It was "always a bit tricky", Cathy Hawara told the Globe and Mail, when Canada Revenue Agency (CRA) "gave consideration to, you know, what you might call political leanings, to make sure that we weren't only focusing on one side of the political spectrum."
Ms. Hawara's acknowledgement that her group gives consideration to an organization's place on the political spectrum is important because she is the Director-General of CRA's Charity Directorate which is conducting all the audits of charities allegedly engaged in "political activities".
This admission that consideration of political leanings formed part of the basis for audit selection came only months after the same Director General spoke to Canada's charity lawyers at the Canadian Bar Association's 2014 Charity Law Symposium about how important it was that the regulator of charities located in a line department of the Government of Canada operate independently from government. She clearly stated: "As I have made clear in the past, the process for identifying which charities will be audited (for any reason) is handled by the Directorate itself and is not subject to political direction".
Absent that claim, it would be easy to assume that the aggressive charity audit program being undertaken by Charities Directorate, which did not begin with but was given impetus by the special additional funding provided by the 2012 federal budget, is intended to focus on those charities whose advocacy creates discomfort or embarrassment to the Prime Minister's political agenda.
Concern about political direction stems in part from the fact that from 2007 through 2009 Ms. Hawara served as the Director of Appointments with the Senior Personnel Secretariat at the Privy Council Office. Consequently, prior to becoming Director General, her job was to provide advice to the Clerk of the Privy Council, the Prime Minister and his Office.
One of Canada's charity lawyers who is most often quoted in the press, Mark Blumberg, welcomed Ms. Hawara's appointment as Director General of the Charities Directorate with the "good news" that she provides "a much needed vigorous crackdown on a few bad apples who are involved with abusive charity gifting tax shelters and receipting fraud." Today she is carrying on a vigorous crackdown on a few bad apples who are allegedly involved in "political activities". Whether this crackdown is "much needed" is a question best left to others.
My concern is that it is meaningless to claim that the audit selection process is not subject to political direction if consideration of political leanings is an integral part of the audit selection process. How can Canada claim to have a truly independent regulator when the Director General has admitted to the national press that the Directorate is concerned with the particular political leaning of charities, rather than with whether their activities are political at all?
Selecting a charity for audit on the basis of its political leanings undermines the independence of the charitable sector. It also undermines the integrity of the audits themselves; because it is possible that a court might overturn a resultant decision by the Minister of National Revenue to revoke that charity's registration on the basis that it was based on improper considerations. The particular direction of a charity's alleged political leanings is generally irrelevant to answering the question whether a charity is or is not carrying on "political activities".
The reason that the federal government is frustrating Freedom of Information Requests filed by audited charities is that will highlight these improper considerations if the matter goes before the courts. CRA's refusal to reveal how the Charities Directorate conducts its audits increases the effectiveness of the "advocacy chill". More importantly, it hopes to conceal the extent to which this audit program has given "consideration to, you know, what you might call political leanings".
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