How Government Created a ‘Funnel’ to Target


The ques­tion I’m most asked about the audits of char­i­ties for their ‘polit­i­cal activ­i­ties’ con­cerns how Canada Rev­enue Agency could end up sin­gling out char­i­ties from the “pro­gres­sive” end of the polit­i­cal spec­trum, par­tic­u­larly envi­ron­men­tal char­i­ties work­ing on issues around var­i­ous aspects of energy policy.

How is it that the process has been politi­cized? Peo­ple won­der whether a cab­i­net min­is­ter told a senior CRA bureau­crat who to audit, and then it got passed down the line. That would be a clear vio­la­tion of the sep­a­ra­tion of admin­is­tra­tive tax­a­tion deci­sions from the polit­i­cal arm of government.

But it’s also the hard­est to prove, because a smok­ing gun would prob­a­bly involve a memo from a senior bureau­crat dis­cov­ered through a free­dom of infor­ma­tion request. Given how wrong it would be for a senior bureau­crat to fol­low such instruc­tions from a cab­i­net min­is­ter or polit­i­cal oper­a­tive in the Prime Minister’s Office (equally wrong as giv­ing such instruc­tions in the first place), it’s hard to imag­ine a min­istry offi­cial writ­ing about it.

So if that’s how the polit­i­cal inter­fer­ence is tak­ing place, it’s unlikely there would be a smok­ing gun. That said, it’s telling that some of the char­ity lead­ers I inter­viewed thought it pos­si­ble for this to hap­pen in the cur­rent polit­i­cal cli­mate. Per­haps trust is not high for the integrity of gov­ern­ment min­is­ters and senior bureaucrats?

The best expla­na­tion though, is what I’ll call the “Con­struct­ing the Fun­nel” approach to ensur­ing CRA tar­gets orga­ni­za­tions that have dif­fer­ent pol­icy pref­er­ences to those of the gov­ern­ment. Now, keep in mind that for this to work it does not have to be a con­scious, well-thought-out strat­egy. Whether very delib­er­ate or the result of a series of actions, the fun­nel gets con­structed and the char­i­ties get dis­tracted and muffled.

Step 1
Start­ing in 2012 and last­ing all the way to the 2014 fed­eral bud­get, fed­eral cab­i­net min­is­ters, with back-up com­ments from the Prime Min­is­ter, write and speak in pub­lic of char­i­ties in the same breath as money-launderers, crim­i­nal orga­ni­za­tions, and ter­ror­ist orga­ni­za­tions. Envi­ron­men­tal­ists are labeled “extrem­ists” under­min­ing Cana­dian fam­i­lies. Envi­ron­men­tal orga­ni­za­tions are added to the national ter­ror­ism strat­egy as poten­tial threats to secu­rity. CRA staff see this as surely as the rest of us and know who the gov­ern­ment is con­cerned about.

Step 2
In 2011, a polit­i­cal employee leaves the employ of fed­eral cab­i­net min­is­ter Jason Ken­ney to found Eth­i­cal Oil, an aggres­sive pri­vate non-profit that advo­cates on behalf of Canada’s petro­chem­i­cal sec­tor. The orga­ni­za­tion starts a web­site and files com­plaints to the CRA against energy-issue char­i­ties, accus­ing them of break­ing reg­u­la­tions con­cern­ing “polit­i­cal” and par­ti­san activ­i­ties. The oper­a­tive returns to Ottawa with a pro­mo­tion to the Prime Minister’s Office. Peo­ple with con­nec­tions to the Con­ser­v­a­tive Party con­tinue to run Eth­i­cal Oil.

Step 3
The 2012 fed­eral bud­get sets aside $8 mil­lion for stepped-up CRA audits of “polit­i­cal activ­i­ties” and other mat­ters, at the same time as other gov­ern­ment depart­ments get cuts in an aus­ter­ity bud­get that laid off approx­i­mately 2000 gov­ern­ment sci­en­tists and mas­sively reduced envi­ron­men­tal reg­u­la­tions and pub­lic con­sul­ta­tion processes. In dis­cussing the changes, Finance Min­is­ter Jim Fla­herty refers to cit­i­zen complaints.

Step 4
CRA now has the finan­cial resources to increase audits for “polit­i­cal activ­i­ties” and aims for 60 over three years. Staff check files to dis­cover which orga­ni­za­tions are declar­ing higher per­cent­age of resources devoted to “polit­i­cal activ­i­ties” (most char­i­ties are allowed up to 10 per­cent of resources, smaller char­i­ties up to 20 per­cent). These tend to be orga­ni­za­tions with dif­fer­ent ideas than the cur­rent gov­ern­ment about the best pub­lic poli­cies for Canada.

Step 5
CRA finds mul­ti­ple com­plaints from Eth­i­cal Oil in the files of orga­ni­za­tions that address envi­ron­men­tal and eco­nomic issues around cli­mate change, expan­sion of the oil sands or gas extrac­tion, pipeline and train trans­porta­tion, export by ocean tankers, and pro­tec­tion of habi­tat and species in Alberta and BC related to the above.

Inter­est­ingly, a Feb­ru­ary 6, 2014 news report by CBC quoted Alberta Con­ser­v­a­tive MP James Rajotte noted that he assumes CRA “receive all sorts of infor­ma­tion from all sorts of Cana­di­ans, in terms of who they should or should not audit.”

Step 6
Per­haps there are com­plaints from indi­vid­u­als or groups in the CRA files of char­i­ties in other sec­tors my data iden­ti­fied as targeted—development/human rights groups and groups with sig­nif­i­cant fund­ing from labour unions—or per­haps there are other yel­low or red flags that drew CRA attention.

Step 7
Char­i­ties with high self-declaration of “polit­i­cal activ­i­ties” and/or com­plaints are given early and par­tic­u­lar atten­tion for auditing.

The fed­eral gov­ern­ment has con­sis­tently denied that it either tar­gets indi­vid­ual char­i­ties or tells CRA to do so. In any case, three sec­tors are being tar­geted for audits. It seems that the gov­ern­ment has, unin­ten­tion­ally or by design, con­structed a fun­nel that increases the like­li­hood of audits focus­ing on groups that have dif­fer­ent ideas than the gov­ern­ment about pub­lic poli­cies, and are more likely to voice their dissatisfaction.

My fun­nel is derived from the com­ments of 16 char­ity lead­ers and five experts who par­tic­i­pated in my the­sis research on con­di­tion of anonymity, along with a sur­vey of lit­er­a­ture on the Cana­dian char­ity and vol­un­tary sec­tor. It is a rea­son­able expla­na­tion for explain­ing the tar­get­ing now being expe­ri­enced, and reflects the expe­ri­ences of char­i­ties, char­ity lawyers and for­mer gov­ern­ment staffers. As they say in the TV com­mer­cials, “Actual results may vary.” There’s no trade­mark on this fun­nel; feel free to share it.

Mean­while, please check out my Master’s the­sis and feel free to for­ward and tweet it. 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 com­mu­ni­ca­tions pro­fes­sional. I have earned a Web­ster Award of Dis­tinc­tion, among other awards, for my reporting.

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