The Jewish National Fund of Canada (“JNF Canada”) has been recently revoked as a registered charity by the Charities Directorate of the Canada Revenue Agency. JNF Canada has appealed the decision in the Federal Court of Appeal. Various parties critical of JNF Canada had sought to be added as respondents to the Appeal (i.e. the Proposed Respondents), in addition to the Minister of National Revenue, who is an actual respondent.
The FCA has decided in a September 13, 2024 order that the Proposed Respondents who had wanted to be added as respondents should not be added. The FCA was not impressed with the arguments that the Proposed Respondents had “commenced the chain of events” that led to revocation, and the FCA said extremely politely this is “speculative and seems implausible”.
The FCA notes:
[2] For the reasons that follow, I am of the view that this motion should be dismissed.
[3] On August 20, 2019, the Respondent Minister of National Revenue (the Minister) issued a notice of intention to revoke the charitable registration of the Appellant Jewish National Fund of Canada Inc. / Fonds National Juif du Canada Inc. pursuant to subsection 168(1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (ITA). The Minister confirmed the notice on June 26, 2024 and the Appellant filed a notice of appeal from the revocation pursuant to paragraph 172(3)(a.1) of the ITA.
[4] Between October 2017 and February 2019, the Proposed Respondents had communicated with the Minister, the Canada Revenue Agency (CRA) and the Parliamentary Secretary to the Minister, with the goal of persuading the Minister and her delegates to audit the Appellant and revoke its charitable registration on various grounds.
[5] The Proposed Respondents claim that, through these communications, they “commenced the chain of events that led to the revocation” of the Appellant’s charitable registration and that, as a result, “they were adverse in interest to the Appellant in the first instance proceedings before the CRA” and ought to have been named as respondents pursuant to paragraph 338(1)(a) of the Rules. They argue that in a bulletin published on its website, the Appellant acknowledged that the Proposed Respondents were “engaged in the revocation proceedings”, that public pressure on the CRA and the Minister was “an important consideration” in the decision-making process, and that Independent Jewish Voices Canada was one of its “opponents”.
Then there is a discussion of Trademark law and how that system is different than the charity system and the FCA notes:
[11] The Trademarks Act affords the requesting party full participatory rights in the first instance expungement proceedings before the Registrar. By contrast, the relevant provisions of the ITA do not entitle persons like the Proposed Respondents to participate in the proceedings undertaken by the Minister and her designates to revoke the registration of a charitable organization.
[12] Where the Minister gives notice of intention to revoke a person’s charitable registration under section 168(1) of the ITA, the person who is registered as a registered charity may serve on the Minister a written notice of objection (section 168(4)). Upon receipt of this notice of objection, the Minister reconsiders the proposed revocation and notifies that person in writing of the Minister’s action (section 165(3)).
[13] Where the Minister confirms her decision to revoke the person’s charitable registration (or fails to confirm or vacate that decision within 90 days of the service by the person of a notice of objection), the person that was registered as a registered charity may appeal from the Minister’s decision under section 172(3)(a.1) of the ITA.
[14] The Proposed Respondents’ claim that their communications with the Minister and her delegates “commenced the chain of events” that led to the Minister’s decision to revoke the Appellant’s charitable registration is speculative and seems implausible, since the audit of the Appellant as a registered charity under the ITA was initiated in 2014, well before the Proposed Respondents began their communications with the Minister and her delegates in 2017.
[15] Regardless, even if such communications had prompted the Minister and her delegates to initiate an audit or had informed their decision-making process, this did not confer on the Proposed Respondents any legal entitlement to participate in the revocation proceedings. The Proposed Respondents remain strangers to these proceedings which, under the relevant provisions of the ITA, involve the person who is or was registered as a charity and the Minister and her delegates.
[16] Whether the Proposed Respondents were adverse in interest to the Appellant or not, they have not established that they were “parties in the first instance” and have thus failed to bring themselves within the terms of Rule 338(1)(a).
[17] The motion is dismissed with costs, payable forthwith under subsection 401(2) of the Rules.
The JNF Canada case seems riddled with distractions. Having the Proposed Respondents be involved in the court case would have been a big distraction, in my view. It is ironic to me that the Proposed Respondents’ view that they were somehow important in the revocation of JNF Canada is similar to the view of JNF Canada that the respondents and others who complained to CRA were an important consideration in CRA’s decision to revoke JNF Canada. The CRA argues that the only evidence that the Proposed Respondents have that they had any impact on the revocation was “a post on the Appellant’s website [JNF Canada’s website(my clarification)] instead of any statutory authority or allegation in the notice of appeal.” As noted above the FCA was of the view that this is “speculative and seems implausible”.
On the bright side, if Independent Jewish Voices Canada and JNF Canada can have similar views on this point, it gives me some hope that there will one day be peace in the Middle East.
If you really want to understand why CRA revoked JNF Canada, a good place to start is a letter from CRA to JNF Canada in 1989. Yes 35 years ago and only released in the last week by JNF Canada on their website. For those who don’t want to read the 500 or so pages of correspondence floating around between CRA and JNF Canada, the 5 pages from 1989 would be a good place to start. People say better late than never, but really is 35 years late the standard we want in Canada? So much for transparency about Canadian charities.
Anyone who complained about JNF Canada after 1989 probably did not bring anything really new from a charity law point of view to the charity regulator, as CRA outlined in 1989 sufficient reasons could have led to the revocation of JNF Canada. For anyone who complained about JNF Canada prior to 1989, you must be very frustrated that it took CRA 35 years to revoke a charity that CRA knew had very significant compliance concerns.
I think that it is fair to criticize the CRA relating to JNF Canada, but not because they revoked JNF Canada 2 months ago, but because it took them so long to revoke JNF Canada when CRA possessed information on serious non-compliance. I have often complained that revocations can take 10-20 years, which is far too long if one hopes to maintain public trust in the charity sector. This revocation was more like 35 years. The amount of CRA resources used must have been incredible.
A significant number of donors, many from the Jewish community, were not aware of the non-compliance because JNF Canada did not disclose these letters and because CRA is prohibited from disclosing any information or letter under the Income Tax Act until there is a suspension, penalty or revocation. We know that some donors stand 100% behind JNF Canada. We also know that probably most donors have not read the 500 pages of correspondence, and they are probably relying more on JNF Canada press releases and sometimes superficial media accounts. What we don’t know is how many people might be having “buyer’s remorse” about donating to JNF Canada and whether, if they were aware of all the allegations contained in these documents that were only recently released, they might have made a different decision. We need to change the Income Tax Act to allow CRA to disclose serious non-compliance to the public before there is a suspension, penalty or revocation or the public will not be aware of non-compliance for 10 or 20 or 35 years!
We cannot blame the Charities Directorate of today who revoked the group- my questions would be why this was not done 10 or 20 years ago in audit 3 or 4. Why was it necessary for CRA to commence a 5th audit of JNF Canada in 2014? I wish I knew all the answers, but I don’t. The whole JNF Canada saga seems to be like peeling an onion, and might take decades before we have better answers.
Here are some of the actual court documents from the Federal Court of Appeal relating to the issue of adding the Proposed Respondents.
Jewish National Fund of Canada v. MNR Order
Jewish National Fund of Canada v. MNR Respondent’s Written Representations August 30, 2024
Jewish National Fund of Canada v. MNR Written Reply Representation of the Appellant