I testified before the Standing Committee of Finance in Parliament October 27, 2014 about the findings of my Master’s thesis, Uncharitable Chill. Below is my testimony.
I’m here today to share with you the implications of the findings of my Master’s thesis. I interviewed 16 leaders of charities of various sizes, in five sectors, and five provinces. Also, 5 charity experts.
The leaders spoke, most on condition of anonymity, of the impact on their organizations of the threat of CRA audits for political activities, and the rhetoric of cabinet ministers since 2012 conflating charities with money-launderers, criminal organizations, and even terrorist organizations.
My study discovered that charities are being muffled in their communications and distracted from their publicly beneficial missions by these government actions.
Studies show most charities have less than 3% of their resources going toward “political activities” as seemingly defined by regulations. My data suggests that even those organizations targeted by CRA are on average well under the allowable 10% of resources devoted to political activities.
Clearly, there is no obvious problem that needs addressing through stepped-up auditing—the pre-2012 auditing regime was sufficient. Few charities exceed political activity limits as they are generally understood, a fact confirmed by how few charities have publicly been identified by CRA as being out of line. This beggars the question as to why the government would devote $13.4 million to beef up political activity audits, while, to use a recent example, reassigning auditing staff pursuing genuine criminals—tax evaders who shift their money to off-shore tax havens.
I found that the government is using the tax collector to fight partisan battles against charities that have different public policy preferences to the government. Researchers who have long studied the voluntary sector have since 2012 found evidence of politicization of CRA. I am not the first to warn that something is seriously amiss. My contribution is in detailing the effects on charities and national conversations and exploring some of the implications for the health of democracy.
I would suggest that the clearly unnecessary new political-activities audit program should be abandoned. Rather than finding a nest of cheating charities, this audit program is muffling and distracting charities from their Missions. Missions that their citizen supporters presumably want them focused on. Charities are experts in their Mission areas, and Canadians know that. The program is thus interfering with important national conversations about public policy choices, arguably at the very time in our history that we need the widest possible input from experts.
A democratic society needs to hear all sides of an issue. Why, my interview subjects kept asking, is our federal government afraid of vigorous national discussions? Some answered their own question, and that can be found in my thesis.
I’d like to raise another major issue that came to light in my research. The lack of clear definitions of specific terms in the regulations leaves charities confused and receiving different advice from different lawyers.
The examples posted on the CRA website for charities to apply to real-life situations, while acknowledging an improvement over the situation before 2002, are described by some charity leaders as “naïve” and “unhelpful.”
There are numerous “grey areas” open to too much interpretation. Allowing people to stay in a state of confusion despite years of feedback about vague definitions and illustrations, leads some to think that this is intentional. On top of that, some charity leaders believe that politicization of CRA since 2012, has resulted in these special audits using new interpretations of the regulations. Charities that have repeatedly passed previous, in-depth auditing, worry about results this time. That’s a head-scratcher.
Charities do important work that has historically had all-party support. This auditing program and the government’s confrontational rhetoric is not helping address society’s needs. And it is hurting all charities, including those beyond the targeted sectors.
Thank you for inviting me to present today.
Have you checked out my Master’s thesis? Feel free to forward and tweet it. Check out media coverage of my thesis findings and the national conversation it triggered. And you can follow me on Twitter: @GarethKirkby
I am a former journalist and media manager who recently completed my Master’s thesis for Royal Roads University and now work as a communication professional. I have been awarded the Jack Webster Award of Distinction, among others, for my reporting and editing.