On June 20, 2019, the Senate Special Committee on the Charitable Sector (the “Committee”) released its report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector (the “Report”). The Committee was struck in January 2018 and was asked to examine and prepare a report on Canada’s charitable and non-profit sector. The Committee was comprised of a core group of seven senators, who were assisted by several additional senators, both presently serving and retired.
The Report is very long and comprehensive. It consists of 190 pages of recommendations, analysis, and summaries of the results of the public submissions that the Committee considered in writing the Report.
The Committee made a total of 42 recommendations. Some of the recommendations involve more administrative-type changes while others are more complex and require legislative changes in order to implement.
The breadth of topics covered by the recommendations is impressive. They touch upon governance, Canada Revenue Agency (“CRA”) reporting requirements, the relationship between the sector and CRA, funding for the sector, volunteers, diversity and inclusion, equality as between the for-profit sector and the charitable and non-profit sector (particularly in terms of availability and access to government support and programs), data, technology, appeals of CRA decisions, revenue generation and business activities, possible new categories of qualified donees, ongoing modernization of the charity regime, whether the T1044 non-profit return should be made publicly available like the T3010 charity return, and other topics.
While many of the topics were of great interest to us, we were particularly pleased to see the Committee recommend that the Government of Canada direct CRA to revise Guidance CG-002 Canadian registered charities carrying out activities outside of Canada. More specifically, the Committee recommended that the guidance should “demonstrate a shift in focus from ‘direction and control’ to careful monitoring through the implementation of an ‘expenditure responsibility test.’” Many in the sector have advocated for CRA to use this approach, including our Social Impact Team when, in 2015, members of our team appeared with co-counsel on behalf of Imagine Canada as an intervener, and on behalf of the appellant, in a case involving these rules.
Another recommendation worth highlighting is that the Government of Canada work through the Minister of Innovation, Science and Economic Development to create a secretariat on the charitable and non-profit sector so that CRA is not the sector’s only interface with the Government. The purpose of this would be for the sector to be able to interact with a Government Ministry on the substance of programs and explore opportunities for growth and increased impact, as opposed to only interacting with the Government on technical compliance matters.
The Committee also recommended that the Government direct CRA to revise its interpretation of the “not-for-profit purpose rule” to provide greater clarity and certainty for non-profits regarding the extent to which it is permissible for them to hold surplus income. Since the release of CRA’s Non-Profit Risk Identification Report a few years ago, non-profits have been seeking greater clarity around these rules.
Now that the Report has been released, the Committee will disband. The senators indicated that it is now up to the Government of Canada, charities themselves, and other interested stakeholders to further explore and take steps to implement the Committee’s recommendations. The Honourable Ratna Omidvar, Senator for Ontario, expressed that she and other senators on the Committee will continue to be advocates for the sector. This being a federal election year, the senators recommended that stakeholders ensure that their local candidates are aware of the issues affecting the sector and the recommendations for addressing those issues. Since there is no specific action plan with respect to what the next steps will be and who will lead the discussion, it will be very interesting to see what comes from the Report. We will continue to monitor developments on this front.
Read the complete report.
 Public Television Association of Quebec v. Canada (National Revenue), 2015 FCA 170.