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Why Is a Weakened CRA Still Auditing Charities?

In austere times, it seems there's plenty of money to go after enemies of the government.

By Tom Henheffer 25 Jul 2014 |

Tom Henheffer is the executive director of Canadian Journalists for Free Expression (CJFE). Follow him at or @henheffer.

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Canadian Journalists for Free Expression's Tom Henheffer asks: Why so many audits in the past year?

Not terrorists, white-collar crooks, or climate change. It seems the real threat to Canadian society hides behind a much friendlier face: charities. Or to be more specific, charities critical of the Canadian government.

This week it was made public that the Canadian Revenue Agency (CRA) is auditing PEN Canada for its "political activities." Our colleagues there are just the latest victims in an aggressive campaign targeting outspoken organizations such as Amnesty International, the David Suzuki Foundation and Environmental Defence.

If you're not familiar with it, PEN Canada is one of our sister civil liberties organizations, one with which CJFE frequently partners. Like CJFE, it fights against censorship and for stronger free expression rights.

In effect, our government is censoring an anti-censorship organization. It makes me wonder, is this really Canada? If so, it’s a country I'm having a hard time recognizing.

So what is the justification for creating this clear chill on free speech?

Well, no one really knows. These audits overwhelmingly target environmental groups opposed to oilsands development. Many of these are the same organizations former Natural Resources and current Finance Minister Joe Oliver called out as being "radical groups" trying to undermine Canadian development. Yet the government maintains it has no control over who the CRA investigates.

Slashed budget, more audits

Here's what we do know: the CRA requires charities spend no more than 10 per cent of their resources on "political activities." And resources doesn't just mean money; that includes absolutely everything that could be considered -- even volunteer time. What political activities actually are is difficult to tell. The term is very broadly defined, but the chilling effect of how the legislation has been put into practice is easy to see.

According to reports, the CRA audited 900 charities in 2012 and 2013 at a cost of $5 million. The result? One charity lost its status, using 26 per cent of its resources for "political activities," exceeding the 10 per cent cap.

So 899 of the targeted organizations were doing nothing wrong. Seems well worth the cost, doesn't it? Oh, what CJFE could do with $5 million...

And let's not forget, this crackdown on orgs committing the sin of speaking out comes at the exact same time that $250 million and 3,000 jobs are slashed from the CRA, impeding its ability to target corporate and personal tax cheats.

Still, the political activities regulation has been in place since 2003. So why have there been so many audits in the past few years?

In 2012, the Canadian government earmarked $8 million of the CRA's budget for auditing political activities, and then upped that amount again to $13 million. In a time of austerity, there is still plenty of money to go after enemies of our federal government.

When asked, the feds say the CRA is completely independent and works without any interference from parliament, cabinet, or any other governmental body. And that could very well be true. I highly doubt ministers are calling the CRA saying, "hey, PEN's getting a little uppity. Let's slap them with an audit to shut them up."

But by so massively expanding the budget for these audits, the government is sending a very clear message: outspoken charities had better shut up, or risk losing their charitable status altogether. It’s disgusting.

Charity chill coming

As the executive director of CJFE, another civil liberties non-profit, I can well imagine the difficulties inherent in dealing with a federal audit. We, like PEN, operate with a skeleton staff. We would be hugely distracted from our important work on issues such as campaigning to get Canadian journalist Mohammed Fahmy out of Egyptian prison, and making sure Canadians can speak out against corporate malfeasance without living in fear of frivolous libel lawsuits.

Instead, even with our extremely tight financial controls and top-level record-keeping, we’d be forced to scramble and get everything ready for inspection.

Luckily, CJFE isn't a charity, so we aren't quite as beholden to the same potentially crippling regulations. But we are part of the civil liberties community, and we can feel the temperature falling.

Still, while an audit is difficult, and a charity losing its status can jeopardize funding streams, Canadian non-profits can weather this storm. These audits are a serious annoyance and the government’s move to silence critics is reprehensible, but it also won’t work.

Our community is too strong, our staff and volunteers too dedicated, and we're well supported by passionate Canadians who understand the importance of what we do.

So let the chill come. We're Canadian after all; we're damn good at surviving the cold.  [Tyee]

Read more: Federal Politics,

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