In the debate over the role of charities in the public policy process it is sometimes suggested that there ought to be no constraints on what political activity groups are allowed to undertake. Occasionally, commentators even assert charities should be allowed to participate in party politics.
Among the less remarked of Donald Trump’s comments during the two weeks after he assumed office was his announced intention to remove the constraints on U.S. churches engaging in politics. Under what’s known as the Johnson Amendment in the U.S. Tax Code, certain American non-profit organizations (effectively the equivalent of Canadian registered charities) are prohibited from endorsing or opposing political candidates. The newly-elected U.S. President said he would “totally destroy” the Johnson Amendment.
Although there has been a long history of charities being involved in issues that overlap with electoral politics (abolition of slavery, temperance, universal suffrage, to name a few), under the common law, groups constituted primarily for a political purpose cannot be charities. This position comes through a line of cases beginning with the British House of Lords’ judgment in Bowman v. Secular Society. It was explicitly stated by Justice Slade in another leading case, McGovern v. Attorney General. Justice Slade included trusts “to further the interests of a particular political party” in his list of trusts for political purposes that are disqualified from being charities.
.. a charity representative’s appearances and statements in the media are apt to be viewed with a different lens if the group is seen as partisan.
While what is considered a political purpose is regularly contested through the courts and through other regulatory processes, the impermissibility of engaging in partisan politics has rarely been challenged.
The U.S. regulatory regime for charities resembles the common law system used in the United Kingdom and a host of other countries (including Canada), but features some aspects that reinforce or deviate from the traditional system. These stem from U.S. Constitutional law or the country’s complicated legislative processes. In this case, the Johnson Amendment buttresses the existing common law rule. Separation of church and state is also, of course, a well-established tradition in U.S. law.
In Canada, partisan activity is explicitly excluded from Sections 149.1 (6.1) and (6.2.) of the Income Tax Act, which deal with regulation of political activity by registered charities.
At almost the same time as the President’s comments were made, the Australian Charities and Not-for-profits Commission (ACNC) revoked the status of an organization in that country that, apparently, had overstepped the bounds of political conduct allowed under Australian law. Among the allegations that brought the group, Catch The Fire Ministries, under scrutiny were close ties between that organization, and the political party Rise Up Australia. The party was founded by the preacher heading up the ministry, Daniel Nalliah, and the ministry website encouraged support of and financial assistance for the party.
Under a 2014 Australian law, charities in that country cannot have a “disqualifying purpose”. A disqualifying purpose is defined as including “a purpose promoting or opposing a political party or a candidate for office”. Australian law also precludes the reasons for ACNC revocation decisions being released.
The Charity Commission for England and Wales, whose regulatory powers differ somewhat from those of Canadian, U.S. and Australian authorities, takes the position that “an organization will not be charitable if its purposes are political”. With respect to partisan political conduct, it has launched an “Inquiry” in two cases where the organization appeared to be engaging in work that could be seen as indistinguishable from, or aligned with, a political party’s aims. In both cases it recommended changes in the practices of the charity to ensure there was not actual or perceived confusion between fulfillment of the group’s purposes and the attainment of partisan ends associated with a particular party.
While there is superficial appeal to a freedom of speech rationale or, alternatively, a leveling the playing field rationale (for-profit corporations can do it) to allowing charities scope to engage in partisanship, there are also huge drawbacks in declaring partisanship permissible.
Among the less remarked of Donald Trump’s comments during the two weeks after he assumed office was his announced intention to remove the constraints on U.S. churches engaging in politics. Perhaps among the most crucial of these is that it is vitally important that charities – with their firsthand information and grassroots expertise – be given a role in development of public policy. Having a close association with a political party is likely to undermine the credibility of representations made by groups to assist in legislative or administrative reform to better address societal needs. Likewise, a charity representative’s appearances and statements in the media are apt to be viewed with a different lens if the group is seen as partisan.
Although the charitable sector is often perceived as relying heavily or primarily on philanthropic giving, it actually gets large portions of its revenue from earned income and from government. Adopting a partisan stance could put government funding at risk and/or lead to an assessment of funding eligibility based on an organization’s politics, rather than the quality of its work.
Finally, in Canada registered charities enjoy significant preferential tax treatment. Parliament has also afforded partisan political groups and their supporters certain tax concessions. The charitable tax credit for individuals is structured to promote giving across all classes of donors, but especially among the limited number of donors that make large gifts. The political tax credit is structured to foster small contributions from numerous donors. For public policy reasons, large donations in the political realm are seen as undesirable and are generally limited or prohibited. If charities engaged in partisan politics, these two tax concession would become conflated, compromising the policy considerations that went into how they have been structured and perhaps undermining the current generous philanthropic support enjoyed by registered charities.
So, as nice as it is to think that charities should be unfettered in what they can say or do in the political world, there are compelling practical reasons why partisanship should be off-limits.
This is not a journey on which the charitable sector wants to embark.
About Peter Broder
