CRA draft guidance on public policy activity by charities needs clarity

  • May 16, 2019

Given the long-running confusion over what constitutes political activities by charities, as opposed to legitimate activities advancing a charity’s cause, guidance from the Canada Revenue Agency regarding which is which should be welcome.

And it is – where it doesn’t add more confusion to the mix.

The CBA’s Charities and Not for Profit Law Section weighed in on a draft guidance from CRA on public policy dialogue and development activities by charities, noting a few spots where the document muddies the water.

For example, the definition of a “stated charitable purpose” appears to require charities to assess whether the purposes in their governing documents, which have already been approved by the CRA, continue to meet the agency’s requirements in order for them to carry on PPDDAs. “Further, defining ‘stated charitable purpose’ to include more than the purposes stated in a charity’s governing documents could be confusing to charities,” the Section says.

It also recommends that the CRA not require charitable purposes to include charitable activities. The guidance states that one of the elements of a charitable purpose is the activity required to further that purpose – for example, if the purpose is to advance religion, the activity could be offering religious instruction. “Charities may find it difficult to see how a PPDDA (for example, advocating for government funding for religious education) could fall within ‘offering religious instruction’.”

It also notes that the guidance as drafted would allow a charity to spend 100 per cent of its resources on PPDDAs, though “it is unclear how 100 per cent of a charity’s activities can be PPDDAs and not the activities set out in its charitable purposes.”

The draft guidance states that the rules applicable to PPDDAs do not apply to the charity’s other activities, such as fundraising, but it’s unclear whether the CRA is saying that PPDDAs that are illegal are not permitted, or that other activities that have their own rules which must be followed. The Section recommends that the intent of that part be qualified.

The Section also calls out the cumbersome language in the draft guidance, noting that after most references to PPDDAs, the document adds the explanation “public policy dialogue and development activities” in brackets, which makes it hard to follow at times. Spelling it out on first reference is plenty, the Section says, or the document could link to the definition every time the abbreviation is used.