Canada: Federal Government Changing Rules on Lobbying, Advocacy

The Department of Finance is modifying the definition of “charitable activities” and other terms under the Income Tax Act to allow charities greater freedom and flexibility in lobbying government at all levels regarding policy and regulations affecting their missions.

On Oct. 25, the Department of Finance posted “Explanatory Notes Relating to the Income Tax Act and to Other Legislation” that includes a number of proposed amendments to the Income Tax Act and other legislation.

For charities, chief among the amendments were changes to the definition of “charitable activities.” From the Notes:

The new definition "charitable activities" provides that charitable activities include, without limitation, public policy dialogue and development activities carried on in furtherance of a charitable purpose. Public policy dialogue and development activities generally involve seeking to influence the laws, policies or decisions of a government, whether in Canada or a foreign country. Under this definition, such activities will be considered charitable activities provided they are carried on in furtherance of a charitable purpose (e.g., the relief of poverty or the advancement of education). An organization could therefore, for example, meet the test in new paragraph (a.1) of the definition "charitable organization" where some or all of its activities are public policy dialogue and development activities carried on in furtherance of a charitable purpose.

Essentially, the effect of these changes is to remove the existing limits on the extent to which a charitable organization can engage in non-partisan political activities. The prohibition against a charitable organization devoting resources in support or opposition of any political party or candidate for public office is maintained.

It's important to note that these changes are still just proposed amendments and are not official law or regulations yet. However, they represent major changes from existing policy, and CRA’s own guidance about this issue, published just a few weeks ago, has already been withdrawn.

“Clarity on allowable activities will help organizational leaders, boards of directors and volunteers engage government representatives with confidence,” says Scott Decksheimer, CFRE, chair of AFP Canada. “Though the previous rules allowed wide engagement, these new, clearer rules will help charity leaders make a bigger impact in public policy and really move the needle on issues of national importance.” 

AFP is pleased with the changes as they align with our recent comments to the CRA about the political activities of charities. In our comments, AFP stressed that new policy language “should be reframed to encourage, not restrict, engagement with elected or other government officials.  At a minimum, the current category of ‘political activities’ should be changed to a term that is less confusing, does not have a negative connotation for charities and encourages charities to engage with elected officials and other policy makers.”

“AFP welcomes this proposed modification to the Income Tax Act as it will encourage charities to advocate for their causes and engage in the public policy process—and not focus on arbitrary calculations of resource allocations that made many organizations fearful of getting involved,” said Dan Brunette, chair of the AFP Canada Government Relations Committee.

AFP will be monitoring this issue closely and working with government and our sector partners to ensure these changes are enacted and that charities have greater freedom to dialogue with elected officials and others about legislation and regulations affecting their mission and services.