The Under Layered Suspicion report examines three Muslim charities that had their tax-exempt status revoked after audits by the Canada Revenue Agency. The details of the audits paint a picture of a community that is deeply anxious about its relationship with the system’s overseers and is constantly under pressure to prove it is not a threat.
When the Canada Revenue Agency informed the Ottawa Islamic Centre, a charity serving the city’s Somali community, that it would be subjected to an audit, the group’s management felt there was no reason to believe something was amiss.
But the final result of the audit, which covered the period of January 1, 2012, to December 31, 2013, came as a shock when it was announced in August 2018. The CRA’s Charities Directorate, which oversees the sector, found the centre had violated the public benefit test and decided its charity status ought to be revoked.
The CRA argued that four people invited to speak at the centre had, in the past, made remarks considered misogynistic, intolerant, or homophobic. The centre had not recorded the actual lectures, yet the possibility that the speakers had said something offensive was seen as a breach of the public trust. The lack of records or transcripts of the talk, in turn, was a violation of the Income Tax Act. (Officials with the centre declined to comment because the case is before the courts.)
The centre’s association with those speakers was enough to trigger a broader examination of the charity’s public benefit role. Other irregularities around record-keeping, plus media reports of individuals who had reportedly attended the centre and were arrested over radicalization concerns, sealed its fate.
“In other words, the directorate was relying on evidence of what the speakers said elsewhere in the past,” concluded the authors of Under Layered Suspicion, a report that examined the Ottawa Islamic Centre case along with two other Muslim charities that had their tax-exempt status revoked after audits by the CRA. “When read with the rest of the letter, it seems that the mere affiliation with these four individuals was sufficiently worrisome to warrant a suspicion that the Ottawa Islamic Centre might be a breeding ground for radicalized Muslims.”
The details of the audits, coupled with the excessive punishment in the form of revocation of charitable status, along with the fact that several charities declined to publicize their own struggles with the CRA out of fear of reprisals, paint a picture of a community that is deeply anxious about its relationship with the system’s overseers and is constantly under pressure to prove it is not a threat. They also contradict the CRA’s stated commitment to anti-racism and fighting systemic bias in Canadian institutions.
Excessive scrutiny and targeting of charities were concerns under the previous government of Prime Minister Stephen Harper as well, including the harassment of environmental charities. But international terrorism financing initiatives have tended to affect Muslim charities operating overseas more in the wake of the 9/11 attacks. Canada is a founding member of the Financial Action Task Force (FATF), a 1989 G7 initiative to combat money-laundering that refocused its efforts on terror financing in the wake of the attacks. Canada’s financial surveillance regime strives to implement the recommendations of the FATF and has tended to identify Muslim entities as the primary source of terrorism threats, a trend that the report’s authors say contributes to a “whole of government” threat perception that affects Muslims the most.
There’s a really exhausting marathon of constantly having to prove yourself as not a threat.Nadia Hasan
Nadia Hasan, chief operating officer of the National Council of Canadian Muslims (NCCM), which sued Harper for libel over comments linking it to terrorism, and a co-author of the report, says the research was met largely with validation by members of the community.
“There’s a really exhausting marathon of constantly having to prove yourself as not a threat, and it really is a marathon,” she says. “People are always conscious of the fact that at any given moment, someone’s going to perceive me as a threat unfairly.”
Hasan says that Muslim charities essentially live with a reverse onus – suspicious unless proven otherwise – so when they do make a mistake, the repercussions are “disproportionate and unusual.”
The report is a collaboration between authors at the University of Toronto and the NCCM and funded by the Social Sciences and Humanities Research Council and the University of Toronto and was released earlier this summer. It examines the basis under which the CRA conducted audits of the three Muslim charities – audits that were informed by concerns over terrorism financing and the Canadian government’s counter-radicalization strategy.
It argues that the three case studies show how Muslim charities are subjected to much higher standards of compliance than other religious charities as a result of a broader, whole-of-government counter-radicalization strategy that “otherizes” Muslims, treats them as national security threats, and views them with suspicion as potential agents of foreign powers.
“Muslim-led charities have for years expressed concerns about the selection, frequency, and reasoning behind audits of their organizations,” the report says. “The findings from Under Layered Suspicion suggest that there is a basis for these concerns.”
The report examines only three charities that had their status revoked: the Ottawa Islamic Centre, the Islamic Shi’a Assembly of Canada, and the International Relief Fund for the Afflicted and Needy–Canada (IRFAN–Canada).
Muslim-led charities have for years expressed concerns about the selection, frequency, and reasoning behind audits of their organizations.Under Layered Suspicion report
The researchers shied away from arguing definitively that the cases show systemic prejudice against Muslim-led organizations, given the small sample size. But they say a whole-of-government approach borne out of the 9/11 attacks, and subsequent terror-financing laws that treated Muslims and their institutions as potential national security threats susceptible to the influence of foreign interests, have led to unfair scrutiny of Muslim charities and a deep chill in Muslim civil society more broadly.
“Systemic bias works within an institutional structure as a variety of individual players participate together,” says Anver Emon, a professor of law at the University of Toronto and a co-author of the study. “How do you calculate that? Well, you have to tell a story. It’s really in the intricacies of the narrative that you can show the story.”
Emon’s findings have since been corroborated by new research on the CRA’s handling of Muslim-led charities. A report released in July by the International Civil Liberties Monitoring Group found that 75% of charities that had their status revoked due to audits by the CRA’s Review and Analysis Division between 2008 and 2015 were Muslim, even though charities promoting the faith make up fewer than 1% of all charities in the country. Many of the revocations were based on suspicions of terrorism financing.
Experts agree that the charities in question did commit violations of the Income Tax Act, but they say these issues are common in the charitable sector and do not usually result in punishments as severe as revocation.
They also point to double standards that punish Muslim-led charities for activities that go unnoticed for other faiths. The report pointed out several instances of registered Christian charities inviting speakers who are known to have expressed homophobic or intolerant views without enduring any repercussions.
They say Muslim charities have long harboured deep anxiety over being targeted by auditors, often spending much higher amounts on compliance than comparable charities because they have little room for error and have to go out of their way to allay the suspicions of the national security establishment. This has led to a chilling effect among Muslim civil society, a decline in donors, and the pulling back from crucial aid and sorely needed humanitarian work in regions like Palestine, Somalia, or Syria, because of the challenges of meeting all stringent requirements.
“We’re serving people, both locally and globally, and we actually genuinely appreciate the idea that charities shouldn’t be given a free pass,” says Zaid Al-Rawni, the CEO of Islamic Relief Canada. “We’re taking public money, and I have no problem with being asked questions about the work we do.”
“The problem is when the rules are specific for one group,” he adds.
Al-Rawni says Muslim-led charities spend enormous amounts of money on compliance, far more than comparable charities, and the risk of falling afoul of stringent regulations drives away many potential donors, who worry that they in turn may fall under scrutiny or risk their reputation if an organization is accused of terrorism links. His organization has declined to carry out international projects that would have served desperate communities for the same reason.
We’re taking public money, and I have no problem with being asked questions about the work we do. The problem is when the rules are specific for one group.Zaid Al-Rawni
“We rejected a lot of money for a lot of good work, because we were uncomfortable, or we don’t think there’s enough money in the pot to do the compliance piece properly,” he says. “I can’t even count the number of times.”
The environment, he adds, has become increasingly hostile for civil society organizations.
The risk of the targeting of Muslim charities gained urgency over the summer amid a debate on Islamophobia and anti-Muslim hatred spurred by the June killing of four members of a Muslim family in London, Ontario, by a 20-year-old Canadian man who ran over them with his truck in an apparently premeditated attack.
In the wake of the attack, the targeting of Muslim charities for audits was singled out as a factor in how Muslims are still seen more broadly as a national security threat. More than 130 civil society groups issued an open letter to Prime Minister Justin Trudeau in late June, urging him to take action against what they described as the “prejudiced audits of Muslim charities, under the auspices of countering terrorist financing.”
The CRA’s Charities Directorate oversees the sector, but the decision to audit an organization may sometimes come from the Review and Analysis Division (RAD), a department within the CRA that works with intelligence and national security agencies to identify organizations suspected of terrorism financing. The decision to revoke the status of the charity, however, is often based on violations of the Income Tax Act rather than proven allegations of funding terrorism.
In a lengthy statement in response to questions from The Philanthropist Journal about the report’s findings, the CRA declined to comment on specific cases but defended itself against charges of systemic bias, and said it does not keep track of the religious affiliation of audited organizations.
“The Canada Revenue Agency (CRA) is firmly dedicated to diversity, inclusion and anti-racism, aligning with our values of professionalism, integrity, respect and collaboration,” the agency said in the statement. “The CRA does not select registered charities for audit based on any particular faith or denomination, nor does it maintain statistics tracking audits based on denominations.”
The agency said that its decisions to audit organizations are administrative and that it takes an “education-first approach where possible” before resorting to harsher measures, like sanctions or revocations. It also said that charities can resort to Canadian courts if they dispute a decision.
But a legal expert with knowledge of some of the cases said the audit and appeals process is far from fair for the charities. (This source declined to go on the record because the cases are ongoing.) The CRA does not usually reveal that an audit was prompted by national security concerns unless directly asked by the charity, which usually has no reason to suspect it is being investigated for potential terrorism financing. Accountants typically deal with routine audit questions. By the time a lawyer is brought in to contest problematic findings, it is usually too late to prevent a revocation of charitable status.
The initial appeal against revocation takes place within the CRA under another division. While it can consider new evidence or submissions from the charity, it can decide to uphold the revocation even before disclosure of evidence to the charity is complete. Court cases and appeals can take years to pan out, and by then the damage is already done to the institution and its reputation in the media.
“First of all, the compliance requirements are quite high, so it is very difficult to meet and then pass with flying colours,” the legal expert says. “But the other thing is very similar to racial profiling. If you’re focusing all your concentration on a particular community, you’re going to find something.”
“We think that the lack of compliance exists across all the charities, possibly, but if you don’t audit everybody fairly or have a representative sample of all the charities that are registered, and are just oversampling from a particular community, then you’re getting overrepresentation in audits and revocations, and that’s the essence of the new report,” the expert adds.
Now civil society is seen as a threat to security, rather than as a bulwark of democracy.Anver Emon
Experts worry about the long-term impact of the targeting of Muslim charities and its broader effect on the community and the health of Canada’s multicultural democracy.
“We can track the democratic quality of a society by the vibrancy of civil society,” says Emon. “Now we’re seeing the regulatory agencies cracking down on charities for national security purposes. And so now civil society is seen as a threat to security, rather than as a bulwark of democracy.”
Emon argues that the CRA needs to be more transparent and accountable, and should acknowledge its shortcomings in order to begin dealing with the issues raised by these cases.
This would involve suspending the work of the Review and Analysis Division, pending a review of the government’s national strategy to combat terrorism; suspending the use of revocation power on audited charities; and informing charities that are under review if the audit is motivated by concerns over terrorism financing.
It also means having deeper, more honest conversations about systemic bias in government and how to combat it.
“They [CRA] don’t categorize them as Jewish, Christian, Muslim, so we can’t hold them to account on systemic racism biases, but nor can they defend themselves from a charge of systemic racism. They can’t because they don’t have the data,” Emon says. “That’s the institutional version of ‘We don’t see race’: ‘We don’t see religion.’”
Al-Rawni says the “stifling” atmosphere has driven many in the community to disengage entirely from public and international causes. “Charities are institutions within our Muslim community and within Canadian society, and they are probably the only institutions which are predominantly managed and run by the Muslim community. In a lot of these not-for-profits and charities, there’s suspicion about what we’re doing and who we are.”