In late March, CRA released a number of new resources to assist charities in understanding CRA’s interpretation of the rules related to political activities by registered charities. CRA’s main official policy statement on political activities, CPS-022, was published in 2003. The new resources on the CRA website supplement this document by providing explanations of the main concepts and issues of which charities must be mindful. This includes comments on the recent changes in the 2012 Budget related to political activities. All charities, and particularly those who comment on issues of public policy, should review these resources carefully.
There are several resources included on the page, including short discussions on distinguishing charitable from political activities, partisan political activities, and accounting for the amount of resources spent on political activities.
The discussion of the calculation of resources spent on political activities is particularly helpful.CRA’s previously released guidance had confirmed that charities may spend up to 10% of their total resources each year on political activities, but had provided little guidance on how this calculation is to be done. The new resource page on accountability for the use of resources provides some elaboration. CRA confirms that charities may use different methods to calculate the resources spent on political activities, provided that the method chosen is reasonable and applied consistently. It then provides examples of how a charity might track its financial, capital and volunteer resources (generally by allocating the percentage of funds, office space and other capital resources, and volunteer hours that are devoted to political activities).
CRA also discusses how charities should deal with representatives that engage in political activities on their own time. It confirms that the representatives of a charity, such as employees, directors, members, or volunteers, may be involved with an election, political campaign, or any other political activity in their own capacity as individuals. However, the charity must ensure that none of its resources (e.g., office space, supplies, etc.) are used to support an individual representative’s personal political activities. It is also important when a representative of the charity is speaking about a political issue that the representative make clear that the views expressed are his or her own and do not reflect the views of the charity. This applies both to spoken statements and any statements on social media.CRA recommends that charities establish policies that provide guidance on this issue to its representatives.
The CRA resources also address the lobbying activities of a charity and how these fit into the rules on political activities. It confirms that charities may make representations to elected officials on issues that relate to the charity’s purposes, including representations that call for changes in the law or government policy, provided that the representations are well-reasoned and the activity is subordinate to the charity’s charitable purposes. Such activities – which may include meetings at the offices of elected officials, presentations to elected officials at a charity’s premises, and appearances before parliamentary committees and municipal councils – will be considered charitable activities and not political activities. Charities may also release the full text of its representations to the public, which will also be considered charitable.The activities only become political when they involve a call to action on the part of the public.
CRA also addresses the amendments introduced in the 2012 federal Budget, which provide that where a charity makes a gift to another qualified donee (e.g., a registered charity) and it can reasonably be considered that a purpose of the gift was to support its political activities, the donor charity must include the amount of the grant as its own political expenditure. CRA offers some comments on how this will be interpreted:
· CRA confirms that the intent of the donor charity is key in determining whether a grant to another charity will be considered a political expenditure. Thus, the fact that a recipient charity uses a grant for political activities will not cause the grant to be a political expenditure of the donor charity. This occurs only when the donor charity intends (and presumably communicates to the recipient) that the grant be used for political activities.
· CRA states that where a grant is made with only a portion of the grant being intended for political activities, only the portion that is intended to be used for political activities must be accounted for as a political expenditure.
Miller Thomson’s Charities and Not-for-Profit Lawyers would be pleased to assist charities in understanding and complying with the rules on political activities.