Terence Corcoran: Time for a serious look at Ottawa audits of anti-oil ‘charities’

For more than a decade Vivian Krause, a Vancouver researcher and writer with more determination than the Winnipeg Jets, has been following and documenting the activities of charities that fund opposition to Canada’s oil industry. Krause has dug into the corners of the so-called charitable activities of a collection of powerful political organizations, funded by U.S. foundations, whose objectives include, among other things, “shutting down” Canada’s oilsands.

Readers of this page will be familiar with Krause’s work. The Girl Who Played with Tax Data lists more than a dozen of her FP Comment reports going back to 2010. Others followed. Her blog site, “fairquestions,” has only added yet more revelations and background documents on how Canada’s charitable system is being used and abused to disrupt the nation’s energy economy.

Krause also recently wrote an open letter (via her blog site) to the president of the University of Alberta, David Turpin, in opposition to the university’s decision to award an honourary doctorate to David Suzuki. In the letter, Krause relays her personal experience with Suzuki’s science methods and outlines how U.S. charities provided The Suzuki Foundation with funds for his fish farm scaremongering. The letter includes details of her early attempts to push the university to investigate.

This week, Krause expanded her range of analysis with a report on a Vancouver-based network of charitable foundations that, in recent years, processed more than $575 million in revenues and donations through a complex web of dozens of foundations. The charitable status of one of those foundations, known as Theanon, recently had its licence revoked by the Canada Revenue Agency following an audit. 

The CRA said Theanon — which Krause claims processed up to $70 million in activity over the last decade — had failed to comply with the Income Tax Act and “failed to devote resources to charitable purposes by making gifts to non-qualified donees and providing undue benefits, carrying on an unrelated business, issuing donation receipts that were not in accordance with the Act and/or its Regulations and failing to maintain adequate books and records. The audit found that the Organization participated in tax planning arrangements which were designed to confer undue benefits on the parties involved.”

The extent to which Canada’s charitable regime may be a fiscal and policy mess is difficult to determine. So far, Krause has been a one-woman crusade. It’s time for bigger interventions from actors with the authority to probe what may well be a major breakdown in Canada’s charitable system. One option is for Michael Ferguson, Canada’s auditor general, to take on the task of examining the work of Ottawa’s Charities Directorate, which under the Canada Revenue Agency is responsible for the audit of individual charities.

In 2012, prodded by the Harper government, the directorate initiated an audit of charities for their “political activities.” The agency looked at 54 charities, apparently selected randomly, and found an assortment of problems at 41 of them, but disclosed no names or details. Then the Liberals took power and stopped the audits, leaving open the question of whether the political activities of foreign foundations and green NGOs were taking place outside the tax rules guiding Canadian charities.

Letting the auditor general loose on the CRA’s charitable audit experience and methods would at least be a start in opening the books to find out whether Canada’s charities system is, at minimum, operating according to the rules — rules that are already vague and impenetrable. There also appear to be many other issues related to Canada’s system of charities that need comprehensive examination, even beyond what the auditor general can reach.

Last month a special Senate committee on charities opened for business. The opening sessions suggest the whole area is rife with conflict and political motivation. Everybody believes in charities and the need to keep the Canadian system of deductions and governance in line with Canada’s rapidly changing social and economic structure. Beyond that, who knows what’s going on?

On the political role of charities in fomenting opposition to pipelines and oilsands development, for example, there is no official information outside of Krause’s.

At a recent meeting of the Senate committee on charities, Susan Phillips, a professor at Carleton University’s School of Public Policy and Administration, said “Current rules on ‘political activities’ are confusing and reporting is a fiction. The language and the limits on political activities need to be clarified.”

So far, nobody seems interested in doing much clarifying. A Trudeau-appointed Consultation Panel on the Political Activities of Charities issued a report last year calling on the government to remove all limits on political activity. The panel said the government should amend the Income Tax Act by deleting any reference to “political activities” and allowing charities “to fully engage, without limitation, in non-partisan public policy dialogue and development, provided that it is subordinate to and furthers their charitable purposes.”

Now that the Trudeau Liberals are the prime targets of the political activities of U.S and other charities active in rousing opposition to development of Canada’s energy sector, their enthusiasm for open politicking by charities might be waning — as it should.

As the Senate committee on charities lumbers forward, it needs more focus. A thorough review of Krause’s research might help. Other critics of the system have different objectives, but it seems clear that Canada’s charitable regime is in need of comprehensive review and reform. Sending in the auditor general to audit the auditors might be a good start toward getting some hard facts to replace the fictions we have now.