Charity Leaders See Need for Fair Audits, but That’s Not What They See Happening

July 31, 2014 No comments Article
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In his col­umn July 28 in the Finan­cial Post, Ter­ence Cor­co­ran let fly spit­balls at Mar­garet Atwood, PEN Canada, and “left­wing” jour­nal­ists and writ­ers over their con­cerns about the politi­ciza­tion of Canada Rev­enue Agency by the cur­rent fed­eral government.

Corcoran’s always been a fun read and he has the integrity as a com­men­ta­tor to make it clear where he’s com­ing from polit­i­cally and eco­nom­i­cally. But his attempt to paint those ques­tion­ing excesses of the cur­rent government’s approach to char­i­ties and civil soci­ety orga­ni­za­tions as left­ist whin­ers seek­ing a free ride from gov­ern­ment is a step too far.

My inter­views with 16 lead­ers of five char­ity sec­tors, in five provinces, revealed not one who thought they ought be fully unre­strained. They accepted they owe the pub­lic finan­cial and pro­gram­ming account­abil­ity in exchange for the tax receipt­ing ben­e­fits char­i­ties receive. Most orga­ni­za­tions had repeat­edly been through audits of var­i­ous kinds, from the basic finan­cial audits to the pro­gram­ming audits that include the organization’s pur­poses and polit­i­cal activ­i­ties. Some, but not all, had been through, and passed, three or four such audits over the decades.

Some specif­i­cally noted that going through gov­ern­ment audits on top of their own inter­nal audits is an oppor­tu­nity to improve their inter­nal account­ing, track­ing, man­age­ment, and staff-training processes, and can result in tweaks to improve their effi­ciency. Even in prepa­ra­tion for the cur­rent round of government-mandated tar­get­ing for polit­i­cal audits, the orga­ni­za­tions saw ben­e­fits in improved processes and set­ting up inter­nal peer-training programs.

Some even dis­cov­ered that their “polit­i­cal activ­i­ties” were sig­nif­i­cantly less, in fact, than they had pre­vi­ously been report­ing to CRA and their boards had responded by order­ing increased polit­i­cal activ­ity to improve their effec­tive­ness in con­tribut­ing to pub­lic con­ver­sa­tions con­cern­ing pub­lic pol­icy. Per­haps not what the cur­rent gov­ern­ment intended, but then per­haps the cab­i­net didn’t actu­ally real­ize how few resources most char­i­ties spend on polit­i­cal activities—they’re allowed 10 per­cent of their resources, but most spend between zero per­cent and five percent.

So, in a very real way, the government’s audit­ing is not likely to find many char­i­ties in violation—unless the inter­pre­ta­tion of reg­u­la­tions and def­i­n­i­tions are under­go­ing change as some char­i­ties believe it is. Despite these pos­i­tive spin-offs from prepar­ing for audits, should they have been dis­tracted in the first place? One is left won­der­ing why these audits are deemed nec­es­sary, and why now, along with accom­pa­ny­ing rhetoric por­tray­ing char­i­ties as some­how doing some­thing wrong, crim­i­nal, or even seditious.

One char­ity lawyer I inter­viewed sug­gested the gov­ern­ment does not need to take away char­i­ta­ble sta­tus from orga­ni­za­tions that it dis­likes for the audits to be effec­tive. The fear that is lead­ing to char­i­ties muf­fling their com­mu­ni­ca­tion and being dis­tracted from their mis­sion activ­i­ties in prepa­ra­tion for audits is the actual goal. In other words, quiet down and keep busy those char­i­ties whose pol­icy ideas—particularly around expan­sion of the oil­sands, pipelines, ship­ping, etc—are con­trary to those of the gov­ern­ment while those poli­cies and project approvals are firmed up.

CRA says it is not choos­ing polit­i­cally which char­i­ties to audit for polit­i­cal activ­i­ties. But the gov­ern­ment has cre­ated a fun­nel that guides CRA to char­i­ties more likely to oppose the cur­rent government’s poli­cies (i.e. that have high polit­i­cal activ­ity lev­els com­pared to other char­i­ties) and have drawn com­plaints from orga­ni­za­tions such as Eth­i­cal Oil, a pro-petroleum advo­cacy group.

Mean­while, Ter­ence Cor­co­ran speaks of those who ques­tion or write about the politi­cized audits as left-leaning “sensation-mongering writ­ers, jour­nal­ists and envi­ron­men­tal activists.” Cute, but how about such right-wing and libertarian-right com­men­ta­tors as The Globe and Mail’s Mar­garet Wente and The Van­cou­ver Sun’s Don Cayo, who have sug­gested the Harper gov­ern­ment cut it out and warned that this tar­get­ing is a dan­ger­ous prece­dent that could be used by future gov­ern­ments to clamp down on right-leaning orga­ni­za­tions? Wente and Cayo may be sen­sa­tional (and a good read, like Cor­co­ran) but they’re far from leftist.

Cor­co­ran also notes that Fraser Insti­tute has under­gone three audits in 40 years. Some in the sec­tor believe that the Fraser Insti­tute recently under­went an audit, but that it was a tra­di­tional finan­cial and receipt­ing audit rather than a “pur­pose” and “polit­i­cal activ­i­ties” audit of the kind directed in 2012 by the fed­eral gov­ern­ment. If that’s inac­cu­rate, per­haps the Fraser lead­er­ship would help set the mat­ter straight?

So far, there do not appear to be any right-leaning orga­ni­za­tions being tar­geted for political-activity audits. Nor should there be. Nei­ther for right-leaning nor pro­gres­sive organizations—other than the 800–900 annual ran­dom audits or audits trig­gered by a seem­ing prob­lem at an indi­vid­ual organization.

Mean­while, please check out my Master’s the­sis and feel free to for­ward and tweet it. And you can fol­low me on Twit­ter: @garethkirkby

NOTE: I have made minor gram­mat­i­cal tweaks to the orig­i­nal version.

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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Blame Harper, not CRA, for Audits but Don’t Target Rightwing Charities

July 26, 2014 No comments Article
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Sorry for the blog length, but I think you’ll find this one inter­est­ing and thought-provoking.

In rapid suc­ces­sion we’ve heard from Chris­t­ian char­i­ties announc­ing that their sat­is­fac­tion with the fed­eral government’s audit pro­ce­dure, Canada Rev­enue Agency deny­ing that it is being used by the cur­rent gov­ern­ment to tar­get char­i­ties crit­i­cal of gov­ern­ment poli­cies, and a colum­nist call­ing for audit­ing of right-leaning char­i­ties to even the score.

It’s great to see a national con­ver­sa­tion about the politi­ciza­tion of the CRA’s audit­ing. But if I may, I’d like to take a dif­fer­ent tack on this. The real issue that most char­ity lead­ers and some experts I inter­viewed for my the­sis is not with CRA staff. They acknowl­edged that those work­ing at CRA are decent, pro­fes­sional, ded­i­cated employ­ees doing their best to keep focused on their respon­si­bil­i­ties. (There are some related issues with CRA that emerged in my research, but more about that in a future blog.) And not one char­ity leader spoke against the need for audit­ing char­i­ties, rec­og­niz­ing the prin­ci­ple that the tax ben­e­fits they receive cre­ate an oblig­a­tion to society.

So it’s wrong-headed to focus on CRA itself in the mat­ter of stepped-up ‘polit­i­cal activ­i­ties’ audits and the three cat­e­gories of charities—all of them rel­a­tively ‘progressive’—being tar­geted: envi­ron­men­tal, development/human rights, and those with sig­nif­i­cant fund­ing from labour unions.

The issues for the lead­ers are: who is get­ting audited, why, why this tim­ing, what are the effects and impli­ca­tions for char­i­ties and society?

Atten­tion needs to be on the gov­ern­ment, not the tax man. The gov­ern­ment has cre­ated a fun­nel that leads CRA staff to focus their atten­tion on cer­tain sec­tors. By allo­cat­ing addi­tional audit funds to CRA while other gov­ern­ment depart­ments saw cut­backs, by des­ig­nat­ing those funds for ‘polit­i­cal activ­i­ties,’ by speak­ing pub­licly about the need for CRA to respond to pub­lic com­plaints, the gov­ern­ment cre­ated a fun­nel that led CRA audi­tors to char­i­ties with rel­a­tively higher self-reported ‘polit­i­cal activ­i­ties’ (which are per­fectly allow­able up to 10% of the organization’s resources when done prop­erly) and char­i­ties with com­plaints in their files.

These will very strongly tend be orga­ni­za­tions with dif­fer­ent pub­lic pol­icy per­spec­tives than that of the government.

Now add to the mix the real­ity that the com­plaints, which CRA has acknowl­edged play a role in who is selected for audit­ing, include a sub­stan­tial num­ber from Eth­i­cal Oil in the case of envi­ron­men­tal orga­ni­za­tions and oth­ers deal­ing with envi­ron­men­tal pol­icy options. In fact, in the spirit of open­ness, Eth­i­cal Oil has his­tor­i­cally sent copies of its CRA com­plaints to the orga­ni­za­tion it is com­plain­ing about. Eth­i­cal Oil was started by a for­mer staffer of cab­i­net min­is­ter Jason Ken­ney who left briefly to set up the orga­ni­za­tion and then returned to the fold with a new assign­ment to the Prime Minister’s Office.

Given that CRA does not pub­licly release com­plaints, we don’t know how many com­plaints are on file against orga­ni­za­tions in sec­tors not deal­ing with energy-related pol­icy. But one of the lead­ers I inter­viewed from a non-environmental char­ity, had been told by CRA staff of mul­ti­ple com­plaints in the organization’s file.

Of course it is pos­si­ble that the fun­nel con­struc­tion is a series of indi­vid­ual acts that coin­ci­den­tally lead to con­cen­trated atten­tion on orga­ni­za­tions with dif­fer­ent pol­icy pref­er­ences than the government’s, and par­tic­u­larly in the envi­ron­men­tal sec­tor. And it’s pos­si­ble that a min­is­ter gave an order to a deputy min­is­ter and on down the line—but that would be a major vio­la­tion of bound­aries that surely no min­is­ter, or senior man­darin, would con­sider. In any case, nobody’s had their photo taken hold­ing a smok­ing gun. Most char­ity lead­ers and experts I inter­viewed see a series of steps, which I call a fun­nel, that leads CRA right to where the gov­ern­ment wants them to end up—indirect, but politi­ciza­tion just the same. One leader who took pains to speak of high regard for the CRA staff char­ac­ter­ized it as an “insid­i­ous” process.

So, it can be argued that CRA employ­ees are caught up in some­thing not of their mak­ing. And if the gov­ern­ment PR staff can focus media atten­tion on CRA and away from the PMO and cab­i­net, with the gov­ern­ment offi­cially back­ing up their tax authority’s inde­pen­dence, well that would be a very bright media strat­egy, wouldn’t it?

The CBC report quoted Chris­t­ian Char­i­ties Asso­ci­a­tion CEO Rev. John Pel­lowe say­ing, “CRA has the right to inves­ti­gate char­i­ties to deter­mine if you’re fol­low­ing the rules.” Pel­lowe went fur­ther, “You can do polit­i­cal engage­ment, but you can­not engage in par­ti­san pol­i­tics, and in the cases I’ve heard about, that’s exactly what they’re doing—they’ve crossed the line.” His mem­bers haven’t expressed any con­cerns about polit­i­cal activ­i­ties audits.

As I pre­vi­ously noted, none of the char­ity lead­ers I inter­viewed had any prob­lem with CA inves­ti­gat­ing char­i­ties to ensure they were fol­low­ing the rules. It’s a mat­ter of ensur­ing a fair process, with­out gov­ern­ment inter­fer­ence. It’s about the gov­ern­ment not using the tax man to fight its pol­icy bat­tles by instill­ing fear, muf­fling, and divert­ing char­i­ties from their missions—and at the very time that key pol­icy issues are work­ing through the sys­tem and Cana­di­ans need vig­or­ous pub­lic con­ver­sa­tions about them.

I’m intrigued by Pellowe’s judg­ment that “in the cases [he’s] heard about” the char­i­ties are par­tic­i­pat­ing in for­bid­den par­ti­san activ­i­ties rather than accept­able polit­i­cal activ­i­ties. Which char­i­ties, exactly? What par­ti­san activ­i­ties, exactly? Churches and reli­gious orga­ni­za­tions have often taken strong stands on issues such as abor­tion, same-sex mar­riage, divorce, and birth con­trol. Reli­gious char­i­ties are par­tic­u­larly vul­ner­a­ble if a future gov­ern­ment heeds the call of activists who claim some cross the line into par­ti­san activ­i­ties and so the sec­tor should lose their char­i­ta­ble sta­tus en mass. With an eye to the future, some might have expected a char­ity umbrella orga­ni­za­tion rep­re­sent­ing reli­gious orga­ni­za­tions to speak up for the widest pos­si­ble pub­lic con­ver­sa­tions in society.

Heather Mallick’s spicy take on the issue in her Toronto Star col­umn sug­gests that audits should be extended to right-leaning orga­ni­za­tions. “Groups that help cre­ate a bet­ter world for bitu­men extrac­tion or urge preg­nant teenagers not to have abor­tions, in other words, groups that don’t scrape at Prime Min­is­ter Stephen Harper’s rage gland, are not audited in a sud­den blitz. They should be. Let’s be fair.”

Play­ful, but not where the char­ity lead­ers I spoke to are com­ing from. Many of them did note that their track­ing sug­gests that only “pro­gres­sive” char­i­ties (and that’s a wide swath of polit­i­cal ori­en­ta­tion, isn’t it?) are get­ting audited. But only one leader thought that the way to deal with that is to even the score by audit­ing more con­ser­v­a­tive and right-leaning char­i­ties. Almost uni­ver­sally, they thought that any sort of polit­i­cal tar­get­ing is wrong. That soci­ety needs char­i­ties of all ori­en­ta­tions and mis­sions to be given the space to con­tribute to society’s pub­lic con­ver­sa­tions. with­out harass­ment That polit­i­cal audits should be ran­dom or respond­ing to obvi­ous prob­lems, not the ide­ol­ogy of, and mis­use of power by, what­ever gov­ern­ment hap­pens to be in power.

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.

Categories: Uncategorized