Canada’s charitable and philanthropic sector won a major victory Monday, May 30, when the House of Commons finance committee voted unanimously to eliminate wording in the budget implementation bill that had been described as “‘direction and control’ on steroids.”
It had been the most contentious language in a bill the sector had been told would embrace the “spirit” of legislation – Bill S-216 – that had passed the Senate and was at second reading in the House of Commons. Conservative MP Philip Lawrence (Northumberland-Peterborough South), who sponsored Bill S-216, moved the amendment at committee to do away with language that he said could bring some charitable work to a screeching halt.
The committee decision was a victory for Senator Ratna Omidvar, whose original bill passed the Senate before it was adopted by Lawrence in the House of Commons.
I am hugely relieved. Mission accomplished.
Senator Ratna Omidvar
“I think we can all raise a glass of wine tonight,” Omidvar told The Philanthropist Journal. “I am hugely relieved. Mission accomplished.” Omidvar paid tribute to the concerted lobbying effort for amendments mounted by the sector.
Liberals on the committee, however, blocked other amendments, including one on “directed giving,” that would have made it easier for charities operating internationally to contribute to pooled funds directed to a specific donee. The language in the legislation, according to legal analyses by lawyers in the sector, could make a donation offside, for example, if money donated to the United Way was specifically earmarked for work in Ukraine. Omidvar said that in her discussion with government officials she had been assured they would not be “heavy-handed” in their enforcement of that provision, but that work remained to be done.
The sector was unanimous in its view that a system already seen as paternalistic and colonial was made even more so with the wording of the bill.
The sector, initially buoyed by the April budget when language was promised to protect the spirit of the progressive S-216, was set back on its heels when presented with implementation wording. It was alarmed particularly by the rigid concept known as “qualified disbursements,” which prescribed a series of regulations for charities working with organizations that were themselves not qualified charities, known as “non-qualified donees.”
The sector was unanimous in its view that a system already seen as paternalistic and colonial was made even more so with that wording.
The committee unanimously passed an amendment put forward by New Democrat Daniel Blaikie (Elmwood-Transcona) that replaced those stringent qualified-disbursement conditions with wording that compels charities to maintain documentation showing the purpose of their disbursement. It would have to show that the disbursements are “exclusively applied” to the stated charitable goals of the organization making the disbursement.
The committee also backed a Lawrence amendment that deleted the prescribed conditions for qualifying disbursements.
The removal of the contentious language creates a path to a more equitable relationship between donor and donee, Omidvar says.
In an open letter signed by more than 70 organizations, Cooperation Canada cited the example of an Indigenous organization that had the expertise and resources to help on the ground but not the financial resources, or even the desire, to attain charitable status. Under the government proposal, because the Indigenous organization was a non-qualified donee, the partnership between it and the charity would have had to meet a long list of “prescribed conditions” outlined in the Income Tax Act. The administrative red tape could doom the would-be partnership “and mean that critical resources for this important work do not flow to the organization and support the transformational work they are doing in their community,” according to the letter.
In removing that language, MPs gave the Canada Revenue Agency more flexibility in its oversight of the relationship between charities and those equity-seeking groups that had often been deprived because of the complexity of rules that compelled the charities to exercise direction and control over the work of the non-qualified donees. Omidvar says that creates a path to a more equitable relationship between donor and donee.
The amendment won Monday was the result of a full-court press from the sector, particularly over the past four weeks.
Its message was delivered in personal meetings, on social media posts, and through open letters and targeted appeals to key ministers in the Liberal government.
Before the committee vote on Monday, Bruce MacDonald, president and CEO of Imagine Canada, said he believed that the sector’s voice had been heard and that it had convinced the government that there had been a disconnect between the sector’s goal embodied in S-216 and what was presented in the proposed Budget Implementation Act.
Omidvar and others said they had noticed a more cooperative spirit in dealings with government officials in recent weeks as the sector raised its voice.
The sector had sought 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 that 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 CRA regulations into law, leaving them as guidance documents.
The government has stated that when the budget implementation bill, C-19, is passed, Bill S-216 will be withdrawn.
