6 min

Charity cases

Homophobes get perks under Canada's antiquated tax laws

Credit: Colin Seaman

Where does charity work end and politics begin?

When it comes to how the Canadian government treats registered charities, gay and lesbian groups often seem to fall on the political side, while rightwing Christian groups fall on the charity side.

And the political side is the wrong side, financially speaking. Charities in Canada get lots of perks, like allowing their donors to claim a 40 percent tax credit on contributions.

But the federal government won’t let groups become registered charities if their main activity is advocacy. A charity may only spend 10 percent of its resources on “political activity.” So many gay and lesbian groups, like Egale Canada or AIDS Action Now, lose out because of their politic purposes.

What makes it particularly painful is that the Income Tax Act considers religion a legitimate charitable purpose – even if a religious group is advocating against, say, gay rights. It may look political, sound political and smell political, but, according to Canada’s tax laws, it’s fine.

“When a religious group qualifies for charitable status, they get more scope than anyone with regard to advocacy,” says Gordon Floyd, vice president of public affairs for the Canadian Centre For Philanthropy. “We call them the untouchables – no politician wants to go after the churches.”

So a church-based group like Focus On The Family can use its charitable status to argue in court against same-sex marriage. It can publish material like the “action guide” on its website, encouraging readers to lobby government: “Write senator [Laurier] Lapierre and share with him your belief in the importance of the heterosexual monogamous definition of marriage,” it states.

But Egale Canada is disqualified from charitable status mainly for using those exact same advocacy tactics for an opposing message.

“I think where we’re seeing a lot of problems is in recognizing groups whose mission is to protect civil liberties or advance human rights,” says Floyd. “The Canadian Civil Liberties Association or Egale Canada can’t get charitable status for their main work because their main work is considered too edgy.”

When the laws for charities were established 400 years ago in Europe, they were determined primarily to help people with money give a share of their wealth to aid the poor. The rules under which this could happen have been redefined over the years by the courts and to some extent Parliament, but by and large remain those established so many years ago.

Organizations wishing to receive charitable status must meet one of four requirements. They must be formed for the purposes of relief of poverty, advancement of education, advancement of religion or other purposes beneficial to the community. The definitions and terms of reference for these four categories are not always clear, especially in the “other purposes” category. Over time, it has included many things, like the arts and sports, but rights issues have been left out.

And religious has been left in.

Derek Rogusky, director of research for Focus On The Family (Canada), defends his group’s charitable status.

“We’ve been doing what we’ve been doing for I don’t how long, and we certainly fall within the guidelines,” Rogusky says.

Focus On The Family (Canada) states on its 2000 tax return that it “promotes the preservation of the family, primarily through radio broadcasts, periodicals, literature and tapes supplied by Focus On The Family Inc (United States)” and it does seem to have some religious activities. But it might be argued that their biggest presence is a network of websites and newsletters which regularly criticizes gay rights, abortion, feminism and progressive politicians.

In 2000, Focus On The Family fundraised almost $8-million, according to its tax return. It spent about $2-million on hazily-defined “family concerns,” almost $2-million on “literature, resources and correspondence,” and another $2.2-million on publications. In the documents the group provides to Canada Customs And Revenue Agency, there is no evidence how much of this spending goes to spiritual issues and how much to blocking gay rights.

Rogusky says that all of Focus On The Family’s political activities fall within the 10-percent political activity rule.

“We’re confident given the rules that exist, that our activities are well within what’s allowed. We don’t have any concerns at this point,” he says.

Because of the way the Income Tax Act is set up, many gay and lesbian groups practise self-censorship and don’t bother applying for charitable status.

“We looked into it and wanted to get it,” says Richard Hudler, a member of the steering committee of the Coalition For Lesbian And Gay Rights In Ontario. “We never made an application as from our research we know our orientation is very political.”

Bill Ostrander, a lawyer with the firm Gowlings who has helped many organizations get their status, isn’t sure whether having a reference to lesbian, gay, bisexual or transgendered in the group’s title or mission sets off flags at the federal or provincial government.

“Is it harder for a group that has gay or lesbian in it to get status?” says Ostrander. “I don’t know if it’s more difficult generally but certainly any one that I’ve tried has been very difficult.”

Ostrander is worried that many groups may get lost in the struggle when they don’t have an advocate assisting them.

One of the cases that Ostrander worked with involved the Toronto Centre For Lesbian And Gay Studies. This case was one of the early battles for queer groups and involved an extremely lengthy process that took several years before it was successful.

One of the difficulties, according to Ostrander, is that in Ontario in order to become a charity, a group must receive approval from both the federal and provincial levels of government.

“This process took several years and if we [Gowlings] hadn’t been prepared to spend the time for free, they wouldn’t have been able to do it,” Ostrander says. “This was a very neutral organization whose sole purpose was to provide a community forum for education and purposes of discussion around issues involving gender and sexuality. There wasn’t any doubt in my mind that it complied. That is why we fought so hard.”

In a large-scale report released last August, The Canadian Centre For Philanthropy recommended making it easier for advocacy groups to get charitable status. It says that advocacy and political applicants should be evaluated according to how public policy institutes are assessed.

“Advocacy issues, debate around public issues, is something that government should be encouraging,” says Floyd.

Floyd says the government seems to be taking the report seriously – the federal Department Of Finance is this month preparing a brief for cabinet on advocacy by charities.

Others see eliminating advocacy by charity groups as a solution.

The administration committee of Toronto City Council recently considered tightening their guidelines about what types of activities community groups can take part in. This discussion stemmed from a request from Councillor David Soknacki and seemed particularly focussed on those groups that receive grants from the city. City hall insiders feel this proposed crackdown is in response to significant lobbying campaigns conducted around cuts to grant programs and other community services.

“It’s too bad when a councillor feels so threatened by the democratic process that allows community people to express their concerns about important city budget decisions,” says Peter Clutterbuck, a spokesperson with Toronto Civic Action Network and a volunteer with Community Voices Of Support (CVOS). “It’s a shame and outrage when councillors attempt to place a chill on community organizations informing and engaging their local people in important city budget debates by threatening to cut city grant funding.”

The city, pointing to a need for harmonization, has deferred action on the report until the federal government reviews its policies.

Charitable registration laws do allow for groups to develop arms-length companion organizations that are able to carry on the charitable activities, while the other part of the group engages in political activities. The Women’s Legal Education Action Fund (LEAF) and LEAF Foundation are a clear example of a successful partnership.

LEAF is a political organization engaged in lobbying for the advancement of equality for women and girls in Ontario. The LEAF Foundation is the fundraising arm and is able to issue tax receipts to corporations and individual donors. Their website indicates “the LEAF Foundation is the largest source of funding for LEAF and represents over one third of LEAF’s cash revenue.”

Ironically, the success of Egale, CLGRO and others has meant that the changing political and legal climate is actually opening up a role for Egale to play that would meet the charitable requirements.

“In the past we felt that political and legal work was such a large part of Egale activities that the administrative work required to have a companion organization was too much,” says Fisher. “There has been a shift in recent years at the board level. The board is more interested in doing research and public education as the laws across the country have changed.

“In equity-seeking communities the early work is about changing laws. As laws change there is more work that is about educating about new laws and changing discriminatory activity. There is much more of a scope now for us to seek to develop a charitable organization.”

As Hudler from CLGRO puts it, “Charitable status is desirable; it makes a difference in number of donations. It isn’t a level playing field when our opponents are able to get it and we’re not.”