In the midst of a Senate inquiry investigating Canadian charities, Liberal Senator Hon. James S. Cowan is countering Conservative attacks with a new motion to dig deeper into advocacy done by Tory-favoured corporate and educational organizations, as well as oppositional environmental groups.
Senator Cowan, Leader of the Opposition in the Senate, gave a notice of motion during Thursday’s debate, asking the finance committee to check up on companies and educational entities that claim tax deductions for advocacy activities. The move is in direct response to the ongoing criticism of environmental groups, which Tories say use foreign charitable dollars to engage in overly political activity hoping to sway domestic policy.
“I wanted to have this whole matter referred to our National Finance Committee to study,” Cowan told the Observer.
“But I think it ought to look not only at the charitable sector, but also at the corporate sector.”
In a previous Senate debate, Cowan brought up the fact that right-wing, U.S. oil industry moguls the Koch brothers had provided charitable funds for the conservative think-tank the Fraser Institute. He also noted that David Koch is on record stating that the family doesn’t donate to groups unless they are aligned with their ideological agenda.
Since he spoke up about his views on the inquiry, Cowan says he has been overwhelmed by the response he’s received from the public. He says over 10,000 Canadians have written and emailed his office saying they’re upset with the federal government’s actions, and expressing their agreement with the Liberal senator’s position.
“I think the government is firing a warning shot across the bows of Canadian charities that, you know, it’s okay if you’re going to support issues that we believe in, like the pipeline. If you want to advocate in favour of the pipeline, then you’re probably going to be okay,” Cowan said.
“But if you want to advocate against that, or some other policy that the government doesn’t support, then you’re going to be in trouble. And we’re going to sic the CRA on you.”
A double standard?
Cowan’s assertion in the Senate was that if charities were going to be subjected to scrutiny, the investigation should not be limited to groups at odds with the Harper government’s policies.
“I was saying, alright if you want to open a hall in favour of transparency and if you want to say to Canadian charities that they have to say where they get their money, and they have to show where they spend it, that’s fine. And I think that most charities do that already,” said Cowan.
“But there are monies that flow from American charities and American organizations into the hands of Canadian charities and charitable think-tanks like the Fraser Institute. Are we saying that should not be allowed? I think we have to be very careful if we’re going that far.”
Cowan says that the Senate inquiry—combined with the $8 million announced in the budget for the Canada Revenue Agency to police charities’ “political activity”—has “put a chill” on the charitable sector. And having worked in the sector himself for many years, this implication of wrongdoing does not sit well.
“I became quite angry about this, and felt that it was unfair first of all to suggest that our charities were abusing their charitable status,” he said.
“As far as I know, there’s not a single shred of evidence that that’s the case. I don’t recall a single instance or actual fact of anybody actually doing anything wrong….there was money being used to give to people who opposed a particular government policy. And as you know, there’s nothing wrong with that, within certain limits.”
Tax consequences of public and private advocacy
According to Thursday’s Senate transcripts, Senator Cowan’s new motion asks that, “the Standing Senate Committee on National Finance be authorized to examine and report on the tax consequences of various public and private advocacy activities undertaken by charitable and non-charitable entities in Canada and abroad.”
It also requests that the committee take particular note of charitable entities receiving funding from foreign sources (as is already under investigation); corporate entities claiming business deductions against Canadian taxes owing for their advocacy activities; and educational entities utilizing their charitable status to advocate on behalf of private or corporate interests.
Cowan explained his motivations, noting that when a company spends money to lobby the government, it can write it off as a business expense—thus having an impact on our tax system.
“But if I give money, or if an American charity gives money to a Canadian charity, first of all the Canadian charity doesn’t issue a tax receipt for that. And then if the Canadian charity gives that money to an organization that is advocating in Canada, there’s no tax receipt there. So that kind of a transaction has absolutely no impact on our tax system,” he said.
If the government is going to accuse certain interest groups of abusing charitable status or tax benefits, Cowan suggests, it should at least be a two-way street.
“Today it’s the environmental [groups facing scrutiny]. But there’s no reason to believe that if you were out there providing money for people who were legitimately advocating against something else that the government wants, that they wouldn’t turn their guns on you then,” he said.
“I just think that’s wrong. But if that’s where we’re going to go, then we better think it through carefully, and that’s the reason I suggested the Senate committee study.”