Steelworkers Humanity Fund

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What Happened

In 2012, the Canada Revenue Canada (CRA) began a “blitz” of reviews of the registered status of charities that are critical of the federal government and promote policy ideas that differ from the government's agenda. The reviews appear to focus on environmental, human rights, progressive policy and international development organizations. In the summer of 2014, CRA initiated an audit of the Steelworkers Humanity Fund, a registered charity. The Humanity Fund believes that its support for the Canadian Network on Corporate Accountability (CNCA) triggered the audit, in spite of the fact that the extent of its support fell well below the CRA’s limits for a charity’s “political activity”. Nearly a year since the audit was initiated, CRA has yet to provide an explanation, verdict or comment to the Humanity Fund. 


Background

The Steelworkers Humanity Fund (the Humanity Fund) is a registered charity founded in 1985 by the members of the United Steelworkers (USW) union. Individual USW members contribute to the Humanity Fund through pay-roll deduction, adding to about $1 million in annual revenues.i

The Humanity Fund plays an important role in representing and advocating against human rights abuses, most specifically in the mining sector. Its connection to an international steelworkers union provides it with the industry knowledge required to respond to specialized issues.

The Humanity Fund contributes to Canadian causes, including food banks, as well as international development projects that aim to facilitate better training, building, and work environment standards for steelworkers around the world. Its projects include international assistance for emergency relief, anti-poverty initiatives, and labour development programs.ii

In 2012, the federal government released its new budget, allotting to the Canada Revenue Agency (‘CRA’) a special fund of $8 million, which increased to $13.4 million shortly thereafter.iii These funds were earmarked principally to strengthen CRA’s capacity to audit charitable organizations potentially engaged in “political activities”. According to CRA’s interpretation of the Income Tax Act (ITA), most charitable organizations can only allocate up to 10% of their resources to political activities. In the absence of a statutory definition of “political activity”, CRA has developed a policy that defines “political activity" as: (1) explicit calls to political action; (2) explicit communication to the public that the law, policy or decision of any level of government in Canada or a foreign country should be retained, opposed, or changed; and/or (3) explicit indications in internal or external materials that the intention of the activity is to put pressure on a public official to retain, oppose or change laws at any level of government in Canada or a foreign country.iv

On January 31, 2014, the media were reporting 31 files under audit, of which 22 were community benefit groups including, environmental, social justice and human rights organizations. Although organizations of this nature make up only 23% of all charities, they account for 71% of total CRA audits.v It has since been reported that 60 political activity audits will have been conducted by the year 2017. Voices-Voix has examined the cases of 24 political activities audits, or audits containing an element of political activities, and all 24 are progressive charities.vi

If CRA finds, following an audit, that a charity has contravened CRA policy limiting political participation, it may revoke that charity’s charitable status under the ITA. Revocation would cause the organization to lose its tax exemption and may force it to close because it will lose all donors that require charitable tax receipts. CRA may also require it to give away or forfeit all of its assets within 12 months.vii In some cases, the CRA may also annul charitable status, if it deems that there was an “error” in registering the charity in the first place.viii

Concerns that the CRA Audits are Politically Motivated

In 2012 the Minister of Natural Resources, Joe Oliver, wrote an open letter advocating for diversification of the Canadian energy market. Oliver stated that “environmental and other radical groups...threaten to hijack our regulatory system to achieve their radical ideological agenda…they seek to exploit any loopholes they can, stacking public hearings with bodies to ensure that delays kill good projects.”ix

News sources have reported that most of the environmental charities under audit since the 2012 budget oppose the Harper government’s energy and pipeline policies. Gareth Kirkby, a graduate student who studied the motive and effects of the audits wrote in his thesis, “the data suggests that the current federal government is corrupting Canada’s democratic processes by treating as political enemies those civil society organizations whose contributions to public policy conversations differ from government priorities.”x

Noel Carisse, spokesperson for CRA, has countered the suggestion that the audits are politically motivated. He stated that the agency “does not conduct research into political views of any charity and it does not base its decision to audit any charities on this criterion.”xi

Beyond questions regarding the audits’ motivations, Kirkby’s study also found that the audits have had a negative impact on public advocacy and civil society. Kirkby reported that the individuals he interviewed from the charitable sector had become “more cautious than previously in their communication”xii One participant spoke about “changing the tone [on] websites and brochures to sound more ‘educational’ than previously.”xiii

Steelworker Humanity Fund Audit

In the summer of 2014, the Humanity Fund joined the ranks of the charities being audited by CRA. The Steelworkers union has alleged that CRA’s decision to audit it stems from its association with the Canadian Network on Corporate Accountability (CNCA),xiv an umbrella organization that advocates for corporate social responsibility among different sectors operating internationally.xv

The Charity Tax Return filed by the Steelworkers Humanity Fund (CRA web site) for 2013 indicates that 2% of its resource were devoted to ‘political activity,’ xvi In a recent interview, Doug Olthuis, Executive Director of the Steelworker Humanity Fund, indicated that these resources relate to involvement in activities related to the CNCA. xvii As such, according to the Humanity Fund’s calculations, it is far below CRA 10% limitation on contributions to “political activity”.

Since the CRA has not provided an explanation or reasons for its decision to audit the Humanity Fund, like many other charities, it is left to speculate about the reasons for the audit. Doug Olthuis believes that the Humanity Fund may have been targeted because of: (1) its support for CNCA’s work which the government sees as contrary to the interest of Canadian mining companies and (2) the USW’s history of critiquing the Harper government’s policies.xviii CBC reported that USW Canada has “frequently butted heads with the Conservative government over issues such as perceived lack of support for the manufacturing sector and what it sees as anti-labour policies.”xix

Speaking in relation to the audits generally, Cathy Hawara, head of the CRA Charities Directorate, denied that they are politically motivated. She argues that the audits are spread “fairly by geography and by the type of charity… [and that] her office gets no direction from the Minister on which charities to target.”xx

While the CRA audit of the Humanity Fund began in the summer of 2014, the charity has yet to receive a report or explanation of any kind from CRA and still awaits the agency’s final determination.xxi

Relevant Dates

  • January 2012: Then-federal Minister of Natural Resources Joe Oliver denounces “environmental and radical groups” funded by “foreign special interest groups” were working to undermine Canada's economy.
  • March 2012: The federal budget allocates $8 million to investigate the charitable status of select groups. This is later topped up to $13.4 million.
  • January 2014: At least 31 files under audit, 22 of them related to community benefit groups including, environmental, social justice and human rights organizations. Voices-Voix examines
  • June 2014: the Humanity Fund joined the ranks of the charities being audited by CRA.

i United Steelworkers, About the Humanity Fund, online: United Steelworkers <http://www.usw.ca/union/humanity/about?id=0002> [United Steelworkers].

ii Ibid.

iii Don McRae, “CRA audits of charities look fair but feel foul”, The Star (05 April 2015) online: http://www.thestar.com/opinion/commentary/2015/04/05/cra-audits-of-charities-look-fair-but-feel-foul.html [McRae].

iv “Political activity: Policy Statement”, Canada Revenue Agency (2 September 2003), online: The Government of Canada <http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html#N102C1>.

v McRae, supra note 3.

vi Alternatives; Amnesty International (Canada); Canadian Centre for Policy Alternatives; ; Canada without Poverty; Canadian Mennonite; CoDevelopment Canada; David Suzuki Foundation; Ecology Action Centre; Environmental Defence; Équiterre; ForestEthics; Foundation for Canadian Studies UK; IRFAN Canada; Oxfam Canada; Pembina Foundation; PEN Canada; Physicians for Global Survival; Sierra Club Canada Foundation; Tides Canada Foundation; Tides Canada Initiatives Society; West Coast Environmental Law Research Foundation; Steelworkers Humanity Fund Inc.; United Church of Canada (Kairos);

vii “Tax Audits of Environmental Groups: The Pressing Need for Law Reform”, Environmental Law Centre (March 2015) at p. 4 available at: http://www.elc.uvic.ca/wordpress/wp-content/uploads/2015/03/Tax-Audits-of-Environmental-Groups_2015Mar25.pdf.

viii The cases of Alternatives and Dying with Dignity Canada were both annulments.

ix “Open letter: Radicals threaten resource development”, Financial Post (9 January 2012) online: < http://business.financialpost.com/fp-comment/open-letter-radicals-threaten-resource-development>.

x “An Uncharitable Chill: A Critical Exploration of How Changes in Federal Policy and Political Climate are Affecting Advocacy-Oriented Charities,” Gareth Kirkby, MA Thesis, Royal Roads University, June 2014 [Kirkby] at p. 23.

xi Dean Beeby, “CRA denies agency audits target charities with anti-government political leanings”, The National Post (03 August 2014) online: http://news.nationalpost.com/news/canada/cra-denies-agency-audits-target-charities-with-anti-government-political-leanings [Beeby].

xii Kirkby, supra note 10, at 25.

xiii Kirkby, Ibid.

xiv Dean Beeby, “Revenue Canada targets Steelworkers charity for political activities”, CBC (12 April 2015) online: <http://www.cbc.ca/news/politics/revenue-canada-targets-steelworkers-charity-for-political-activities-1.3026863>.

xv Supra note 1.

xvii “Death from Taxes” (8 May 2015) (Podcast), online: Green Majority Radio < https://greenmajoritymedia.wordpress.com/2015/05/08/451-death-from-taxes/>.

xviii Ibid.

xix Beeby, supra note 14.

xx Dean Beeby, “Foreign-aid charities join together to challenge Canada Revenue Agency audits”, The Star (10 August 2014) online: <http://www.thestar.com/news/canada/2014/08/10/foreignaid_charities_join_together_to_challenge_canada_revenue_agency_audits.html>

xxi “Revenue Canada Targets Steelworkers Charity for Political Activities”, CBC (12 April 2015) online: <http://www.huffingtonpost.ca/2015/04/12/revenue-canada-targets-st_n_7048932.html>.

 

Role or Position

The Steelworkers Humanity Fund is a registered charity founded by the members of the United Steelworkers Union. Individual members contribute to the Fund through pay-roll deduction, adding to about 1.3 million in annual revenues.i The Humanity Fund provides support for Canadian and international causes, including international assistance for emergency relief, international development projects, anti-poverty initiatives and labour development programs.ii

i Supra note 17.

ii Supra note 1. 

 

Implications and Consequences

Democracy: Canadian charities play a vital role in “the health and vigour of our democracy.”i Charities allow members of society to give their time, money or other resources to a cause of their choice, often to help address social justice issues. They encourage the public participation necessary to promote and sustain a democratic and equitable society.ii The targeted CRA political activities audits weaken charities’ ability to do their work and threaten their very existence. When charities are prevented from fully engaging with important issues, their role in facilitating democracy is diminished.

Freedom of Association: By labelling progressive charities as “political organizations” the federal government is suppressing the activity of work that it disagrees with it, while leaving intact other organizations that provide services (but undertake no research or public interest work) or that support a conservative agenda. This is, ultimately, a political attack on charities and on freedom of association.

Free Speech: Most charities rely on tax-receipted public donations for an important part of their revenues, at a time when governments are also cutting back on funding to progressive organizations. The audits have left organizations anxious and in fear of losing charitable status.iii This applies not only to charities currently under audit, but also to those that simply fear the cost and implications of non-routine audits. The audits have had the effect of silencing certain charities who have begun to “self-censor their own advocacy.”iv The audits have caused an “advocacy chill” among charities, public servants, and donors.v

Transparency: The current CRA definition of “political activity” is vague and “leaves too much room for interpretation.”vi Moreover, CRA is unwilling to provide information about the audits selection process.vii This lack of transparency leaves charities unclear about how they can safely advocate for policy change.viii Lack of information also prevents the public from assessing the legitimacy of CRA audits and from holding the government accountable. In the case of the Humanity Fund, the CRA’s lack of communication has left it unsure of why the audit was initiated, what the result might be, or if the audit will continue. This guesswork prevents the Fund and other charities like it from measuring their activities against government regulations, leaving them unable to effectively carry out important social justice advocacy and support.

Equality: The Humanity Fund’s core philanthropic purpose is to support vulnerable groups and human rights victims. The CRA audits create administrative and bureaucratic blockades that may prevent the Humanity Fund, and charities like it, from supporting these disadvantaged individuals and groups. In this sense, CRA audits may ultimately affect the people and organizations that charities such as the Humanity Fund aim to support, thereby perpetuating disadvantage and inequality.

i “Joint letter to political parties”, Policy Alternatives (11 February 2015) available at: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2015/2015_Public_Good_letter.pdf.

ii Ibid.

iii Trinh Theresa Do, “CRA charity audits creating confusion, fear at tax time”, CBC (16 March 2015) online: <http://www.cbc.ca/news/business/taxes/cra-charity-audits-creating-confusion-fear-at-tax-time-1.2952509>.

iv Bruce Cheadle, “CRA Charity Audits: Study says Rules for Political Advocacy Are Unclear, Unfair”, Huffington post (25 March 2015) online: <http://democracyastray.blogspot.ca/2015/03/cra-charity-audits-study-says-rules-for.html>.

v Sean Kilpatrick, “Study cites ‘chill’ from tax agency audits of charities’’ political activities”, CBC (10 July 2014) online: <http://www.cbc.ca/news/politics/study-cites-chill-from-tax-agency-audits-of-charities-political-activities-1.2703182>.

vi Jenny Uechi, “Charities rebel against CRA targeting”, National Observer (4 March 2015) online: <http://www.nationalobserver.com/2015/03/04/news/charities-rebel-against-cra-targeting>.

vii Tasleem Thawar, “CRA Audits of Charities—what’s the big deal?” (12 August 2014), online: PEN Canada <http://pencanada.ca/blog/cra-audit-charities/>.

viii Ibid

Published: 16 June 2015

Sources