Regulatory reform of charities subject of Osgoode Hall Law School professor's new book

TORONTO, September 25, 2000 -- The system of granting charitable status to organizations needs to be substantially reformed to make it more open and accountable, says Patrick Monahan, Law Professor at York University's Osgoode Hall Law School, in a hard-hitting new book about the regulatory framework governing the voluntary sector.

A considerable number of applications for charitable status registration are denied by the Canada Customs and Revenue Agency (CCRA), and the public never knows the reasons for those decisions, says the co-author of Federal Regulation of Charities: A Critical Assessment of Recent Proposals for Legislative and Regulatory Reform (York University, 2000).

What's more, there is no simple, informal way for charitable organizations to appeal decisions. Unlike the internal appeals mechanism within the CCRA that applies to taxpayers in general, charities must take their appeals directly to the Federal Court of Appeal. It's a costly, time-consuming and outmoded appeals process that has resulted in less than 20 appeals in the past 15 years.

"We haven't had any significant reform in this area for 30 years," says Monahan who co-authored the book with Elie Roth, an Osgoode graduate who now works at the law firm Davies, Ward & Beck LLP in Toronto. "We are saying that there should be significant reform but it should be measured and incremental reform, as opposed to a totally new system."

In particular, the authors critically examine the options for regulatory reforms that have been presented in previous reports and studies including last year's reports of the Panel on Accountability and Governance in the Voluntary Sector, headed by former NDP leader Ed Broadbent, and the Federal/Voluntary Sector Joint Tables.

The Broadbent Report had called for the establishment of an independent body that would include representatives of the voluntary sector reviewing CCRA decisions on whether to register an organization as a charity. Such registration gives an organization the right to issue receipts to donors for income tax purposes. Monahan and Roth argue against the establishment of such an outside body, saying that it might tend to unduly politicize decision-making on applications for charitable status.

Their review of the regulatory framework governing the voluntary sector follows on the heels of the Government of Canada's announcement in June that it will commit more than $90 million over the next five years to developing its relationship with the voluntary sector. Of that amount, $7 million has been set aside to deal with regulatory issues ranging from the introduction of a shorter tax form for charities to the examination of a new appeals process to greater transparency when applications for charitable status are filed.

The tax credit for charitable donations by individuals and corporations currently costs the federal treasury about $1.3 billion annually in foregone revenue.

One of the most contentious of the 21 conclusions and recommendations in Federal Regulation of Charities is the authors' call for the abolition of the existing "10 per cent rule" for political activities of charities.

Monahan and Roth argue that charities should have the option of choosing a higher quantitative limit similar to the United States, which allows spending up to 20 per cent on political activities. Alternatively, the authors say a charity should be able to opt for a qualitative system, whereby it can engage in political activities providing they are incidental to its charitable purpose.

Osgoode Hall Law School of York University is one of Canada's leading law schools with some of the country's most innovative law programs. These include the undergraduate Bachelor of Laws (LLB) program, with more applications for admission each year than any other law school in the country; the Graduate Program in Law, leading to the degrees of Master of Laws (LLM) or Doctor of Jurisprudence (DJur); and Canada's most popular Professional Development Program.

Funding for Federal Regulation of Charities was provided by the Non-Profit Sector Research Initiative, established by the Kahanoff Foundation to promote research and scholarship on non-profit sector issues. However, the views expressed are those of the authors and do not necessarily represent the views of the Kahanoff Foundation or the Non-Profit Sector Research Initiative.

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For free copies of the book and more information, please call:

Virginia Corner
Communications Manager
Osgoode Hall Law School of York University
(416) 736-5820
E-mail: vcorner@osgoode.yorku.ca

Joanne Rappaport
Centre for Public Law & Public Policy
Osgoode Hall Law School of York University
(416) 736-5515
E-mail: joanner@yorku.ca
YU/094/00