The effect of publishing a newsletter on the disbursement quota is often obvious. Thus, charities must be cognisant of the relative expense of their newsletter with respect to their total budget. Unless the publication of the newsletter directly fulfills the charitable objects of the charity, the charity will be restricted in the amount it can spend on publishing the newsletter. So, for example, smaller charities who may feel that publishing a newsletter does not further their objects but has other benefits for the charity may in fact be prohibited from publishing the newsletter because of the disbursement quota rules. Smaller charities in particular must pay special regard to the total expense of a newsletter in drafting their yearly budget.

Political activities

Given that we have just recovered from our latest federal election, many charities are likely familiar with the restrictions on participating in political activities. However, these rules must be kept in mind throughout the year, not simply at election time. Charities are prohibited from participating in partisan political activities; doing so makes a charity liable to revocation of its registered charity status. Partisan political activities include not only a specific endorsement of a particular political party or candidate but also favouring a candidate or a party with space or with time that is not made available to other parties. Charities are not prohibited, however, from participating in the political process by contributing their special expertise to a general debate on a topic.

For example, a charity that engages in feeding the poor would have special expertise in the area. Where the issue arises for public debate it may be appropriate for this particular charity to advocate or contribute its special expertise to the debate either through written articles or submissions to government. The charity may also want to illustrate which party has a platform most similar to the position it is advocating. If done with caution (i.e. not simply as a partisan endorsement), and in a way so as not to arouse the suspicions of a capricious revenue officer who may disagree with the charity’s endorsement of a political party, the charity may succeed in its objective.

Even if the publication is non-partisan but does not fulfill the charity’s objects, the CRA restricts the amount of resources that can be expended in producing the publication. In the example above, where a charity is participating in a political debate by contributing its expertise in a specific field, the CRA would still restrict the amount of resources the charity can contribute to the debate to 10% of its financial, human, or capital resources. While I would like to give more guidance as to the meaning of this general cap on resources, I am not sure there is anyone in the country that really knows.

Of course, if a charity is expending more than its disbursement quota on non-charitable activities, clearly it is falling outside the guidelines of the CRA. The problem lies where the resources being donated are not simply financial but perhaps volunteer time. How does a charity decide that 10% of its volunteer resources are being donated to a political activity? A volunteer is still a private citizen able to give of their own time to pursue their own activities. Given these difficulties, it is unclear in what circumstances the CRA would try to revoke a charities registration for engaging in non-partisan political activity. Nevertheless, a charity would be wise to avoid the problems that come with attracting the CRA’s attention.

It is not common for the CRA to revoke a charitable registration because of a newsletter, however, that does not mean that it does not and cannot happen. I look forward to the case that makes it to court where a charity argues that the CRA is restricting the charity’s right to freedom of expression. In the meantime, charities should be cautious in their publications so as to avoid the fight that will come with CRA’s disagreements.