With the upcoming election, Canadian charities should be aware that the federal government has changed its rules governing political activities. In December 2018, the federal government amended the Income Tax Act (“ITA”) to allow registered charities to pursue charitable purposes by engaging in non-partisan political activities and in developing public policy, without any financial constraint. Restrictions against partisan political activities, however, remain.
The amendments, contained in Bill C-86, eliminate the limitation on charities to devote up to 10% of their resources to political activities. The new legislation allows charities to engage in political activities, now known as public policy dialogue and development activities (“PPDDAs”), in order to further their charitable purposes, without any limitations. Charities are still restricted, however, from providing direct or indirect support or opposition to a political party or candidate.
What are the new rules?
The following table summarizes the old rules and new rules under the ITA:
|Old Rules under the ITA
|New Rules under the ITA
|Charities could devote up to 10% of their resources to non-partisan political activities that were ancillary and incidental to their charitable purposes.
|Any reference to “political activities” has been removed from the Income Tax Act (“ITA”.) Charitable activities now include public policy dialogue and development activities (“PPDDAs”) that further a charitable purpose.
|If a charity made a gift to another qualified donee that was intended to support the political activities of the recipient, the gift was considered a political activity for the donor charity.
|There are no quantitative limits on the resources a charitable organization or charitable foundation can devote to PPDDAs.
|Expenditures on political activities were not considered in determining whether a charity had satisfied its annual disbursement quota.
|Charities can transfer resources to another qualified donee to support the recipient’s PPDDAs.
|Charities could not directly or indirectly support or oppose a political party or candidate for public office.
|Charities cannot directly or indirectly support or oppose a political party or candidate for public office.
|Starting in November 2019, charities will report on PPDAs on their T3010 Annual Returns.
|The definition of charitable organization was amended – a charitable organization must be constituted and operated exclusively for charitable purposes.
What are public policy dialogue and development activities (PPDDAs)?
Charities are now free to advocate for any change to a law, policy, or government decision, as long as it furthers their charitable purpose and provides a tangible, public benefit. PPDDAs encompass activities a charity carries on to participate in the public policy development process, or to facilitate the public’s participation in that process, which may include the following:
- Provide information to supporters or the general public
- Conduct research into public policy
- Disseminate opinions on matters related to charitable purposes
- Advocate to keep or change a law, policy, or decision of government
- Mobilize supporters or the general public
- Make representations (i.e. to elected officials, public officials, etc.)
- Provide forums and convene discussions
- Communicate on social media
To which charities do the new rules apply?
The new rules under the ITA apply to all charities registered as of September 14, 2018.
- Be aware of federal and provincial rules, as provinces regulate charities and the ITA does not override provincial legislation. In Ontario, charities fall under the purview of the Public Guardian and Trustee. It is not clear whether these new rules will have much of an impact on charities in Ontario, but it would be advisable to refer to both pieces of legislation.
- Note that charities are also subject to other legislation, such as the Lobbying Act and Canada Elections Act, and should be cognizant of any lobbyist registration requirements or rules related to third party election advertising.
- Be transparent about any activities in which your charity may be involved.
- Be strategic and consider staying non-partisan – participating in any kind of political activity may risk alienating people or donors from your charity.
For more information, please refer to the Canada Revenue Agency (CRA) Guidance CG-027, Public policy dialogue and development activities by charities.
PooranLaw is dedicated to supporting not-for-profits, charities and social enterprises. We can help you navigate the ever-evolving area of not-for-profit and charity law in Canada. Contact us to ensure that you are meeting your obligations and for any other assistance with your corporate governance.