Newspapers Protest “Attack-by-Audit” of Canadian Charities

Print Share on LinkedIn


March 2, 2015;Chronicle Herald (Halifax, Nova Scotia)

“Canadian charities are under attack,” proclaims the first line of a recent op-ed in the Chronicle Herald. The cause for this calamitous statement is a situation playing out in the North that has a familiar and yet diametrically opposite ring to it.

As NPQ has reported quite often, America’s Internal Revenue Service has come under attack from Republicans for targeting right-wing groups. The IRS stands accused of having delayed and stalled consideration of applications for tax-exempt status by groups with Tea Party affiliation as a way of preventing them from promoting their views. In Canada, on the other hand, the accusation sounds the same but is reversed: there, the Canadian Revenue Agency is under attack for a series of intrusive and damaging audits against progressive nonprofits that disagree with the Prime Minister, Stephen Harper, and his conservative policies.

In November of last year, it was estimated that as many as 52 nonprofit organizations had come under scrutiny by the CRA and that all of them had been critical of the government. What unites these agencies, and supposedly therefore triggered the audits, is that they were spending money on overtly political activity. The question raised, however, is if that were true, why were none of the agencies that support Harper and his government audited? In fact, one report released last year by the progressive Broadbent Institute cited 10 conservative-leaning agencies that claimed no political expenditure in their tax filings but had clearly spent money on such activity and yet were not audited.

What seems to put this scandal beyond the IRS version in the U.S. is that in Canada, government funds are being allocated to it directly. At a time when funds are laying off auditors who focus on the tax evasion of the very wealthy and major corporations, between 2012 and 2015, $13 million was allocated to investigating the political activity of environmental agencies and, later, anti-poverty, international aid, and human-rights groups.

Worse, there are significant allegations that the charities being scrutinized are being bullied by the CRA. One person described having spent two weeks responding to questions and requests by the auditors from the CRA and said that those with a more significant role in the agency had spent months doing so. Allegedly, the CRA never actually closes the audit, leaving the agency constantly on tenterhooks that the auditor might return and ask for more information.

The worst allegation came in the form of an open letter, in which environmental whistleblower Andrew Frank wrote:


“As I have detailed in a sworn affidavit, no less than three senior managers with Tides Canada and ForestEthics (a charitable project of Tides Canada), have informed me, as the Senior Communications Manager for ForestEthics, that Tides Canada CEO, Ross McMillan, was informed by the Prime Minister’s Office, that ForestEthics is considered an ‘Enemy of the Government of Canada’ and an ‘Enemy of the people of Canada.'”

Under Canadian law, nongovernmental agencies with charitable status are allowed to spend no more than 10 percent of the annual budget on “political activity.” As defined, this would seem to say that any activity that openly advocates for or against new or existing legislation, calls people to action around a particular legislative action, or in any way promotes lobbying government officials is political in nature. NGOs that do not have charitable status can spend as much as they would like on such political activity, as can for-profit corporations.


In the U.S., a similar definition of political activity is in place, but spending is limited to less than a vaguely-described “substantial part” of the budget. The only exceptions, of course, are if a nonprofit in the U.S. opts for the 501(h) election, which has very specific limits on lobbying activity based on percentages of annual budget and if the organization is a 501(c)(4) or a (c)(6).

In and republished by several other papers in Canada, Garfield Mahood and Brian Iler suggest that there is no reason why the political activity being questioned should not be the regular part of an NGO’s work. If we follow this argument in the U.S., why can 501(c)(4) organizations spend all their funds on lobbying, but 501(c)(3)s cannot? If, in the name of free speech, corporations can make unlimited anonymous donations to (c)(4)s, why can’t donors to (c)(3)s expect the same? In other words, if the agency’s mission is to alleviate hunger, why not be able to lobby on behalf of legislation and candidates that would have positive impact on that mission? Why is that any less appropriate a budget line than providing a meal at a soup kitchen? The latter alleviates the problem for a day; the former might solve it forever.—Rob Meiksins

  • Arthur Drache

    I generally buy into the idea that the main thrust of the charity audits are “progressive” organizations. But I fear that there is another side to the story. It seems that the “conservative” organizations which are being subject to audit simply do not wish to publicize the fact while the progressives are making a case for themselves. I believe it is true that the audits are creating a chill on activities which may be legally acceptable but fairness suggests that it is not only the left-leaning organizations which are being hit.

  • Pingback: Fear of advocacy()