Also known as the Effective and Accountable Charities Act, Bill S-216 would amend the Income Tax Act (ITA) to eliminate the “own activities” test. It would end the requirement that charities exercise “direction and control” and replace it with “reasonable steps” to ensure resources are used for only charitable purposes.

The status of the bill was raised in question period on February 14, 2022, but no clear answer as to the government’s position on the bill was provided.

What is Direction and Control?

What are we talking about when we say direction and control? This term doesn’t even appear in the ITA! 

What does appear in the ITA is a definition of “charitable organization.” Among other characteristics, a charitable organization is one devotes all of its resources to either (1) charitable activities “carried on by the organization itself” or (2) gifts to qualified donees.

For a charity to show that it is carrying on charitable activities itself, the charity must exercise direction and control over the funds it spends.  Charities can meet the test by using their own staff to carry out their activities or by working through an intermediary. It is usually straightforward to demonstrate direction and control when a charity uses its own staff, volunteers, etc., but it becomes a bit more complicated when intermediaries are engaged to carry out the charity’s activities, particularly when the activities are outside of Canada.

Direction and control means that charities need to have intermediary agreements and exercise operational control over projects. That means there are additional policy documents, protocols, processes, and periodic payment. Pooled funding agreements are basically impossible for Canadian charities unless they can exercise direction and control over the funded activities. That is difficult, if not impossible, when the Canadian charity is not the majority contributor.

Why is S-216 Important?

The current approach to accountability is “costly, inefficient and inconsistent with contemporary values of equal partnership, inclusion and local empowerment” (Senate Debate on December 1, 2021).

At first reading in the House, the purpose of Bill S-216 was enthusiastically summarized by the Member of Parliament as:  

…help[ing] charities do their great work around the world. Currently, charities are unfortunately encumbered by significant red tape and bureaucracy. This legislation would go from granular control, where charitable organizations in Canada have to okay nearly every decision of the partners they work with around the world or in Canada, to a system of accountability and transparency that will increase accountability for charities while giving them the autonomy to do their great work.

The move away from direction and control toward resource accountability provides the necessary transparency and flexibility to charities to accomplish their charitable purposes, a change that CCCC supports.

What are the Specifics?

The Bill would make this change in three ways:

1. Replace “charitable activities carried out by the organization itself” with “charitable activities” in the ITA
2. Expand the definition of charitable activities so that charities that take reasonable steps before using funds will fall within the definition
3. Set out what reasonable steps are, including:
   • Collect information to ensure resources will be used for charitable purposes (if not a qualified donee)
   • Use measures, restrictions or conditions, or other actions to ensure resources are used exclusively for charitable purposes

Next Steps

The bill will be scheduled for second reading in the House of Commons. At that point, most bills are referred to a committee for a thorough review and to receive input from the public. We’ll continue to monitor its process and update you on key developments, including any opportunity to make submissions to committee.

Details on how resource accountability will be determined through CRA consultations after the bill is passed.

Want to Know More?

For more on the Bill, you can check out our past blogs. You’ll see that some of them refer to Bill S-222. Bill S-222 is Bill S-216’s predecessor. Bill S-222 died when the federal election was called, and when the bill was introduced in the new Parliamentary Session it was given a new number, S-216. They are substantively identical.

Bill S-216 on Direction and Control – Different Name, Same Aim (9 December 2021)

What’s Happening with Bill S-222? (30 June 2021)

Bill S-222: From Direction and Control to Reasonable Steps (10 February 2021)

On direction and control, see our Resource Page in CCCC Knowledge Base. And for members interested chatting about the topic, you can head over to our dedicated discussion space in The Green.

The post Update: Bill S-216 on Direction and Control appeared first on CCCC Blogs.

Centre Block, on March 19, 2018

Far from being a “kerfuffle,” the opposition from faith-based and other groups to the Canada Summer Jobs has become a real headache for the Government of Canada. On March 19, 2018, the government was required to vote on the Opposition’s motion to allow all applicants to apply without having to attest to believing in the government’s ideology. Voting got underway at about 6:45 in the evening. Attendance in the public gallery was conspicuously sparse. As for the press, only three reporters were present. Clearly, in the minds of many, this was a non-issue. But for the hundreds of applicants who could not sign the government attestation this was (and is) a big deal. However, it was a foregone conclusion that the government would use its majority to easily defeat the Opposition’s motion, and it did. The final tally was 93 in favour of the motion and 207 against.

Yet, despite the appearances of near unanimity on the Government side of the House, the vote did cause some soul searching for several Members of Parliament.

Scott Simms, MP interviewed by media

Newfoundland MP, Scott Simms, no doubt caused some of his fellow Liberals a twinge of doubt as he made his lone vote against the party’s position. In conversation with reporters after the vote he said that he informed his whip of his decision and was treated with respect. When asked if he will suffer consequences, he stated to the effect that “that is to be seen.” Whatever the repercussions, based on principle, he could not vote in favour of compelled speech – even though he supports the Prime Minister’s pro-abortion policy.

Barry W. Bussey with Scott Simms, MP

The government could not have been surprised by Mr. Simms’ stance as he made his opposition known early on. In January he insisted that it was unfair to force people to accept something they do not believe in. “To me that’s a lack of respect. If I was to say to someone, ‘Look, don’t worry about it, just tick the box or whatever’ — some people have a core fundamental belief that they don’t believe in this.” From his perspective the government’s approach was “not right.”

Simms was not the only Liberal who was conflicted. After roll call was taken Ontario Liberal MP John McKay slipped out of the House and did not vote. Mr. McKay is pro-life and in the past supported Canada Summer Jobs funding for Campaign Life Coalition in his riding. Given his many years of experience as a sitting MP since 1997, Mr. McKay is noticeably absent from playing a major role in the government. One cannot but speculate that is due to McKay’s pro-life position, from which the current Prime Minister has taken pains to distance himself.

It has got to be a struggle for Members of Parliament when faced with their party’s demand that they vote against their conscience on such basic concepts as freedom of expression. How Simms and McKay will fare in the coming days or weeks because of their refusal to vote with the party will be worth watching.

Green Party Leader, Ms. Elizabeth May, voted in favour of the motion. She stated early on that the attestation was an overreach of the government. She committed “to voting for the opposition motion because I believe the attestation box was a mistake, but not because for one second I will surrender on a woman’s right to equal choice and equal rights.”

Bloc Québécois’s married couple, Xavier Barsalou-Duval and Marilène Gill, who made history as the first married couple of MPs to have a child while in office, also voted in favour of the opposition motion. Joining them was fellow Bloc Québécois Mario Beaulieu.

The sole New Democratic Party voice in support of the motion was Hamilton MP David Christopherson.  National Post reported that Christopherson also wrestled with his conscience.  “I wrestled with it, of course. You don’t vote against against your own caucus lightly,” Christopherson said. “To me, at the end of the day, that box took away Canadians’ right to disagree with the laws that they have to obey. I had a very strong, fundamental problem with that. And just abstaining wasn’t good enough.”  One cannot but admire such a principled position.

Not surprisingly, there were no Conservatives who voted against their own motion. The motion was aimed at ensuring that all Canadians are free to live by their conscience; and that charities who may not share the government’s ideology can still carry out their work of looking after the homeless, welcoming refugees, providing camps for children, or caring for the elderly.

Andrew Scheer’s office held a reception for the stakeholders as representatives of the local religious community were on hand to see the vote.

Stakeholders were on hand to meet several MPs just before the vote: Garnett Genuis (Sherwood Park—Fort Saskatchewan); Arnold Viersen, (Peace River—Westlock); Harold Albrecht (Kitchener—Conestoga); Hon. Candice Bergen (Portage—Lisgar); Martin Schields, (Bow River)

As I sat in the gallery watching the vote take place, I was troubled by the seemingly nonchalant expressions of those who voted against the motion. Perhaps my reaction is to be expected from someone who has been wrapped up in this debate since it began just before Christmas 2017.

Every day my office receives a number of calls and emails from our 3400 members who are concerned about the government’s apparently callous attitude towards their deep spiritual commitments. They were told to simply “check the box” as if words didn’t matter.

The fact is, words do matter. Words have meaning. Words have power.

What I witnessed last night in the House of Commons is precisely that words, and particularly the words in the current attestation, do matter. They matter so much that over 1400 charities would rather forego government funding than be compelled to express words that violate their conscience.

Crucially, the words in the attestation require applicants to sign on to the government’s ideological position, without mentioning exemptions in Human Rights legislation that allow groups to operate lawfully according to their beliefs. Nor do they acknowledge that the Supreme Court of Canada has issued judgments that recognize the right of Canadians to hold alternative views and freely express them. In short, the wording of the attestation remains unacceptable.

The Peace Tower Clock, March 19, 2018

Yet, I did not leave the House of Commons dejected. I left emboldened. Emboldened to continue to press the cause of liberal democracy.

We, the religious community, have been thrown into an ideological maelstrom not of our making. We simply wanted to carry out our charitable work, but the powers that be wished to push the abortion button that created an “us” and “them” divide for partisan purposes. That is wrong. We will not accept the situation, and we will push back until the government recognizes that on matters of ideology its role is to persuade, not compel.

In a liberal democracy, access to government funding and licensing should never be subject to having the “correct” opinion. That is a sure road to despotism and we have seen enough of that in world history! The government is free to set its funding priorities based on activities, but not on beliefs.

I recognize that not all of the religious community has been upset by the CSJ attestation. Some, based on their conscience, agree with the government’s ideology. However, this battle is not about whether we concur with the government on abortion. It’s about being forced to endorse opinions that are not our own. We cannot let this go. To give up now would be to lose our right to think and express our views.

This issue is not over. It remains very much alive.

Below is the exchange on the Canada Summer Jobs issue during Question Period – March 19, 2018:

https://youtu.be/EXvskjMpedQ?t=1702

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