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Why Is CRA Reinterpreting Rules to Shut Down Charities It Doesn't Agree With?

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It's what charities have feared. The results are trickling in from the Harper government's program of stepped-up Canada Revenue Agency (CRA) audits of charities that tend to have different policy ideas than those of this government -- and it ain't pretty.

Sadly, the early results are in sync with the findings of my recent thesis, which triggered a national conversation about political interference by the Harper government in the workings of the taxman and causing an advocacy chill in charity communications. And that in turn impacts on Canada's public discussions and thus on the vigour of democracy itself.

The first of the latest two charities to make the news include Alternatives, a small Montreal-based development and human rights organization, which has been around since 1994 doing work through partners in developing nations.

Toronto-based Environmental Defence a three decades-old and highly regarded Ontario environmental charity, is the other group to be given bad news, though it has received a reprieve from being closed down so that it can appeal a death sentence. While the main focus of media attention has been on whether charities will lose tax receipting privileges because of CRA's changing interpretations of acceptable activities, the problems faced by these two organizations is of a different, though very disturbing, nature.

CRA is telling them that they will lose their charitable status because their very activities have been reclassified as "non-charitable," that previous finding them in good stead were wrong, and that they should not have been given charitable status in the first place.

Alternatives is expecting to close shop, and it's understandable. Executive Director Michel Lambert told CBC News reporter Dean Beebie, that he expects CRA to offer them a contract in order to continue their work but that he expects the terms will not be ethically acceptable. That's because Alternatives has an approach to its work with Third World partners that respects the ability of the partner to run the programs funded by Alternatives.

Alternatives' approach to partnerships may seem obvious to readers, who cannot imagine that Montreal staff of a Canadian charity would know the details of what is best for Third World partners and their clients. Are charities expected to duplicate former Colonialist power structures by micromanaging the work of Third World locals in order to satisfy the Canadian taxman?

Well, actually, yes. Media reported last summer on the experience of CoDev, a very small Vancouver development charity that works to empower Latin American communities. But CRA upbraided them for not having sufficient control over their partners. Shocking but true. But also, I suspect, also unworkable and so, ultimately, likely to lead to CoDev losing its charitable status in a future audit unless CRA comes to its senses.

Also caught in the middle here are first, Canadian donors to CoDev and Alternatives who doubtless would oppose these recipient organizations channeling colonialist attitudes and, most importantly, the international recipients of the good work sponsored by Alternatives and CoDev. Given that all taxpayers are subsidizing the tax-deductible donations to these charities, the tax collector has a responsibility to ensure that monies are well-spent. But they need to find an approach that recognizes that Canadian charities cannot be put in the position of being colonial administrators.

Further, my thesis interviews with charity leaders brought up another issue to which CRA needs sensitize itself: Canadian international development and human rights charities often work through partners in countries that have dictatorships and the funded activities are often illegal in that country.

Many Third World partners of our charities are courageously risking jail or capital punishment for the work they do, and our charities are also often breaking the local laws in order to do the bigger good of helping people, spreading Canadian values of human rights and democracy. By requiring detailed control and reporting from projects in these countries, CRA puts at risk the very people that we should be protecting and nurturing. CRA needs to know when to bend the rules in the name of something bigger than detailed naming and record-keeping. I suspect that most Canadians would strongly agree that the taxman needs to back off quite a distance from the direction in which they are heading.

But Lambert of Alternatives is not expecting any give in the new interpretations from CRA. His organization will likely have to shut down, and they won't be the last, he predicts to CBC. "If it happens to us, it will happen to every international solidarity organization in Canada." Wow! To put this in perspective, think of the international development, disaster relief, and human-rights charities to which you now or previously donated. Yes, we're talking about them.

This is bonkers. Respected charities doing important work are being told they were never qualified to operate, that some bureaucrat made a historical mistake and now the organization must be shut down, their work discontinued, their assets scattered among those charities in their same sector that survive. Survive for now, that is.


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