Press Release: The Effective and Accountable Charities Act Would Empower the Charitable Sector and Weed out Systemic Racism
Senator Ratna Omidvar presented Bill S-222, the Effective and Accountable Charities Act, to the Senate. The bill will amend the Income Tax Act to enable charities to establish equal partnerships with non-charities, empowering the voices of BIPOC organizations, while still ensuring accountability and transparency.
“I urge parliamentarians and Canadians to support this bill. It will get rid of old laws that perpetuate systemic racism and will create more effective partnerships in the charitable sector by freeing up resources for important causes and equity seeking communities,” said Senator Ratna Omidvar.
Currently, the Income Tax Act limits charities to spending their charitable dollars on their “own activities”. However, there are times when the best way for a charity to pursue its charitable purpose is to partner with non-charities, such as not-for-profits, social enterprises, co-ops, or civil society groups. The Canada Revenue Agency, which issues guidelines based on the Income Tax Act, has stipulated that when charities do work with non-charities, they must exercise “direction and control” over that work.
In addition to being inefficient, ineffective, and costly, these regulations are an example of a quiet but deeply embedded form of systemic racism. Partner organizations are forced to give over control of their projects to the charity. Understandably, many community groups, including BIPOC-led organizations, are uneasy being directed and controlled, which limits true partnerships with charitable organizations that wish to support their work.
The report by the Special Senate Committee on the Charitable Sector found that the CRA guidelines are inconsistent with contemporary values of equal partnership and inclusion. The Committee recommended moving towards a new approach, away from the language of “direction and control.”
In keeping with this recommendation, the Effective and Accountable Charities Act will replace the current Income Tax Act language of “own activities” with new language of “resource accountability.” This approach shifts a charity’s focus from ongoing operational control of activities to an approach focused on taking reasonable steps to ensure that charitable resources are devoted to achieving charitable outcomes.
“This change is long overdue. Updating the Income Tax Act will benefit not only the Canadian charitable sector, which contributes $150 billion to our economy, but also the populations the sector supports. Charities have provided essential services during the COVID-19 pandemic and updating the Income Tax Act will help them support people in need more quickly and effectively” said Senator Omidvar.
An open letter by 37 top charity lawyers says that “the current rules are inefficient, overly complex, and out of touch with those of other global actors. They create lost opportunities by making it difficult, in some cases prohibitively so, to carry out legitimate charitable work. Further, they impede collaborative partnerships between Canadian charities and their ally organizations across the world…It is time for charity law to do away with the inefficiencies created by these antiquated rules, and instead focus on maximizing the charitable work that can be done.”
We need a strong and functioning charitable sector to take Canada on the road to recovery. It should not have to do so with one hand tied behind its back.
For more information visit or contact:
Paul Faucette
Director of Parliamentary Affairs, The Honourable Ratna Omidvar
paul.faucette (@) sen.parl.gc.ca