Social Policy in Ontario

Take the politics out of charity? Far better to just cancel the tax break

Posted on May 6, 2017 in Inclusion Debates

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NationalPost.com – Full Comment
May 5, 2017.   Andrew Coyne

The “chill” is gone. In what is being hailed as a victory for free speech, the Liberal government has suspended all remaining audits of charitable organizations, as ordered by the previous Conservative government, on suspicion of political activity.

The move comes in response to a report of a panel made up of leaders in the charitable sector, which suggests the government may adopt the panel’s broader recommendation that the current legal limit on charities’ political activities — they may spend no more than 10 per cent of their resources on what the Canada Revenue Agency defines as “any activity that tries to change, retain, or oppose a law, decision, or policy of any government” — be abolished altogether.

In fact the issue has nothing to do with free speech, and everything to do with politics. The Conservatives were inclined to look less favourably on charities’ political activities for the same reason the Liberals are inclined to look more favourably on them: because the vast majority of the organizations in question, from Environmental Defence to Canada Without Poverty, are more likely to sympathize with Liberal and NDP policy than Conservative.

That’s their right, of course. The current law’s attempt to distinguish between political and non-political activities, much flouted as it may be, is as impossible in practice as it is ill-founded in principle. The environment, to take one example, is inherently political: we may all care for it, or profess to, but what exactly poses a threat to it and what to do about it are inescapably political questions. So it would be absurd to tell a group dedicated to preserving the environment that it may not make recommendations about the sorts of policies it thinks would advance that end.

But in fact no one is. The issue was never whether charities could advocate for political causes, but whether they could do so and still be eligible for charitable tax status, notably the tax credit on charitable contributions. Absolutely nothing and no one stands in the way of Environmental Defence or any other charitable organization taking whatever political stance they wish, or spending whatever share of their budgets to that purpose they choose — even to endorse a political party, if so moved. The issue is whether they should be able to do so on the public dime.

Which is perhaps the real question: why should donations to charity be tax free? Why, especially when so many of these organizations aren’t charities in any meaningful sense of the term. My dictionary defines a charity as “an organization set up to provide help and raise money for those in need.” But many, if not most of the many thousands of organizations — think-tanks, activist groups, small-circulation magazines and so on — listed as registered charities have no such end in mind. They’re advocacy organizations.

It may be pointless, as I said, to separate their political from their non-political activities. But that’s an argument for taking away their special tax status altogether, not for giving them free rein to agitate for political causes at public expense.

Because that’s what the tax credit entails. If I give to my preferred charity with my own money, that is entirely my affair. But if I claim a tax credit on it, I am effectively forcing you and everyone else to pay for it as well. Again, this would seem to have little to do with charity as it is usually defined: “the voluntary giving of help, typically in the form of money, to those in need.” There is nothing voluntary in my conscription of your assistance. Neither is there much of the charitable spirit in demanding to be recompensed for what ought to be given freely.

The nature of political causes, what is more, is that they are matters on which opinion divides. My preferred charity may be entirely repugnant to you, as yours is to me. Forcing each of us to pay for the other’s political causes does not cancel the offence, but compounds it. And yes, that’s an argument for abolishing the tax credit on contributions to political parties, as well.

Or if we are going to fund charities out of public funds, then let us do so in the way we normally spend the public’s money: directly, openly, and by a vote of Parliament, with all of the means of accountability that implies — including elections, the ultimate sanction, wherein those who disagree with how these funds have been disbursed can make their objections known.

The charitable tax credit, by contrast, amounts to the private spending of public funds; not openly, but out of public view; not by general agreement, but out of general ignorance. That would be troublesome even if every charity were above-board and on the level. But within those many thousands of “charities” hoping to cash in on charitable tax status lurk all manner of dodgy organizations, which the CRA spends countless hours attempting to track down.

And if the restrictions on political activity are lifted, expect to find many more — or do you think the political parties will pass up the opportunity this presents to evade their current contribution and spending limits?

Better by far to do away with the tax break. People who wish to donate to charity should be encouraged to do so – but out of their own funds, i.e. with after-tax dollars. Virtue is supposed to be its own reward, remember?

(Disclosure: I sit on the board of a registered charity, the Energy Probe Research Foundation, whose views may not necessarily be the same as my own.)

http://news.nationalpost.com/full-comment/andrew-coyne-take-the-politics-out-of-charity-far-better-to-just-cancel-the-tax-break

Tags: ideology, philanthropy, tax

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