Senator pushes change in tax code for charities

Independent Sen. Ratna Omidvar says the Income Tax Act is perpetuating systemic racism and colonialism in Canada in how it deals with charitable organizations.

She is pushing for changes that would stop limiting charities to funding work they either undertake themselves, or over which they maintain full "direction and control."

Instead of having to control their activities, the Effective/Accountable Charities Act will allow #charities to form equal partnerships w/ non-charities, eg indigenous and #BIPOC orgs. This is responsible + transparent: https://t.co/qo2s1AJRXV #cdnpoli #SenCA #EqualPartners #S222

— Senator Ratna Omidvar (@ratnaomi) March 17, 2021

Her private member's bill would instead require charities to make "reasonable" efforts to track the use of their funds, without forcing any recipients to give up control.

The Income Tax Act places strict limitations on charities because they receive tax benefits through charitable donation tax credits.

But Omidvar says Ottawa can keep charities accountable without forcing them to exert full control over projects they undertake with non-profits and international organizations.

She says the groups that need the most help are often from marginalized and racialized communities and forcing them to give up control to an outside agency is perpetuating systemic racism and colonialist thinking.

There are many organizations that don't qualify for charitable status for a number of reasons, including being too small or being based outside Canada.

They could benefit from partnering with a charity, but if they do so they must give up control over everything related to any funds they receive. That includes intellectual property resulting from the projects, budget decisions and even communications.

"I need not describe to you what the two words 'direction' and 'control' mean to Indigenous organizations and Indigenous peoples," Omidvar said in a speech in the Senate Tuesday, when the bill was called for second reading.

The law may have been created in the 1950s to prevent charities from passing money from one group to another with no guarantee it made it to communities, but Omidvar said that even if it was never intended to perpetuate control over marginalized people, that is the consequence.

"Systemic racism is hard to detect," said Omidvar, who sits with the Independent Senators Group and has represented Ontario in the Senate since 2016.

"It is deeply embedded. It may not have any intended victims, it is unconscious, it lurks in dusty corners of institutions, and yet it has an outsized impact on certain marginalized groups."

Any intellectual property resulting from charitable work is owned by the charity, not the partner organization, every budget item must be approved and every communication about the project pre-authorized.

Her bill builds on a special committee report passed by the Senate unanimously in 2020. It also repeats recommendations made to Revenue Minister Diane Lebouthillier in January by a charities advisory board her office established in 2019.

That board told Lebouthillier the rules are "hierarchical, intrusive and onerous" and should be eliminated.