It is important that Canadian non-profits and registered charities are aware of what is going on politically in Canada and also engage in appropriate and relevant political activities, as allowed by law. Unfortunately, for NPOs and charities, it is far more complicated than one may think.
Keep in mind that, in a simplistic scenario, a Canadian registered charity based in Toronto and only dealing with improving food security in Ontario when it is dealing with political activities currently has to be aware of:
- the Income Tax Act and PPDDAs, (only applies to registered charities, not NPOs)
- potentially lobbyist registries on 3 different levels of government (Canada, Ontario, Toronto), (applies to both registered charities and NPOs)
- a Canada Elections Act requirement to register if certain advertising is done over $500 during a Federal election (also third party advertising requirements when Ontario election) (applies to both registered charities and NPOs); and
- a new “Foreign Influence Transparency Registry” that has not yet been implemented. (will have far-reaching consequences and will apply to both registered charities and NPOs)
Each regime has different rationales, definitions, rules, limitations, regulators and requirements. When there is an election, there are not only more regulatory requirements that apply but also greater scrutiny.
There are many activities that a charity can do during an election that are compliant with the ITA requirements, don’t require registration under the Canada Elections Act as a third party, and don’t involve lobbying. However, if, as an example, a charity wants to during the election period boost social media posts or pay for other advertising on an election issue, and if you are going to spend more than $500, then such charity will have to register under the Canada Elections Act.
The “regulated activities” under the Canada Elections Act cover a number of different types of activities, including 1) partisan activities, 2) election surveys, 3) partisan advertising and 4) election advertising carried out by third parties. Some of these activities a registered charity cannot undertake at all, but others they can do. The most common area a registered charity may be involved in is #4 election advertising, specifically the part which includes taking a position on an issue with which a political party or candidate is associated.
In terms of third-party election advertising, as this is not a fixed-term election as was in 2019, the amount of time covered by the Canada Elections Act and Third Party Advertising registration requirements will be about 36 days. Therefore, some groups may have decided not to do the “regulated activities” during that election period. However, those groups will need to be extremely careful because the $500 threshold is very low.
An argument can be made that if a registered charity or NPO is dealing with important issues that should be discussed during the election, then it often makes sense for an NPO or registered charity to register under the Canada Elections Act and Third Party Advertising registration requirements. For registered charities, CRA has made it clear that there is no intrinsic problem registering with Elections Canada as a third-party advertiser. It is clearly not appropriate to ignore the rules and just conduct regulated activities over the $500 threshold. It also may be seen as ironic that some groups say that involvement in the political process is very important, to then just go largely silent during an election period.
There is a lot of information on the Elections Canada websites about Third Parties and their registration requirements.
The election will be over in a few weeks, and some groups will go back to hibernating on political activities for years! This would be very unfortunate. Some of the biggest positive impacts we have seen in Canada over the last 100 years have come from non-profits and charities being involved in political activities. It is important, with all the problems that we have in this world, that non-profits and charities engage in a much more concerted way in appropriate political activities.
Unfortunately, the current T3010 return has no questions on political activities, which is not great from a transparency and public trust point of view. So we don’t know how many charities are involved with political activities, how much they spend, what issues they are dealing with, etc. In other contexts, this is sometimes referred to as “dark money”.
Also, very few charities with significant resources allocate much to political activities, despite their protestations that political activities are important. Much of the political activities in the charity sector in the past were conducted by small to mid-sized registered charities that were often completely ignoring the requirements and consequently undermining the public and government’s trust in the sector. Things like not registering when conducting extensive lobbying, undertaking partisan activities with the resources of the registered charity, etc.
If your registered charity is interested in doing more political activities, then you can retain our firm to assist with understanding the relevant compliance obligations.