Auditors from Canada Revenue Agency (CRA) showed up at the offices of PEN Canada just a few weeks after denying a request from PEN to see the criteria for the audit of advocacy activities by non-profit agencies. PEN Canada is a small charity that promotes freedom of expression. According to Jim Cresky, one of its directors, the salaries of the two auditors working on this file are probably higher than the group’s annual revenues. The limited staff time that PEN has will now be consumed in the petty details of an audit process that often includes reviewing internal memos and e-mails, but the organization refuses to be silenced. Donors have shown their support for PEN with increased giving. This is one more story in the tales of torment coming from charities caught up in the audit of advocacy activities in Canada. The audits are done by Revenue Canada Agency officials to ensure that charities have not crossed the vague and sometimes arbitrary lines between legitimate advocacy and political activity that imperils charitable status. The $13 million budget for this program comes from tax dollars.
Earlier this summer, the CRA forced Oxfam Canada to change its charitable purpose statement from “prevention of poverty” to “alleviation of poverty” because, according to government policy, preventing poverty is not a charitable cause. Yet given the documented evidence that poverty has negative health, social and economic impacts, one could argue that preventing it would be more charitable than waiting to offer help after harm has been done. Not so, say government officials, and their word trumps the donors to Oxfam who would like it to focus more attention on preventing poverty. But if Oxfam does what its donors want, it risks losing its charitable license. The organization was forced to comply with CRA’s demands.
Then there is the case of a small development agency forced to translate every memo from its Spanish-speaking partners in Latin America into French or English because the auditors demanded it. Is it just coincidence that the agency had previously raised questions about respect for human rights in the free trade agreement between Canada and Colombia? Cases like this create what is called “advocacy chill”: charities stop raising questions about current public policies because they fear losing their charitable license. Several public policy analysts have asserted that silencing critics of the government is the real motive behind this program.
This month’s news includes a public letter, signed by more than 400 academics, asking CRA to place a moratorium on this audit program. The letter was prompted by an audit of the Canadian Centre for Policy Alternatives (CCPA). It frequently questions current policies. Its high quality research, says the letter, is used in academic circles, and the letter pointed out that similar think tanks who tend to support current policies, such as the C.D. Howe Institute and the Laurier-MacDonald Institute, are not being audited. The question of bias in the program was originally raised when environmental groups who questioned pipeline proposals and oil sands subsidies were the first targets.
First CRA replied to questions of bias by saying that they do not analyze the content or political leanings of any group; later it justified the program by saying it targets groups across the political spectrum. But how does CRA know they are selecting targets across the political spectrum if they do not analyze and categorize the advocacy work of charities? Is it just coincidence that most of the audits are being done on environmental, human rights and poverty groups?
The audit program is officially justified as a way to protect taxpayer dollars. So far, however, $13 million dollars and three years of hassling more than a hundred small agencies have saved very little money. Meanwhile, donor’s dollars to charities are diverted from their goals to doing paper work for long, drawn-out, detailed audits, often lasting years before the charity gets final clearance. Donors have no voice in this; many of them want the charities under audit to do research and advocacy to advance the causes they support.
Outdated charity laws
During the same time period, the government stated that it is not investigating off-shore tax evasion because it does not have funds to do so. If saving tax dollars is the goal, say several commentators, the $13 million would be better spent catching tax evaders who divert millions to off-shore accounts while other Canadians dutifully pay their fair share. Still others point to the more generous tax credits given for donations to political parties, which can be used for things like personal attack ads and robocalls. It can be argued that these add less value for a healthy democracy than the research and advocacy of charities, which bring to light significant societal issues that are often ignored because they are not profitable or politically popular.
Some faith-based groups, such as the United Church and KAIROS Canada, are among those under audit. In May the Commission for Justice and Peace of the Canadian Council of Churches (CCC) asked the government to review this policy because justice and charity go together in a Christian approach to love for neighbour. Giving voice to the voiceless is charitable, said CCC, and should be allowed under the laws for charities.
Ironically, this audit program risks becoming a political issue itself. The state of democracy in Canada is gaining profile as a public concern, behind economic issues but increasingly named by voters as a matter of concern. A healthy democracy should encourage rather than stifle well-researched public policy discussion. Many other countries encourage charities to engage in advocacy. Public anger about using charity audits to attack and silence those who dare to question public policies may finally make clarification of Canada’s outdated charity laws a political priority.
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