Effective and Accountable Charities Act

An Act to amend the Income Tax Act (use of resources of a registered charity)

Status

Second reading (House), as of May 16, 2022

Subscribe to a feed (what's a feed?) of speeches and votes in the House related to Bill S-216.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from the Library of Parliament. You can also read the full text of the bill.

An Act to Change the Name of the Electoral District of Châteauguay—LacollePrivate Members' Business

October 28th, 2022 / 1:05 p.m.
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Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Mr. Speaker, it is always a privilege and honour to rise in the House.

Today, we are talking about a private member's bill for renaming the riding of Châteauguay—Lacolle to include Napierville. I want to talk a bit about that community and why I believe it is important that it get recognized. Of course, it is famous for its fruits and vegetables and has a beautiful rural countryside. There are many beautiful things about it, so I am glad to see that like all the great towns and beautiful areas in Quebec that get recognized, it is being recognized as well.

I also want to talk in general about my riding. It is composed of a number of areas, and one of them is Clarington, where I live, which did not make the cut for the name. I have a beautiful countryside as well, so perhaps it is a little akin to Napierville as it is another beautiful rural area.

Members of the Bloc made the excellent point that perhaps there are more poignant things we could be talking about in this House. I certainly do not want to be rude in any way, so I will underscore the wonderful countryside and beautiful people of Napierville. As for getting their moment in the sun, my understanding is that after the redistribution, they will, but as I said, it is not the most poignant of PMBs.

I just want to go through some of the things we can talk about in a private member's bill, if the Speaker will give me that bit of indulgence.

I have had the opportunity to raise a couple of private member's bill in this House, one of which was to give an exemption on propane and natural gas to farmers, who, of course, are paying thousands of dollars in carbon tax every year. I was glad to see that it made it through the House, but it fell apart when the government unfortunately called a needless, unnecessary and very expensive election. I am glad to see that it is being brought forward by one of our fellow Conservative members, the member for Huron—Bruce, if I have that correct, and that it is now back in front of the agriculture committee. It is Bill C-234, which will provide tremendous relief and save farmers thousands of dollars.

As we know, in Napierville and elsewhere in Canada farming is among one of the hardest but most important occupations we can have. Of course, without farmers we do not eat, so one of the ideas I would throw out is that perhaps we could have more private member's bills to help farmers.

We are going through an incredible food crisis and this spring will be very challenging. For most people in Canada, it will be okay. For the people in this House, who are earning good salaries, it will not be fun to go to the grocery store but they will be okay. I am worried about the people who are economically challenged, not just in Canada but across the world. We will see, if the forecasts are correct, some record-breaking starvation.

We have already seen the pain that Canadians are going through right now because of the lack of food production and because of inflation, with 1.47 million Canadians going to food banks in March 2022. That is a record high; it has never been higher. Twenty per cent of Canadians are now going to food banks on a regular basis and 60% of Canadians are failing to put food on their tables. These are the types of issues we need to be discussing. These are the types of issues we should be helping people with in rural areas across this country from coast to coast to coast.

By the way, the government was good enough to respond to my private member's bill by putting part of it into the budget, but unfortunately, instead of just giving farmers and the people in Napierville an exemption, it tried to put in a credit system. The challenge with how these debt-credit systems work is that, like the carbon tax, some of the money always seems to get stuck in Ottawa. Can members imagine that? It is so strange. These millions of dollars flow into Ottawa and are all supposed to flow out, but somehow they get stuck here in Ottawa. It is funny because that same money seems to flow pretty easily to Liberal insiders, friends and family, like with the arrive scam app worth $54 million. We still do not know where that money went. My goodness.

I could just imagine what the NDP or the Liberals would be saying if a private company took $54 million and had no idea from people who did not have even the obligation or the right to pick where that money came from. We need to be looking at this from the viewpoint of helping all Canadians going forward.

Another private member's bill that I worked on, with Senator Omidvar, was Bill S-216, which would help charities. There was a barrier, a Canadian problem called “direction and control” in charity law, which stopped Canadian charities from giving out money and working with other institutions around the world. Once again, do members know what the response of the Liberal government was? It put it in its budget.

I think I am singlehandedly driving a lot of the Liberal policy here. Maybe, to the member's credit, perhaps just having me talk about her private member's bill will mean the Liberals will also put that in the budget. There are odder things. I think there was some money to go to land control on the moon in one budget, and there is the arrive scam app, so certainly the Liberals could put this in the budget as well. However, that was another good idea for things we could put into PMBs that would help Canadians from coast to coast to coast.

Finally, with respect to my ideas for private member's bills, we have the international human rights act. The international human rights act contains a number of clauses, one of which will force the Department of Foreign Affairs to publicize the names of individuals who are being held as prisoners of conscience. These are individuals who are held just because of their beliefs, because they are pursuing things like freedom, liberty, democracy, LGBTQ2 rights and indigenous rights around the world. They are being held in prison just because they are pursuing freedom for others.

It would also force the government to respond when Magnitsky act sanctions are called for by a parliamentary committee. If a parliamentary committee says, “We need Magnitsky act sanctions put on this person,” then the department has 40 days to respond. It does not have to do it, but it has to tell us why it is or why it is not imposing Magnitsky sanctions. It is a very reasonable thing.

To go back half a step, the Magnitsky act sanctions are sanctions the government can put on individuals who are committing vile human rights crimes. When the legislation was initially passed, there were many instances in Venezuela, Russia and other countries where these sanctions were used. However, these sanctions have stopped being used.

I see that I am running a little short of time, which is a shame, because I could really talk about the people of Châteauguay—Lacolle for hours and hours. It is an absolutely beautiful part of the world. However, I did think of another name for the riding, which is Roxham Road. This has been a serious issue for Canadians, for Quebeckers, and so while I say that a little in jest, it takes nothing away from this serious issue that I hope the Liberal government will listen and respond to.

I like all of the people of Napierville.

I hope they have an absolutely fabulous time and I look forward to their being fully recognized as everyone in Canada should be, regardless of what they believe, who they love or who they are.

Report StageBudget Implementation Act, 2022, No. 1Government Orders

June 6th, 2022 / 1:25 p.m.
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Bloc

Yves Perron Bloc Berthier—Maskinongé, QC

Madam Speaker, I have no doubt that the member for Winnipeg North could have continued speaking for some time. I will make him happy and start with his last statement, which referred to child care. We are pleased that this has now been established in the rest of the country and that Quebec has served as the model. That makes us very proud.

I would invite my colleagues in the House to remember this example when the Bloc asks for the right to opt out of the next few Canada-wide programs with full compensation. The right to opt out was a big factor in making this possible, as was recognition of the fact that Quebec already had a good system. For me, it is a mark of respect.

Not only did the federal government take our model and implement it elsewhere, it gave Quebec its share of the money it was owed without telling it what to do. The phrase “without telling it what to do” will come up a few times in my speech today when I speak about the conditions that are set to be imposed in various areas.

I am pleased to rise to speak to Bill C-19. I will begin by criticizing its huge omnibus format. When the government claims to properly study bills and practise true democracy and freedom of speech, how can it seriously introduce a 500-page bill that amends 37 acts?

Several provisions involving minor amendments to legislation have garnered consensus. However, the bill also proposes other extraordinarily important and complex measures.

For example, there is the employment insurance reform, which, as I have said before, deserves to be studied separately and in depth. The current system helps too few workers in Quebec and Canada, and I find that unacceptable. I do not want to get too deeply into this, but I am not sure that anyone would hire me as an insurance salesman if I tried to sell homeowner’s insurance by telling prospective customers that the company would only pay four times out of ten in the case of a loss. This is what we are telling workers with this program, so an in-depth reform is necessary.

This omnibus bill makes it seem like the Liberal government is taking advantage of its deal with the NDP and the so-called majority it gives them to have a pile of legislation passed quickly. Still, we are more or less in favour of this bill, and we will continue to improve it, as we are doing now.

I would like to talk about cider and, especially, mead. Representatives of both these industries approached us to tell us that the reintroduction of the excise tax on July 1 makes no sense. Australia’s complaint, which led to the reintroduction of the tax, concerned wine, not cider or mead. These financially sound but more marginal productions are expanding and are the pride of several regions of Quebec. They did not deserve to be taxed. Their representatives were very anxious and approached our members to speak on their behalf.

I would like to publicly congratulate my colleague from Joliette who, with his team, did extraordinary work in committee and succeeded in having cider and mead exempted from the definition. I am very proud, we are happy, and this is one of the improvements I was talking about.

We also raised a few concerns voiced by charities, which feared they would be once again subjected to a mountain of paperwork in the restrictions, although the basis of Bill S-216 was positive. We will be keeping a close watch on that. We are keeping a close watch, and we will follow up.

As for the rest of Bill C-19, there are no measures we find strongly objectionable. For that reason, we are more or less in favour of it. Among other things, there is not much about oil subsidies, which is good. There is not much about nuclear energy. We are aware that that is coming but, for now, we have no position on the subject.

The numerous encroachments promised in the Liberal Party's budget, including encroachments on health care with the dental insurance plan, are not yet upon us. This allows us to take a step back and look at what is constructive in the bill. For one thing, it contains urgent measures that we approve of, such as the additional five weeks of EI benefits for seasonal workers. That is a positive measure in our eyes.

The Bloc Québécois offers constructive opposition. When proposals make sense, we are happy and we say so. When they do not make sense, however, we do not say that the government is lousy and that what it is doing makes no sense. We say that we think the government should try looking at the situation from such and such an angle. Quebeckers can count on us to keep doing this.

Obviously, there are the health transfers. We hope to get our way someday, even if it is not looking that way right now. This subject will always remain a bone of contention, but we will take the $2 billion offered, since it will give us some breathing room. The same goes for the $750 million for public transit.

There are also some good intentions, but we will need to work to make sure that they are implemented properly. I am thinking, among other things, about the tax treatment of companies that adopt zero-emission manufacturing processes. We will have to watch out for hidden subsidies for fossil fuels. The Bloc believes that we must eliminate the fossil fuel subsidies and begin transitioning to alternative energy sources. With respect to the ridiculous carbon capture projects for oil wells, we have seen the results they yield in other countries and the disasters they cause when they go wrong, because they do go wrong. I do not think we have the right to go down that rabbit hole. Right now, with climate change being what it is, we need to be diligent, but above all cautious. Let us be smart about this and move in the right direction.

We like the proposed amendments to the Competition Act to prevent collusion and abuse of power. At the Standing Committee on Agriculture and Agri-Food, we studied the problems with competition among shipping container companies. During the pandemic, prices jumped from around $3,000 to more than $25,000 over the course of a year or a year and a half. That is outrageous. The container industry is concentrated in the hands of a few key players, so there is work to be done.

We also need to keep an eye on telecommunications companies' billing practices. I would like to see the hidden fees exposed. I think that that is also something positive.

The important thing is overall consistency. I also think it is good that pension fund managers would be forced to provide details on investments in things like fossil fuels. That is the first step in transitioning to green energy. I encourage anyone who is interested in this to take a look at the Bloc Québécois's platform or to talk to my colleague from Mirabel, who is very familiar with this issue. Our platform contains solutions, and we suggest some approaches that we would like to explore.

The luxury tax is a tricky topic, however. Everyone agrees with the principle of a luxury tax, but we need to be careful about how we proceed. The Bloc Québécois has expressed a number of concerns and reservations about this tax, mainly because we want to protect our aerospace industry. This industry should not have to wait so long for a rebate if it turns out that the tax does not apply.

We need to be smart and consistent here, to ensure that we do not hurt our businesses. I am thinking about the 35% surcharge on Russian fertilizer, for example. Everyone agrees on the principle, but I want to reiterate that when this surcharge is applied to orders placed and paid for in the fall, before the conflict started, it ends up penalizing our producers instead of the Russians. The government does not seem interested in creating an exemption.

If a government wants to impose measures, it needs to make sure they are done right.

May 30th, 2022 / 5:15 p.m.
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NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Thank you very much.

It's very much in the spirit of what's already been said. I think we have some language here that we've likewise run by folks in the industry and by the senator who's sponsoring Bill S-216, Senator Omidvar. I'd like to put that language to the committee now in the hopes that we may be able to pass some wording that I do think strikes a good balance between the need for accountability on the one hand and the need for more flexibility than the charitable sector has enjoyed in the past.

It's in that spirit that I present this amendment, and I look forward to the vote.

Thank you, Mr. Chair.

May 30th, 2022 / 5:05 p.m.
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NDP

Daniel Blaikie NDP Elmwood—Transcona, MB

Thank you very much.

I think we have a number of amendments before us, not just for this clause but also for a few clauses coming up, that will deal with the subject matter of what is currently Bill S-216. My preference is for NDP-2 and I'm confident, given the parliamentary secretary's remarks, that it will pass.

My intention is to vote against the other amendments in the package with the exception of CPC-4, which I take to be a complementary amendment not just to Mr. Lawrence's own amendment here but also to my own. That's how I intend to vote on these items. I think that in doing so we can create or provide a substantial solution to what was clearly a problem with the way the budget implementation act was worded.

I want the committee to know that's how I intend to proceed.

May 30th, 2022 / 5:05 p.m.
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Liberal

Terry Beech Liberal Burnaby North—Seymour, BC

Thank you, Mr. Chair.

As I had the opportunity to articulate earlier in the House, the government is supportive of the spirit of Bill S-216. I've had the opportunity to work with the senator personally and I thank, actually, all members around the table from all parties for their work to try to make sure we get this right. There is a balance between allowing greater freedom to do better work with less administration and protecting Canada's very generous tax receipting program.

My preference is for NDP-2. Amendment CPC-2 would prevent that, as the chair stated when introducing it, so that would actually have me oppose amendments CPC-2, CPC-3, Bloc-1 and Bloc-2 but support NDP-2. If we got that far, amendments Bloc-3, CPC-4 and NDP-3 are essentially the same and I would support that as well. I believe that strategy is the right way to go. I believe it has the general support of those individuals who have been involved in bringing this to the government's attention in the first place. I believe it respects the spirit of the bill, and that's the way I'll be voting. Thank you.

May 30th, 2022 / 5 p.m.
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Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Thank you very much, Mr. Chair.

I have spent extensive time consulting with stakeholders with respect to the charitable sector, and they have incredible frustration with the current status of the law respecting the contributions of charities to non-qualified entities such as NGOs. This situation creates both international and domestic challenges.

When they heard the budget was going to take place in the spirit of Senator Omidvar's private member's bill S-216, they were excited. However, their excitement was quickly dashed by the overly prescriptive nature, and that's what our amendment to clause 16 seeks to fix.

It takes the prescriptive nature of the BIA and turns it into a more reasonable set of circumstances that put the onus on the charities to conduct their business within their charitable scope and also to do so in accountable and transparent ways. What it doesn't do is create overly prescriptive rules that will create a legal fiction or will just stop charitable work altogether.

In short, Mr. Chair, this amendment will allow more good people to do more good work.

May 26th, 2022 / 11:05 a.m.
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NDP

Heather McPherson NDP Edmonton Strathcona, AB

Thank you, Chair, and thank you to all our witnesses for sharing their testimony today. It's been very informative and very interesting. It's my very first time attending this committee, and I look forward to participating.

I'm going to follow up on some of the very brief testimony that we heard from Mr. Mangin and hopefully talk a bit about some of the issues around Bill S‑216 and the BIA.

The reason I want to do this is that we didn't get the opportunity to hear from Mr. Mangin, but this is an issue that's very, very important to me. I know it's very important to many members of Parliament, but I come at it from a bit of a special perspective, I guess, which is that I have been working on changing the direction and control legislation in this country since 2005. We have known that this is a paternalistic and a colonial piece of work within CRA that has needed to be changed for a very long time and has impacted the ability of the charitable sector to actually do the work they are mandated to do. It is in no way reflective of participatory, democratic good practice in charities. It needed to be changed.

When Senator Omidvar came to me and to many other parliamentarians to speak about the changes to direction and control within her bill, Bill S‑216, we of course were all delighted. We were all on board. We were all working with her. The sector has worked very closely with her, and legal experts have worked very closely with her and her team to develop a really strong piece of legislation.

Of course, when we saw in the BIA that it was named and that the spirit of Bill S‑216 was going to be implemented, I think many of us within the House of Commons and many more within the charitable sector were delighted. When we saw what was actually being proposed, the delight turned a bit to disappointment.

I'm going to read from a few different places for you, and I'd like to put some of this testimony into the record. Then I'm going to pose some questions to Mr. Mangin that he can respond to in writing, bilingually, when he's able to do so.

First of all, I want to start with a letter that was written to the government by Cooperation Canada. For those who don't know, Cooperation Canada is an organization that represents many of the charitable sector groups that work in Canada. It's a very long-standing organization that has been in place for over 50 years. It is very well respected and knowledgeable on this file and has certainly taken a lead on it.

In the letter they addressed to the government, they say:

...the BIA reinforces the colonial and paternalistic approach to the relationship between charities and the partner organizations supporting their charitable purposes. It makes the current regime more challenging for organizations to fulfill their charitable purpose by embedding a rigid and prescriptive approach to funding non-qualified donees inside and outside Canada in legislation. It makes the system more confusing, risky and challenging for registered charities and non-qualified donees to work together, and as such, impedes philanthropic and charitable resources flowing to communities that need them the most.

The serious concerns that the sector has with the BIA and that we would like to see changed within the BIA are the proposed definition of a qualifying disbursement, the proposed language relating to directed gifts and the prescribed conditions for qualifying disbursements to grantee organizations.

I know that this committee has received information from Imagine Canada; I wanted to make sure that that information from Cooperation Canada was also included.

I also wanted to give a little bit of insight into what this looks like on the ground. For example, if you're looking at perhaps an indigenous partnership and perhaps there is a requirement to work with indigenous groups that do not, for whatever reason, have charitable status, what we have in the BIA impedes the ability for charities to support indigenous groups that are doing the work within their communities. I think that's something that no Canadians want as we deal with truth and reconciliation in this country.

There's another example when we look at working internationally. Right now, we have an incredible crisis that is happening in Ukraine. I think it's really important that everyone on this committee recognizes that if we don't get this BIA right, if we don't get the direction and control right, those organizations that can do the best work in Ukraine and can do the best work with refugees who have fled Ukraine, Romania, Poland and other countries won't be able to work with Canadian charities because of the aspect of direction and control that we have in this BIA.

As Mr. Mangin was, I suspect, going to tell us, we need to amend the language on direct giving. This would allow Canadian charities to contribute to pooled funds and support non-qualified donees.

We need to remove the reference to disbursements meeting prescribed conditions and replace it with a requirement that the charity instead takes reasonable steps to ensure that the resources are disbursed and used exclusively in furtherance of a charitable purpose. We need to delete proposed regulation 3703 in its entirety. This would allow for regulations to remain in the CRA guidance documents.

Thank you, Mr. Chair.

May 26th, 2022 / 10:25 a.m.
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Jean-Marc Mangin President and Chief Executive Officer, Philanthropic Foundations Canada

Mr. Chair, members of the committee, thank you very much for this opportunity to discuss the serious and unintended consequences of Bill C‑19 for the charitable and non-profit sector.

Like many other organizations in the sector, Philanthropic Foundations Canada, which is the largest national network of private and public foundations in the country, welcomed the government's budget announcement that it would adopt the spirit of Bill S‑216, the purpose of which is to treat organizations that contribute to the common good on an equitable basis even if they do not have official charitable status.

However, Bill C‑19 does no such thing. In fact, if passed in its present form, it would undermine the operational environment by adding more complexity and risk through overly prescriptive statutory measures. I believe that the government and opposition parties are fully aware of the problems involved and that there is a common willingness to correct these unintended effects.

With Imagine Canada, Cooperation Canada and leading charitable lawyers, we have provided three simple amendments that would remove the worst of these unintended consequences. These have already been submitted to the clerk of this committee. Together, we continue to offer our co-operation to fix Bill C-19.

Given the vast and complex set of urgent challenges facing our communities, our collective focus must be to encourage adaptive, learning-oriented results management, not to impose, in law, seven narrow and mandatory measures on all forms of partnership.

The former—that is, Bill S-216—offers real accountability to funders and communities alike who work across a myriad of partnerships. The latter—that is, Bill C-19 in its current form—is a straitjacket that will hinder social innovation, continue the damaging colonial practices of de facto direction and control, and ultimately restrict the flow of charitable dollars to those who need them the most. Let's focus on outcomes—

May 19th, 2022 / 11:20 a.m.
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John Clayton Director of Programs and Projects, Samaritan's Purse Canada

Mr. Chair and members of the finance committee, thank you for the opportunity to appear before you today concerning Bill C-19, the budget implementation act, and specifics related to charities.

I've spent 30 years working in the charitable sector. Back in August 2019, Samaritan's Purse studied the Senate report on the charitable sector, specifically the pages concerning CRA direction and control. We decided to pursue changes to ITA legislation to correct problems we and many other charities in Canada have been experiencing. Samaritan's Purse then joined Cooperation Canada, where I am co-chair of the direction and control working group.

I don't know the precise history, but about 70 years ago the Government of Canada enacted legislation in the ITA that enabled charities to function but required that they only pursue their “own activities”. Subsequent to this, the CRA policy was developed around this idea.

I need to mention that the idea of “own activities” is unique to Canada. No other country uses this concept and every other country has found ways to hold non-profits accountable without using the idea of “own activities”. It is the cause of the problems we are dealing with today and the issues within the budget implementation act.

Cooperation Canada, Imagine Canada and Philanthropic Foundations Canada, together with a group of Canada's leading charity lawyers and Senator Omidvar, worked together for the last two years bringing forward Bill S-216. Bill S-216 would have eliminated “own activities” requirements, but in the last days, and after two years of advocating for changes to the Income Tax Act, this year's budget announcement indicated that the charitable sector's concerns had been heard. We were grateful for this and considered it a great success.

However, our initial euphoria turned to concern when the details of the BIA emerged. The BIA proposes changes to the Income Tax Act that would add new rules allowing charities to make “qualifying disbursements” or grants to non-qualified donees. The qualifying disbursement mechanism is a workaround to the problem of “own activities”. The BIA claims this would provide the needed funding mechanism for charities to work with non-charities and that this was in the spirit of Bill S-216, but what the BIA proposes is not in the spirit of Bill S-216. Instead, it would add 800 words of tightly defined, inflexible and prescriptive terms and conditions to the ITA.

The BIA's proposed qualifying disbursement mechanism will not work and will not be used by charities. Charities need to work with non-charities. This happens in Canada and around the world. The ways these partnerships and arrangements take shape are complicated and are determined by contextual realities, current events, cultures and a myriad of other factors.

I'll give some examples. In the last month, Samaritan's Purse, my organization, and many other organizations have responded to the Ukraine crisis. We are currently working with 17 local partners across Europe that are providing assistance to Ukrainian refugees. Another aspect of international work is that many charities are affiliated parts of larger networks. When they come together to respond to events like Ukraine, they need to be able to easily combine or pool their resources in a common response. This increases effectiveness and efficiency. Other charities are engaged in long-term development projects involving multiple partners, complex programs, funders and local governments. Lastly, within our own country, the government provides funding to charities, expecting them to work with community groups, marginalized, racialized and indigenous groups, and other non-charities.

I need to make it clear that the BIA's proposed inflexible terms and conditions don't work in any of these contexts. The qualifying disbursement mechanism would provide a one-size-fits-all regulatory straitjacket. The qualifying disbursement mechanism doesn't fit the real world. With this approach, we appear to be taking the problems of “own activities” and making them worse. Charities will avoid using this mechanism and its codified rules in the ITA because any failure to perfectly comply would result in a loss of charitable status.

If the BIA proceeds as is, we would see a combination of ITA regulations, CRA policy and a regulatory hierarchy that would be complicated and confusing. This should not be allowed to happen.

If we're going to work around the problem of “own activities”, we need to make amendments to the BIA to connect a qualifying disbursement mechanism to the practical realities and operations of charities. We all acknowledge the need for accountability. The CRA needs to monitor and enforce policy when tax-protected dollars are involved. The charities themselves are concerned about integrity and the public trust that they must preserve with their donors.

Nobody is asking for relaxed or reduced accountability. We need appropriate accountability for practical, workable mechanisms for engagement with non-qualified donees. The BIA as is will not provide this. The committee already heard earlier this week from Bruce MacDonald of Imagine Canada and has received a detailed briefing note from the three organizations, Imagine Canada, Cooperation Canada and Philanthropic Foundations Canada, which was signed by 66 significant Canadian charities.

If I have time, I'd like to restate the three specific amendments we are seeking: to refine—

May 16th, 2022 / 12:05 p.m.
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President and Chief Executive Officer, Imagine Canada

Bruce MacDonald

Yes. It's an interesting question, because, again, it goes back to this idea that having different accountability is less accountability. That is simply not true.

What we're looking to see is saying that organizations who want to work with non-qualified donees must do so in furtherance of their charitable purpose. Both Bill S-216 and the amendments we're providing to the BIA create a system where that takes place. There's not less documentation. There's not less accountability. There are appropriate accountability measures that speak to the unique partnership and relationship set up with the non-qualified donee. CRA would play its role in ensuring that those are observed.

Charities want to do their good work in furtherance of their charitable purpose. They're not looking to step outside. What we're suggesting is a system that preserves the ability to have innovative programming and to also have trust and confidence that the accountability measures are in place.

May 16th, 2022 / 12:05 p.m.
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Conservative

Philip Lawrence Conservative Northumberland—Peterborough South, ON

Thank you, Chair.

My questions will focus around direction and control. I'll be talking to Mr. MacDonald for most of my questions.

First of all, Mr. MacDonald, I think some of the concerns with moving towards more of an accountability and transparency base, as opposed a micromanagement base, might come from the government and the concern that if in fact charities gift to non-qualified donees, somehow this money might go to a non-charitable purpose, or even, in a worst-case scenario, to illicit purposes. But I know, because I've reviewed Bill S-216 and I've looked at the current legislation, that this won't happen.

Perhaps you could share with the committee the types of challenges a charity would face, both reputational and legal risk, if in fact the amended legislation went through and one of the non-profit organizations or non-qualified organizations did something outside the charitable purposes.

May 16th, 2022 / 11:55 a.m.
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Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. MacDonald.

When I compare Bill C‑19 with Bill S‑216, my take-away is that the Department of Finance was concerned that certain provisions of Bill S‑216 could be abused, making it possible for resources to be used for a non-charitable purpose. That is problematic from an accountability standpoint. I'd like to hear your thoughts.

Do you think ill-intentioned people would be able to use charitable donations for non-charitable purposes?

The prescriptive nature of this legislation seems to be borrowed from the American law. Are we to understand that the American model is the best way to oversee a charitable partnership system?

May 16th, 2022 / 11:55 a.m.
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Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. Chair.

Thank you for that, Mr. Blaikie.

I'd like to thank all the witnesses for being with us today. Their opening statements were very informative.

My first questions are for Mr. MacDonald.

Mr. MacDonald, my understanding is that the measures in Bill C‑19 are inadequate. Bill S‑216 would actually do a better job of meeting the needs expressed by various organizations.

How would Bill C‑19 impact equity-seeking groups wanting to work with charities?

Effective and Accountable Charities ActPrivate Members' Business

May 16th, 2022 / 11:50 a.m.
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Conservative

Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB

Madam Speaker, it is a pleasure for me to be able to speak in support of Bill S-216, a bill that would do away with the direction and control requirements currently in Canadian charities law.

As I speak to this bill, I would like to recognize the excellent work of the sponsor in this place, the member for Northumberland—Peterborough South, and also to recognize the great work of Senator Omidvar, who has put this bill forward in the other place and championed it multiple times. I was very pleased to see at the beginning of this Parliament how the Senate worked very quickly to get a number of private members' bills that had already passed in the last Parliament quickly into this House, so that we could move them forward. I was very pleased to see the work of Senator Omidvar and the whole Senate, as well as my colleague in this place, on this important issue.

Direction and control requirements: What are we talking about? Canadians, I think, are familiar with the concept of charitable status, the fact that organizations that have been identified and qualified as charities have certain privileges in terms of being able to issue tax receipts. We broadly recognize that it is in the public interest to provide charitable status to organizations that are doing charitable work to try to support the most vulnerable, to try to support international development and to provide various kinds of services to individuals.

I see great value in charitable work, not only because of the benefits that are provided to communities through the provision of that charitable service but also through the way in which charitable organizations draw individuals into the provision of those services directly, that they create a bond within communities between those who are working to provide services and those who are benefiting from the services that are provided.

The government has to have rules around who qualifies for charitable status and who does not. That much is fairly obvious, but the government should seek to make these rules as reasonable and accessible as possible, and to minimize red tape in the application of these rules. I was very proud of the fact that, while in government, the Conservatives had a strategy around reducing red tape in the private sector. We recognized that for private business, red tape was a major impediment, and we worked to measure and reduce the overall level of red tape.

Canada needs an intentional red tape reduction strategy for not-for-profit organizations as well. We need to recognize that not-for-profit organizations that are partnering with the government, trying to access government funding, provide services or simply benefit from charitable status, often have similar concerns about the level of red tape they face and how it limits their ability to do good work, helping to strengthen and fortify our communities.

Direction and control is one example of the kind of onerous red tape that charitable organizations have to deal with. I know the member who is putting forward this bill came to it as the shadow minister for revenue for our party in the last Parliament. My point in accessing this was as the shadow minister for international development. Direction and control, in particular, is a major concern for international development organizations.

How does direction and control work? It is simply the requirement that charitable organizations have direction and control over charitable activities, that they cannot dispense money to other organizations that are not charitable organizations if the activity that is under that provision is not fully under the direction and control of that organization. It creates administrative challenges when different organizations are trying to partner together to do good work that is clearly aligned with the charitable purpose of the organization that is doing the work, because it requires the charitable organization to be fully directing and controlling that activity. That creates administrative challenges. In particular, though, it is an issue in international development or when charitable organizations are trying to work with vulnerable communities.

The best practices in international development are really focused on empowerment. It is not about having donor countries controlling the activity that is happening in another country. Rather, it is about that donor coming alongside, partnering with but seeking to support, empower and give control to the organization that is on the ground, the people who are responsible for their own development. Too often, the discourse around international development has been about the external saviour coming in and providing the solutions, when, in reality, we should be thinking in terms of people in developing countries, those who are in the act of trying to strengthen their position economically and in other ways. They are the heroes of the story. Those who are coming alongside to help and support are merely providing an assist, a supporting function, for the central role held by the people who are involved in the struggle to pursue their own development.

When we have policies like direction and control, which say the control has to be in the hands of a Canadian charitable organization, this perpetuates a kind of colonial structure around development, whereby the control cannot be with people on the ground; the control is with the external organization providing assistance. A problem in international development is something that I have heard repeatedly from Canadian international development sectors, who say they want to see us address the issue of direction and control.

However, it is not just a problem with international development. We can think of this as being a particular problem with charitable organizations that are partnering with minority communities, indigenous communities and others. The requirement for direction and control is also colonial in that context, because it requires that the charitable organization be directing and controlling in some sense the work of organizations that may be coming from communities themselves. Unless those communities have an actual organization that has charitable status, their ability to take control of the process is limited. There is an administrative problem, but in particular, in this sense, there is a problem with the colonial message that is sent through the structures in place in terms of direction and control.

We have been working on this issue for a number of years. I have asked questions on it in the House. I have raised the issue, and many other members have done the same. One of the points of frustration is that we talk about the importance of charities, but there does not seem to be a home in government for charities. We do not have a minister responsible for charities, so when these questions come up there is sometimes a bit of back and forth. There is the engagement of the international development, revenue and finance departments, but we do not have a real hub in government for charitable activities.

That is an issue that needs to be addressed as well. To have a broader strategy around reducing red tape for charitable organizations, we need a structure within government that is a hub for policy and strategy around promoting and empowering charitable organizations and addressing the challenges they face. Notwithstanding those issues, we were very pleased to see that the government at least took a step in the last budget, which actually mentioned Bill S-216 and acknowledged the problem with direction and control. The foreign affairs committee in the last Parliament unanimously endorsed a direct recommendation asking the government to do away with the direction and control requirements and replace them with a new accountability structure. The foreign affairs committee specifically used the word “colonial” to describe the existing requirements.

Finally, for the first time in this budget, we have acknowledgement by the government that yes, we do have a problem with direction and control, and it has to be remedied. The budget said that the remedy the government would put forward would be in the spirit of Bill S-216, but there continues to be concern about that language, the spirit of S-216 instead of the text of S-216. Effectively, the text of S-216, in terms of replacing direction and control with an alternative accountability framework, was built up through extensive engagement and consultation with the charitable sector. It involves a strong structure of accountability whereby charities are accountable for the activities they fund but do not have to provide that direction and control.

There are continuing concerns among many in the charitable sector about the approach being taken by the government. They say the government has acknowledged the problem, but they ask whether it has actually brought forward the solution we need to see and whether it is prepared to solve the problem. To do so could and should have involved the full adoption of the text of Bill S-216 into the budget implementation act. We did not see that, so there continue to be concerns about whether the new framework will introduce a substantial level of red tape, so that we are replacing one flawed framework with another flawed framework.

The debate on Bill S-216 will continue and, in the absence of complete action by the government, the bill can and should go forward. I am hopeful that the government will take further steps from the budget, recognize that the charitable sector needs to be continuously consulted throughout this process, recognize that there is more work to do to ensure that not just the spirit but the letter and the fullest of the ideas that are present in S-216 are reflected in government policy going forward in order to empower charitable organizations, and address these problems of residual colonialism in our charitable laws.

May 16th, 2022 / 11:45 a.m.
See context

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Thank you, Mr. Chair.

My first questions are for Mr. MacDonald, from Imagine Canada. Then, I will have questions for Mr. Rooke, from Cider Canada.

I want to begin by thanking all the witnesses for being here today. I really appreciated their opening statements, which were all very informative, especially Mr. Cochrane's.

Mr. MacDonald, we had an opportunity to meet with representatives of your organization to discuss the problems with Bill C‑19 at greater length. My understanding is that you would prefer Bill S‑216, because it does a better job of meeting the needs of the organizations you represent.

How do you think Bill C‑19 would impact equity-seeking groups wanting to work with charities?