Canada Revenue Agency accused of ‘political’ targeting of charities

Charities in first wave of CRA audits were largely opponents of Conservatives’ energy policies

Keystone Report 20140131

OTTAWA – The Canada Revenue Agency says it pays no attention to pro-government or anti-government political leanings when it chooses which charities to audit for their political activities.

But charities targeted in the first wave of agency audits were largely opponents of the Harper government’s energy and pipeline policies, an analysis shows, suggesting bias in their selection.

“The CRA does not conduct research into the political views of any charity, and it does not base its decision to audit any charities on this criterion,” said agency spokesman Noel Carisse.

The head of the charities directorate, Cathy Hawara, said last month that political ideology was indeed a factor, telling a Toronto newspaper: “We also gave consideration to … what you might call political leanings, to make sure that we weren’t only focusing on one side of the political spectrum.”

Hawara later said she had mischaracterized the CRA’s selection process.

“What position a charity might take on any given issue, what views they might have, what perspective they have on a particular policy issue, isn’t really of concern to us — and isn’t a triggering factor,” she said in an interview with The Canadian Press.

Rather, Hawara said, the agency seeks balance by targeting groups from each of four charitable categories, that is, relief of poverty, advancement of religion, advancement of education and benefit to the community — the last a grab-bag that includes environmental and human-rights groups.

She said the agency also considers any formal complaints from citizens, lobby groups, MPs or even cabinet ministers. Such external complaints were taken seriously enough to have generated some 30 “leads” for further investigation, though the CRA will not provide details.

The newly formed political-activity audit group, consisting of nine people in Ottawa and six auditors across Canada, set itself a goal of 10 audits for 2012-2013, its first year of operation.

The agency does not publicly identify which charities it targets, citing confidentiality provisions of the Income Tax Act.

But information gathered by The Canadian Press shows at least half of the 10 political-activity audits slated for 2012-2013 were conducted on charities in one narrow category — environmental groups, all of whom oppose government energy policies.

This group of initial audits included Tides Canada Foundation, Tides Canada Initiatives Society, Ecology Action Centre, Equiterre, Environmental Defence Canada Inc., with the David Suzuki Foundation following early in the 2013-2014 fiscal year.

A Nova Scotia charities lawyer with several hundred clients also says the political-activity audits he knows about are all in the environmental sector.

“The organizations I am aware of that have been audited, or are still in process, are in the environmental community,” said Richard Bridge in Middleton, N.S.

CRA’s initial focus on environmental groups closely follows inflammatory statements by Conservative cabinet ministers shortly before and after the 2012 federal budget, which announced $8 million for the new political-activity audits.

Environmental groups had a “radical agenda,” Joe Oliver at Natural Resources said in January that year. The groups were used to “launder offshore funds,” said Environment Minister Peter Kent in May., an energy-sector promoter founded by a Conservative political aide, also formally complained about three of the five environmental groups caught in the first wave of audits — suggesting their letters turned into CRA “leads.”

The Canada Revenue Agency, which is planning 60 political-activity audits by 2016, has since expanded the scope to include anti-poverty, foreign-aid, human rights, and even animal-welfare groups.

CRA is watching for any group that uses more than 10 per cent of its resources on political activities, or that engages in any kind of partisan activity, such as endorsing a candidate, which is forbidden.

Most charities that have self-identified as being under audit have opposed government policy at one time or another, raising the question of whether CRA’s widened auditing scope remains politically skewed.

Ottawa charities lawyer Adam Aptowitzer, with several hundred clients, says he is aware of some on the right side of the political spectrum who are being audited for political activities, but who decline to make it public.

“I know that they are disinclined from coming forward because there’s nothing to be gained,” he said in an interview.

Some well-known conservative think-tanks that are registered as charities have confirmed to The Canadian Press they are not being audited by CRA for political activities, including Toronto’s C.D. Howe Institute and the Macdonald-Laurier Institute in Ottawa.

The Fraser Institute in Vancouver declined to say one way or another; others did not immediately respond.

Hawara, who met in person with Revenue Minister Kerry-Lynne Findlay in June this year to discuss the political-activity audits, says she did not provide any lists of targeted charities to the minister.

“She or her office has not asked me to audit any particular charities,” Hawara said. “We have not been subject to any kind of direction.”

But Gareth Kirkby, who recently completed a master’s thesis on political-activity audits, suggests the government has effectively targeted its political opponents simply in the way it set policy guidelines for the CRA.

“By speaking publicly about the need for CRA to respond to public complaints, the government created a funnel that led CRA auditors to charities with relatively higher self-reported ‘political activities’ and charities with complaints in their files,” Kirkby said in a recent blog post.

“These will very strongly tend to be organizations with different public policy perspectives than the government.”

Timeline of key events surrounding the Canada Revenue Agency’s launch of political-activity audits of charities:

Jan. 9, 2012 — Joe Oliver, then Natural Resources minister, issues an open letter denouncing “environmental and other radical groups” who “threaten to hijack our regulatory system to achieve their radical agenda.”

March 21, 2012 —, founded in 2011 by Alykhan Velshi, who currently works in the Prime Minister’s Office, files formal complaint to CRA about the political activities of Environmental Defence Canada Inc., an environmental charity.

March 29, 2012 — Federal budget announces new restrictions on political activities by charities, including more disclosure of funding by foreign sources. The Canada Revenue Agency is also provided with $8 million over two years largely to establish a new political-activity audit program, with 10 such audits planned for the first fiscal year. Funding later increased to $13.4 million over five years.

April 1, 2012 – March 31, 2013 — First wave of 10 political-activity audits includes at least five environmental charities, including Environmental Defence Canada, Tides Canada Foundation, Tides Canada Initiatives Society, Ecology Action Centre, Equiterre. CRA will not itself release list, citing confidentiality provisions of the Income Tax Act.

April 24, 2012 — files formal complaint to CRA about the alleged political activities of the David Suzuki Foundation, an environmental charity.

May 1, 2012 — Peter Kent, environment minister at the time, suggests Canadian charities have been illegally used “to launder offshore funds for inappropriate use against Canadian interest,” that is, by obstructing the environmental assessment process.

July 23, 2012 — CRA issues a warning letter to the publisher of Canadian Mennonite, a monthly magazine, saying the Canadian Mennonite Publishing Service risks revocation of its charitable status for publishing recent pieces “that appear to promote opposition to a political party, or to candidates for public office.” The agency later identifies several problem pieces, including one criticizing then-Public Safety Minister Vic Toews.

July 24, 2012 — CRA concludes an audit begun in 2004, revoking the charitable status of Physicians for Global Survival because the group’s work is “inherently political.” The audit was not conducted as part of the new political-activity program, but under the standard financial audit that also examined political activities wherever necessary.

Aug. 8, 2012 — files formal complaint to CRA about the political activities of Tides Canada Foundation and Tides Canada Initiatives Society, two related environmental charities.

April 1, 2013 – March 31, 2014 — Audits slotted for second year of the political-activity audit program appear to broaden targets to include more groups fighting poverty and human-rights abuses, and promoting international aid.

Feb. 12, 2014 — Then-Finance Minister Jim Flaherty responds to a question about why the CRA is auditing charities that oppose oil-pipeline projects by saying “charities are not permitted to accept money from terrorist organizations.”

April 9, 2014 — Pen Canada, a Toronto-based freedom-of-expression charity, receives call from CRA saying the group is to undergo an audit that will include a review of its political activities. Three auditors show up at their offices on July 28, 2014.

April 10, 2014 — Canadian Council of Churches sends letter to Prime Minister Stephen Harper raising concerns about the “chilling effect of threats to revoke the charitable status of organizations that draw attention to policies that harm our world.”

May 27, 2014 — Lawyers’ Rights Watch Canada sends letter to UN Human Rights Council raising a “particularly troubling trend … the selective targeting of organizations by Canadian revenue authorities to strip certain organizations of their charitable status.”

June 2014 — Gareth Kirkby, graduate student at Royal Roads University, completes master’s degree identifying “advocacy chill” resulting from the political-activity audits of 16 charities he examined, after offering them anonymity. Kirkby cites evidence indicating three charitable sectors singled out for CRA attention: environmental, development/human rights, and charities receiving donations from labour unions.

July 16, 2014 — NDP sends letter to Kerry-Lynne Findlay, national revenue minister, calling for an independent inquiry into whether CRA is conducting its political-activity audits at arm’s length and free of political interference. “These targeted audits are effectively muzzling public interest groups,” say MPs Murray Rankin and Megan Leslie.

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