With the government poised to enact legislation that threatens to set back efforts by charities to more easily fund “non-qualified donees,” the sector has mounted a full-throated pushback.
The message has been delivered in personal meetings, on social media posts, through open letters and targeted appeals to key ministers in the Liberal government.
The philanthropic sector has been seized with a sense of urgency and has made it clear that proposed legislation, once trumpeted as embracing the spirit of progressive change, threatens to set back efforts by charities to more easily fund equity-seeking groups, baking into law a paternalistic and colonial system it seeks to end.
I think we’ve been heard. Our case has been understood … We’re hoping that translates into amendments.Bruce MacDonald, Imagine Canada
It is a full-throated pushback. But has it been effective?
“I think we’ve been heard,” says Bruce MacDonald, president and CEO of Imagine Canada.
“Our case has been understood – that there is a disconnect between the spirit of what was in the budget and the Budget Implementation Act. We’re hoping that translates into amendments.”
That conclusion will be put to the test as early as next week when the Commons Finance Committee is expected to begin clause-by-clause study of Bill C-19, the budget implementation bill.
MacDonald made the sector’s case directly in an appearance before the Finance Committee, but he had no shortage of allies who flooded Parliament Hill to meet with officials in Prime Minister Justin Trudeau’s office, government, and opposition MPs. He said the effort was effective because it involved a coalition of organizations with lived experience under the existing rules, ranging from those working in international development to non-qualified donees who have been hurt by the current system.
At issue is the sector’s attempt to eliminate the “direction and control” provisions in the Income Tax Act, which compel charities to take ownership of programs as if they were their own when dealing with organizations that do not have charitable status, known as non-qualified donees.
This [bill] makes ‘direction and control’ look like a picnic.Bruce Lawson, Counselling Foundation of Canada
Senator Ratna Omidvar championed that cause; her legislation replacing direction and control with “resource accountability” passed the Senate, and her Bill S-216, now at second reading in the House of Commons, was taken up by Conservative MP Philip Lawrence.
The government has signalled that S-216 will die when the budget implementation bill is passed, adding more urgency to the sector’s lobbying efforts.
“This [bill] makes ‘direction and control’ look like a picnic,” says Bruce Lawson, president and CEO of The Counselling Foundation of Canada. “This is not written in the spirit of S-216. It makes things worse.”
There are signals that this message is landing in the capital.
Jessica Eritou, a spokesperson for Finance Minister Chrystia Freeland, told The Philanthropist Journal via email that the department was working “closely and collaboratively” with Omidvar – following criticism that the government proposals were crafted without any input from the senator or key stakeholders.
“Our tax rules should support the work of Canadian charities and minimize their administrative burdens, while still ensuring accountability for how charitable resources are used,” Eritou said. “The government is committed to supporting these objectives, while allowing greater flexibility for charities to support non-profit groups that may not have the ability to pursue charitable status of their own and will continue to work with them on this matter.”
[The BIA] makes the system more confusing, risky and challenging for registered charities and non-qualified donees to work together.Cooperation Canada
Lawson wrote an open letter with Wanda Brascoupé of the Indigenous Peoples Resilience Fund, an Indigenous-led institution designed to deploy capital quickly and efficiently to Indigenous organizations. Over the past two years it has provided almost $7.5 million in funding to Indigenous communities and Indigenous-led organizations, most of them non-qualified donees.
“It is our deep concern that the new rules, to be enshrined in law through the BIA, will make working with Indigenous communities and Indigenous-led organizations that are not qualified donees even more difficult than it already is – and perpetuate and worsen the colonial mentality and conditions that have been imposed on our peoples for generations,” the letter states.
Cooperation Canada also released an open letter, supported by more than 60 philanthropic organizations. “[The BIA] makes the current regime more challenging for organizations to fulfill their charitable purpose by embedding a rigid and prescriptive approach to funding non-qualified donees inside and outside Canada in legislation,” its letter states. “It makes the system more confusing, risky and challenging for registered charities and non-qualified donees to work together, and as such, impedes philanthropic and charitable resources flowing to communities that need them the most.”
The sector is seeking at least three key amendments:
- Replace the proposed “qualifying disbursement” language, seen as too rigid, with language (from S-216) that requires charities to take reasonable steps to ensure their funds are used for charitable purposes.
- Remove language that prevents Canadian charities from contributing to emergency pooled funds supporting non-qualified donees.
- Delete the language that enshrines Canada Revenue Agency regulations into law, leaving them as guidance documents.
Even though it will almost certainly die, Lawrence (Northumberland-Peterborough) brought S-216 to the Commons for second reading and found widespread support. He told his colleagues his bill would restore respect to the charitable sector, remove needless bureaucracy, and allow the sector to escape a “morass” of paperwork.
We have to ensure that this doesn’t go from the front burner turned up to the back burner turned down.Bruce MacDonald
New Democrat Niki Ashton (Churchill-Keewatinook Aski) told the Commons that the Liberal government had failed to meet the sector’s needs with Bill C-19 but said S-216 was a step in the right direction.
Conservative Garnett Genuis (Sherwood Park-Fort Saskatchewan) said “direction and control” perpetuates a colonial structure around development. Bloc Québécois MP Marie-Hélène Gaudreau (Laurentides-Labelle), who came to the Commons from the Corporation de développement communautaire des Hautes-Laurentides, an umbrella organization for the region’s non-profits, said S-216 would ultimately allow the sector to support more people in need.
In the meantime, the sector wants to keep the heat on. “We have to ensure that this doesn’t go from the front burner turned up to the back burner turned down,” says MacDonald. “A lot can change in a week.”