Should a charity divert monies from its programs to attempt to influence public policy?

A charitable mission is about making some aspect of the world or community better. If a current or proposed public policy works against that mission, the most ethical thing to do is speak up. Charities often have the best front-line, first-hand knowledge and failing to bring that knowledge forward could mean poorer public policy decisions.

I worked in public policy development in the Ontario government. Civil servants are often asked to develop policies and legislation on complex matters where many viewpoints need to be heard and considered; no one source can predict the full impact of policy decisions or the wording of regulations. If charities are not at the table, a major and useful voice is silent, and the voices of other sectors are overly loud. Civil servants need detailed input from on-the-ground organizations.

The issue shouldn’t be presented as diverting monies from programs. The issue is about wise use of resources in service of the mission. Preventing a future increase in need for your services is usually a very wise use. Otherwise, down the road, the charity will need more money to avoid turning away desperate people. Similarly, input to policy that will improve the situation or eliminate the problem frees up money to address other issues in your community. Reducing poverty through advocating for economic and social justice may be by far the wisest use of charitable resources. Many of our agencies exist because of poverty, which drains the system of resources at the same time it keeps many people from contributing to the economy.

In many charities, the priorities and programs are explicit about advocating on behalf of clients. There is no reason to interpret that as meaning only individual clients if public policy advocacy could improve the situation for many clients. Both forms are advocacy are fully legitimate.

Canada Revenue Agency information

Both forms of advocacy are also legal, but, under the Income Tax Act, Canadian charities can only use up to 10% of their resources in a year on political activity (with some allowance for small charities to spend a higher percentage). None of that can be partisan (that is, direct or indirect support to a political party or candidate). The Canada Revenue Agency (CRA) definition of resources includes financial, staff, volunteers, directors, premises and equipment.

The 10% limitation on resources is seen as unfair by many, since industry associations and for-profit corporations have no such restriction. But it is important to comply, failure to do so can result in a loss of charitable status, and the CRA does audits focussed on this use of resources.

The Policy Statement on Political Activities gives a great deal of information on the topic. I urge you to read the whole document. In general, charities are encouraged to share their wealth of knowledge with this caveat:

“In order to serve the public, the information charities give on public policy issues should be presented in an informative, accurate, and well-reasoned way to enable society to decide for itself what position to take.”

Well reasoned is defined elsewhere on the CRA site as: “A position based on factual information that is methodically, objectively, fully, and fairly analyzed. In addition, a well-reasoned position should present/address serious arguments and relevant facts to the contrary.”

Charities are also expected to undertake only charitable activities. Note that the CRA deems communication with elected representatives and public officials a charitable activity, even when changes to laws or public policy are being proposed, provided the activity is subordinate to and related to the charity’s purposes, is well reasoned and does not contain information the charity knows to be false, inaccurate or misleading. Such work would count towards the 10% limit as I understand it.

Other Considerations in Advocacy by Charities

1. Loss of funding

It is highly unethical in my opinion for governments to take away funding because a charity has shared its knowledge in an effort to improve laws and public policies. Unfortunately, it happens, and many charities are heavily dependent on government contracts and grants. Do a risk analysis before undertaking non-partisan political activities. Even when governments have signed accords that forbid such action, governments do not always comply.

2. Involvement of public servants in your organization

If you have civil servants sitting on your board of directors or making up a significant percentage of your membership, you may be putting them at risk of losing their jobs if you take non-partisan political action. Again, such actions by governments are highly unethical but you cannot ignore the risk. At minimum, civil servants should avoid visible roles in political action such as appearing at Standing Committees at the level of government in which they work. If the public policy issues are mission-critical, some people may have to resign from the board during the period of advocacy. This is especially true for people in senior public service roles.

3. Separate organizations

Some charities have determined that their advocacy work is too important to be limited to 10%. They set up new nonprofits without charitable status. Their supporters have a choice of funding the charitable activities and getting a tax receipt or funding the advocacy body without a tax receipt. Other organizations faced with this decision simply give up charitable status altogether.

Summary

If charities are silenced by fear of retribution or misunderstanding of what they are allowed and encouraged to do, all Canadians suffer from poorer laws and poorer public policies. When an issue relates to an area in your charity has expertise, you should do as much as you can, within the law, to make Canada better.

Since 1992, Jane Garthson has dedicated her consulting and training business to creating better futures for our communities and organizations through values-based leadership. She is a respected international voice on governance, strategic thinking and ethics. Jane can be reached at jane@garthsonleadership.ca.

Because nonprofit organizations are formed to do good does not mean they are always good in their own practices. Send us your ethical questions dealing with volunteers, staff, clients, donors, funders, sponsors, and more. Please identify yourself and your organization so we know the questions come from within the sector. No identifying information will appear in this column.

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Disclaimer: This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.

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