Canadian Charities Need More Oversight

Contributed by Robert Lyman © 2022. Robert Lyman’s bio can be read here.

The recent report of the Public Inquiry into Anti-Alberta Energy Campaigns received relatively little coverage in the Canadian media, largely because the enquiry did not make damning findings concerning the role played by the foreign-funded charities that conducted the campaigns. The coverage largely glossed over the fact that the efforts to undermine the financing of oil sands development in Canada was mostly led by Canadian charities that benefit from taxpayer support. It also did not probe into the related question of whether the Canada Revenue Agency, in its role as regulator of charities under the terms of the Income Tax Act, was properly exercising its responsibility to ensure that charities in general adhere to guidelines about financial responsibility, adequate reporting and avoidance of prohibited political activities.

The Inquiry’s findings were in fact significant. The adversaries of oil sands development, and the financial and insurance companies that backed them, claim to have brought about more than 1,000 divestments representing $8 trillion. There is no question that this inflicted enormous harm on the Alberta and broader Canadian economies. In other circumstances this would have been condemned as campaign of economic sabotage, but it was “justified” by its allegedly well-founded environmental intentions. While the total foreign funding of the Canadian organizations involved were estimated to be at least $1.28 billion between 2003 and 2019, there was also significant funding from sources within Canada.

For unexplained reasons, the report only indicated the amounts of funding by some of the environmental organizations involved and by the related “enviro-legal” organizations that used the courts as weapons.

The participants deserve to be named, so here is the list published by the Inquiry:

• Pembina Foundation and Pembina Institute
• The David Suzuki Foundation
• Greenpeace Canada
• Equiterre
• Western Canada Wilderness Committee
• Sierra Club Canada Foundation
• Sierra Club of British Columbia Foundation
• Raincoast Conservation Foundation
• International Institute for Sustainable Development
• World Wildlife Fund Canada
• Makeway, formerly Tides Canada
• West Coast Environmental Law and Research Foundation
• Environmental Defence Canada
• Dogwood Initiative
• Leadnow

All of these organizations enjoy charitable status in Canada because the activities defined as charity include “public education” and these organizations claim to be “educating” the public about environmental issues and problems. One has to wonder whether an organization that sought charity status so that it could educate the public about economic development issues and problems would be so qualified.

Charity status grants several benefits, especially in financial terms. The charity sector has revenue of over $300 billion per year. In the pre-COVID-19 period, it rivalled the revenues of the federal government. Registered charities pay no taxes on this revenue or on the appreciation of their over $500 billion in assets. Collectively, they represent a state-within-a-state, with far less transparency and accountability than federal and provincial governments. Over $160 billion in funding for charities comes not from private donations but from governments, and most of that from provincial and local governments. So, taxpayers pay twice, once through government direct expenditures and again through what are called “tax expenditures”.

Donors to charities can take advantage of two types of tax breaks. Individuals can apply for a Charitable Donation Tax Credit. According to Finance Canada’s annual report on tax expenditures (indicating the cost to the federal treasury of the foregone revenues), donors received $3.2 billion in tax credits in 2021, and $18.2 billion in tax credits over the six-year period 2016-2021. Corporations that donate can apply for corporate income tax deductions. In 2021, these amounted to $725 million and over the six-year period 2016-2021 totaled $3.9 billion. That does not include the lost revenue to provincial governments or to municipalities when they allow charities to pay less or no property tax.

With these immense revenue flows from taxpayers to charities, one might think that the Canada Revenue Agency would keep a tight rein on the charities, by conducting frequent audits and maintaining other forms of close surveillance. One would be wrong.

Due to a recent report by Blumberg Canadian Charity Law, probably the foremost firm providing services to the charities sector in Canada, the number of annual audits conducted by CRA fell from an average of about 800 per year in the decade before the election of the Justin Trudeau government to about 200 per year recently. With 86,000 registered charities, that means that from a statistical point of view the average charity can expect to be audited about once every 400 years.

With the scandal concerning the WE charity, public trust in charities has declined, which might have led to more surveillance at least to protect the interests of taxpayers. Albertans and those across Canada who value our energy resource industries and have seen the damages that environmental “charities” can do have even more reason to hope environmental charities would be closely monitored. Unfortunately, that seems unlikely to happen under the present government.

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Read our reports on the ENGO ‘charitable’ sector’s power and might.