Tackling systemic racism and colonialism in Canada's charities
The majority of Canadians will probably have never given much thought to Canada's Income Tax Act, but in its current form, the legislation perpetuates colonial and racist approaches to charitable work.
Finally, there is a chance to change the way the charitable sector works in a foundational way.
Unless you are a political enthusiast or closely watch the charitable sector, you probably haven't heard of Senator Ratna Omidvar's Bill S-222, the Effective and Accountable Charities Act. However, this somewhat technical bill to amend the Income Tax Act has the potential to meaningfully improve how Canadian charities operate locally and internationally.
The bill is good for reasons of practicality and efficiency, but it is also important for access to justice. Namely, Bill S-222 seeks to eliminate mandated racist and colonial ways of engaging with communities.
Under the current version of the Income Tax Act, Canadian charities can only use money in two ways. Charities can conduct their own charitable activities, or they can transfer funds to qualified donees (typically other Canadian charities).
The original intention of the "own activities" limitation was to ensure that tax exemptions for charities are not abused by the wealthy and charities are held accountable for how they disburse funds.
As noted by several senators during debate on the second reading of the bill, including Senators Omidvar, Terry Mercer, and Don Plett, on its face this regime makes sense.
However, the CRA has interpreted "own activities" to mean that if a charity wishes to cooperate with a non-charity to conduct charitable activities, it must "direct and control the use of those resources."
If you've spent time in the charitable sector, you are probably hearing alarm bells. As Omidvar put it, this kind of approach "is not a partnership. It is tantamount to a takeover."
Not only do these words mandate an approach that is wildly out of step with current accepted practices in international development, which emphasize local control, but these words systemically exclude BIPOC organizations and mandate colonial approaches to charitable work.
BIPOC non-profit leaders speak out
In April 2021, the Pacific Legal Education and Outreach Society held an event with Omidvar during which we heard from two non-profit leaders who explained how the current Income Tax Act negatively affects their ability to work with charities.
Yasin Kiraga Misago, founder and executive director of the African Descent Society in British Columbia, spoke to the systemic racism of the current legislation.
He explained that the current act and CRA interpretation are an immense barrier to funds going to Black communities and Black-led organizations. Due to the cost and complexity of getting and maintaining charitable status, the vast majority of grassroots BIPOC organizations aren't eligible to receive transfers from charities. Misago noted that in B.C., of the more than 100 Black organizations, he only knows of three or four that have charitable status.
To Misago, the COVID-19 pandemic demonstrated how broken the system is. While the federal government intended emergency funding to go directly to Black communities, instead it was sent to white-led charities, who were then largely unable to disburse it.
"If you go to ask [a large charity] how many Black organizations you funded in BC during COVID-19, they will tell you that we sent them all to find qualified donees with charitable status," he said.
Valerie Sing Turner, founder and artistic producer of Visceral Visions, spoke to the inherent colonialism of the legislation.
Visceral Visions supports Indigenous and racialized artists, but Sing Turner stated the current state of the Income Tax Act "means we are generally reliant on larger, white-led organizations." She called the direct and control mandate "deeply problematic."
Sing Turner's concerns are shared by Senator Omidvar, who stated that charities may avoid working with Indigenous governments and Indigenous-led non-profits because of the "complexity of the rules" and "not wanting to offend Indigenous Peoples."
Enter Bill S-222
Senator Omidvar's Bill S-222, the Effective and Accountable Charities Act, does three things to the Income Tax Act. First, it removes the "own activities" language, leaving simply "charitable activities." Second, it allows charitable activities to be conducted by non-charities, provided reasonable steps are taken by the charity to ensure the money goes toward charitable activities. Finally, it defines what are "reasonable steps."
The bill seems well-supported by senators. Every single senator who rose to debate the bill at second reading expressed support for the bill, including senators from the Independent Senators Group, Conservatives, and the Progressive Senate Group.
The bill is also well-supported by the charitable sector, and in 2020 the House of Commons' committee on foreign affairs and international development unanimously recommended the government fix the direct and control mandate.
On June 9, 2021 the Senate national finance committee concluded study on the bill and reported it back to the Senate without amendments for debate and third reading. In all likelihood, Bill S-222 will be sent to the House of Commons in only a short time.