative view of a business profiting from the use of nonhuman animals, it stands to lose its charitable tax status. The Canada Revenue Authority (the “CRA” — akin to the United States’ Internal Revenue Service) has what is commonly called the 10% Rule. Simply put, the rule restricts charities to using no more than 10% of its resources on “political activities.” As one media advocacy group declares, “This limitation on a charity’s voice is more restrictive than practices in virtually any other developed democracy. Vibrant, informed, and genuinely open debate, and greater civic engagement on issues of public importance, will lead to innovation, better public policy decisions, more efficient use of public resources, and a healthier, stronger democracy in Canada.”
The 10% rule, as applied, has adversely affected organizations whose goals relate to nonhuman advocacy work. The overbreadth of the CRA’s rule lends itself to capricious government enforcement. It’s time to change this ill-conceived rule.
The significance of tax deduction
In Canada, not all contributions to non-profit organizations receive the same tax benefits. Only contributions to registered charities are tax-deductible. The registered charity designation is critical for many contributors. Charitable status allows an organization to collect donations and issue tax-deductible receipts to donors. Many large foundations are restricted by their own charters to giving money only to charitable organizations, not simply those that are non-profit.
The English tradition
Canada’s laws regulating charities are rooted in a 400-year-old edict known as the Statute of Elizabeth. This Statute identified what purposes, for its time, were to be considered charitable. The law permitted special treatment to those who offered relief to society’s marginalized citizens or who supplied services the government deemed beneficial, such as
the relief of aged, impotent, and poor people; the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars of universities; the repair of bridges, havens, causeways, churches, sea banks and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; marriages of poor maids; supportations, aid and help of young tradesmen, handicraftsmen and persons decayed; the relief or redemption of prisoners or captives and the aid or ease of any poor inhabitants...”
In 1917, the English House of Lords, traditional bunch that it was, held that an organization created for the purpose of changing the law could not be a charity. From this holding, Canada derived its current law prohibiting charities from having a political purpose.
Clarified or confounded?
In 1985, Canada’s Federal Court of Appeal attempted to clarify these limitations and held that some political activities were permissible so long as they are “incidental” to the charity’s main function. This is the origin of the 10% rule.
The following year, Canada’s federal Income Tax Act was amended in an apparent attempt to clarify that holding. The law now states that charitable organizations can engage in political activities if they are “ancillary and incidental to its charitable activities” and they don’t (even indirectly) support or oppose any political party or candidate for public office. The CRA regulations adopted the 10% figure as being the cap of what is considered “ancillary and incidental” and that amount has since been accepted by courts as well. This still leaves us with the threshold question: what activities do the CRA consider political?
The courts have, with a broad stroke, established that activities which are designed essentially to sway public opinion on a controversial social issue are not charitable, but political. These types of activities include publications, conferences, media advertisements designed to attract interest in a political position, public meetings or lawful demonstrations organized to publicize and gain support for a point of view on matters of public policy, and requests by a group to its members or the public to write to the media and government expressing support for specific views. It is easy to see why registered charity groups might tremble. These “limitations” cover virtually all activities in which any charity may engage. Whose charitable status will the CRA revoke next?
And then, to muddy (or pollute) the waters even more, the CRA issued Summary Policy A04 that states, in part, that “some forms of advocacy can be charitable — for example, to advocate in order to change people’s behaviors — while others are unlikely to be charitable: for example, to advocate to change people’s opinions. This leaves the CRA the authority to determine which is which. How does an organization advocate changing people’s behaviors without first changing their thoughts that prompted those behaviors? Canada’s policy seems to accept the premise that if people act without thinking, it is acceptable; but if they think before acting, it is likely not acceptable.
As you see, the restricted activities are so broadly defined that it is impossible for a charity to be sure it has reasonably complied. And this doesn’t even take into account the impossibility of determining whether those “political activities” comprise less than 10% of the charity’s resources. The CRA has no written policy to guide its employees or guide charities in calculating that ten percent figure. Is it 10% of hours worked by employees? Is it 10% of money spent? 10% as calculated over what length of time? Charities are left without the benefit of knowing how CRA calculates this nebulous figure.
And recall too that the 10% figure only relates to “controversial social issues.” So now we have the CRA determining which social issues are “controversial” and which are not. Charities are in a Catch-22 situation: if they succeed in educating the public about an issue, thus initiating informed open public discussion, will the CRA then consider the heretofore non-controversial issue to then be controversial?
A chilling effect
So why haven’t pro-animal charities voiced displeasure with 10% rule? Nancy Zylstra of the Charity Action Team in Ottawa explains that “it’s difficult to attract vocal support because of a fear of intimidation or legal action from hunting clubs.” Charities hesitate to back up the Team’s work, “because they don’t want to attract attention to themselves for fear of becoming a target for possible government delisting.” The government has also removed the charitable status from pro-choice groups, amongst other progressive groups, contending their work reflects political activity by only advocating one side of an issue.
Not long ago, the CRA pulled the charitable status of the anti-logging group Friends of Clayoquot Sound in British Columbia after over 20 years of rainforest advocacy. An organization called Charity Watch — reported to be run virtually single-handedly by Toronto agitator George Barkhouse, who is, in turn, supported by the gun lobby — filed a complaint with the CRA against the Friends of Clayoquot Sound, demanding an audit. The Friends had cleared audits before, but this time was different. “We were a bit naïve,” says Valerie Langer, one of the organizers of the Friends of Clayoquot Sound. “We thought they were auditing us to check our books, in fact we got audited to check our activities. It’s pretty hard not to be political in these times. You’re allowed to give a person a crutch but if you advocate for a safer work place then that’s considered advocacy and not within the Charities Act.” Barkhouse next targeted the Schad Foundation, a charity that helped end spring bear hunts ended in Ontario and B.C. “By the time I get finished with the Schad Foundation, they’ll be wishing that they never got involved in the first place,” Barkhouse wrote on an Internet site called “Hunt Action.”
Meanwhile, the government has granted charitable status to hunting groups and groups that espouse anti-environmental agendas. According to the Charity Action Team, “many of these groups have adopted names that make them sound like pro-environmental groups… [T]hese anti-environmental groups cloak themselves in government-sanctioned subterfuge.” A Charity Action Team report to the revenue agency named 12 pro-hunting organizations and fishing lodges that have been granted charitable status yet do not appear to comply with the standards detailed in their applications. According to Anita Krajnc, one of the report’s principal investigators, after a full year of receiving continuous “No comments” from the CRA, the Charity Action Team went public with the report, generating substantial news coverage throughout Canada. Still, according to Krajnc, the CRA refuses to comment on any action it has taken against any organization named in the report.
Silencing the Fur-Bearer Defenders
One of the oldest non-profit organizations in Canada to be the victim of CRA’s status-yanking is the Fur-Bearer Defenders, a Vancouver-based organization working against the trapping of mammals. The group had its charitable status stripped in 1999 after nearly fifty years of working against the fur industry. The CRA claimed its political activities — working against the fur industry to ban trapping — were not permitted.
“It is most unfair,” said George Clements, co-founder and director of Fur-Bearer Defenders. “We’ve lost a lot of members; up to one-third,” Clements said from Vancouver in a telephone interview. “We’ve lost thousands and thousands of dollars because we lost our charitable status. We’ve lost money not just from charitable foundations but also lost a large amount of small contributions. People don’t want to contribute to an organization that’s not charitable.” Clements explained that CRA alleged that “we were registered ’incorrectly’ in 1953 as our group does not provide ’both sides of the issue’. We were told five years before they yanked our status that we risked losing it if we continued speaking out against the nation’s fur industry. It’s all about money.” Indeed, the fur industry accounts for $800 million of the Canadian economy and provides employment for over 85,000 people. The Fur-Bearer Defenders, on the other hand, as a charity, brought in no tax dollars and employed relatively few individuals — relying mostly on volunteers.
The 10% Rule: a dubious legality
The 10% rule runs contrary to Section 2(b) of Canada’s Charter (similar to the U.S. Constitution upon which all other laws in the country must comport) which gives every Canadian certain fundamental freedoms including the “freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication.” Further, the 10% rule benefits big-business and stifles the voices of the public interests. It is important that governments and its citizens receive information and ideas from a variety of perspectives and sources, not just from those who can afford to buy the attention of others.
What’s a group to do?
If the 10% Rule is silencing groups or placing such an undue burden on them that they cannot fulfill their charitable mission, arguably a logical action is to give up the charitable status and take on the issues with lesser resources and challenge the Rule’s legality. Surely, accepting the status quo is hindering progress. Using the Rule as an excuse for failing to zealously and vigorously advocate for the protection of nonhuman animals and their habitat will result in mundane and unenthusiastic campaigns lacking the necessary public support. Only with public support will the government stop acquiescing to big money.
What can the activist do?
Friends of Animals will continue to keep members up-to-date on our interventions in the Canadian seal hunt from our southern side of the border. Watch this space for more. Meanwhile, if you think Canadian law needs to be changed to allow charitable organizations to speak out, don’t wait — the seals and other animals can’t.
Write, email or fax:
The Right Honorable Pamela Wallin
Consulate General of Canada
1251 Avenue of the Americas
New York, NY 10020-1175
(212) 596-1628 (tel)
(212) 596-1790 (fax)
Prime Minister’s Office
Right Honorable Paul Martin
80 Wellington St.
Ottawa, Ontario, K1A 0A2 CANADA
(613) 941-6900 (fax)
Contact the Canada Revenue Agency and demand immediate audits of the questionable “charities” covered on Charity Action Team’s (CAT) report “Conservation or Contradiction: Should Hunting and Fishing Clubs Have Charity Status?”
Canada Revenue Agency
Ottawa ON K1A 0L5
1-800-267-2384 (English) or 1-888-892-5667 (bilingual)
(613) 954-2586 (Fax - Director General’s office)
Here are some examples of questionable registered charities, which are frequently engaged in exploiting nonhuman animals rather than displaying charitable motives:
- Alberta Fish and Game Association
- British Columbia Wildlife Federation
- Canadian Wildlife Federation
- Ducks Unlimited Canada
- Federation of Anglers and Hunters Ontario (OFAH)
- Manitoba Wildlife Federation
- New Brunswick Wildlife Federation, Inc.
- Newfoundland and Labrador Wildlife Federation
- Nova Scotia Wildlife Federation
- Ontario Wildlife Foundation
- Prince Edward Island Wildlife Federation
- Saskatchewan Wildlife Federation
We urge individuals living in Canada to call and ask your MPs what they are doing to change this law. (Copies of electronic replies are appreciated. Contact TerryBerger@FriendsofAnimals.org)