In the wake of Greta Thunberg’s searing appearance at the United Nations, a coalition of Canadian environmental groups, including the David Suzuki Foundation, the World Wildlife Fund-Canada and Environmental Defence, this week are launching what could be characterized as a dutiful effort to inform Canadians about climate change issues in the election.
The organizations prepared a side-by-side chart with answers from each party to 10 questions about their environmental planks. The idea was to pump out the document through the usual channels: websites, social media and so on.
The project seemed like straightforward advocacy with no topspin. But the network’s attempt to do election-season voter engagement is steeped in irony, and reveals much about the contradictory rules governing the role of non-political party actors in the federal race.
According to Tim Gray, who runs Environmental Defence, the platform comparison document stops short of grading the parties’ positions out of an abundance of caution. When Stephen Harper’s Conservatives held power, they ordered the Canada Revenue Agency to initiate costly audits of environmental NGOs (ENGOs) suspected of excessive political or even partisan activity. Justin Trudeau’s Liberals eased the rules restricting the political activities of charities, but Gray’s group didn’t want to risk further audits, so they dispensed with a scorecard.
At the same time, Gray also had to register the network as a “third party” in the election because the project cost his group $4,000. Under new Elections Canada rules designed to prevent so-called dark money from seeping into the race, any individual or organization that spends more than $500 on expenses like advertising or opinion polling must disclose its backers to federal officials. To maintain a level playing field with political parties, registered third-party groups are allowed to spend a maximum of $511,000 after the writ drops, and the same amount in a newly established pre-campaign period.
Here’s the weird part: while Canadians have told pollsters in no uncertain terms that climate change is a top-of-mind concern, these reputable ENGOs are tip-toeing through what they regard as a regulatory minefield. Elections Canada warned Environmental Defence in August that if it ran ads warning about climate change, it might be accused of partisanship—a strict no-no for charities—because Maxime Bernier’s People’s Party has a strong position on the topic: denial. (Elections Canada walked back its warning after a flurry of media coverage and incredulity.)
Meanwhile, pop-up third-party groups like “Canada Proud” and its provincial cousins (New Brunswick Proud, Ontario Proud, etc.) are spending hundreds of thousands of dollars on Facebook attack ads, most of which are widely shared and heavily torqued hit jobs on Trudeau, Environment Minister Catherine McKenna and others prominent targets in the anti-Liberal firmament. With these ads, by contrast, Elections Canada’s third-party rules are agnostic when it comes to content and accuracy. As Gray observes, the agency has “no interest in the truthfulness of the messaging.”
It’s as if the feds, in their stepped-up efforts to stage-manage the election process, couldn’t decide which sort of speech should pass muster, and wound up enabling the worst sort (dubious ad hominem attack ads). The seeming contradiction highlights a collision between two of this government’s recent policy preoccupations: forging tighter relations with Canada’s charitable sector and buttressing Canada’s democratic institutions against the fake news/big money meddling that has distorted politics in the U.S. and elsewhere.
The two goals aren’t irreconcilable, but as this dreary election totters into its final laps, there’s little doubt that Ottawa needs to confront the perverse incentives and unintended consequences baked into its rule book.
* * *
Charities have long been banned from engaging in partisan activity, and the reasons are clear: by issuing receipts that allow individuals to reduce their taxes, registered charities receive an indirect subsidy. Their claim on the public purse means they need to remain above the fray. For most charities, this rule isn’t difficult to obey. Canada has more than 86,000 registered charities—everything from that volunteer-driven neighbourhood soccer league to giant hospital foundations raising megabucks for new wings—and the vast majority ignores politics.
Yet Canada’s Income Tax Act, which regulates charities, has also traditionally allowed charities to spend up to 10 per cent of their budgets on “political activities,” which are seen by regulators and the courts as different from partisan activities. These outlays may include policy briefs, issue-oriented advocacy campaigns, lobbying and, in election season, get-out-the-vote campaigns. As long as the charities stayed inside the 10-per-cent limit and kept clear of political parties and candidates, such activity was deemed permissible. (Most charities don’t come anywhere near the 10-per-cent limit in their budgets.)
The problem is that the definition of “political activity” is notoriously slippery. What may be policy to one eye could look like partisanship to another. The dilemma brings to mind one U.S. Supreme Court justice’s famous comment about pornography: he can’t define it, but he knows it when he sees it.
The interpretations for charity-funded advocacy advertising are subtle: if a charity designs a climate change ad campaign featuring the NDP’s green-and-orange colour scheme, would that be considered offside? Probably not. But Bruce Macdonald, head of Imagine Canada, the philanthropic sector’s umbrella group, says a more visually neutral ad promoting carbon taxes in the context of a federal election where this policy instrument differentiates parties would likely be deemed partisan. In other words, ENGOs can’t really talk about carbon taxes.
During Harper’s term in office, the Conservatives decided to press the issue, giving funds and instructions to the Canada Revenue Agency (CRA) to pursue “political activities” audits against charities suspected of flaunting the 10-per-cent rule, either with large ad buys or other advocacy campaigns.
The Tories’ targets were ENGOs suspected of abusing their privileges by attacking the Alberta oil and gas industry and scaring off foreign investors. The ultimate sanction—CRA rescinding a group’s charitable status—represents a doomsday scenario.
As it turns out, the Tories’ dragnet failed to catch any wayward ENGOs, but it did cast a pall over the advocacy-minded part of the charitable sector, which may have been the point all along. That chill, it seems, hasn’t completely dissipated.
But not for want of trying. During the 2015 election, the Liberals, sensing an opening, pledged improved relations with civil-society groups—hardly a surprise, given the fact that Gerry Butts, Justin Trudeau’s former right hand, had served for a time as CEO of the WWF-Canada.
Since taking office, the Liberals have pushed various policy goals that involve new partnerships with foundations and other charities, including conservation and green-cities programs built around the allocation of hundreds of millions of federal dollars meant to attract philanthropic matching funds.
The Liberals also put all those Tory-era CRA political audits on hold while a federally appointed expert panel, comprising senior figures from the charitable sector, reviewed the Income Tax Act, scouting around for ways to modernize legislation that hadn’t been updated in half a century. Among other regulations, the 10-per-cent political activities threshold was on the panel’s radar.
As it turned out, a court case forced Ottawa’s hand. In 2018, a tiny Ottawa-based charity, Canada Without Poverty (CWP), sued the federal government, claiming the 10-per-cent rule breached its constitutional right to freedom of expression. CWP has four employees and a budget scarcely north of $400,000; it is not interested in the environment but had been the target of one of CRA’s political activities audits, which found that almost everything CWP does is, well, political.
Unlike other anti-poverty organizations, whose work may focus on funding affordable housing or running food banks, CWP does only advocacy, but its approach was laid out clearly in its founding documents; its modus operandi was transparent and consistent. The group’s view is that the way to better the lives of poor Canadians is to change the politics around how governments treat them.
When Ontario Superior Court Justice Ed Morgan rendered his verdict in July 2018, he began with a stark philosophical question. “What,” he asked, “is political?” Seventeen pages later, Justice Morgan had come to one particular conclusion: that the CRA’s long-standing practice of limiting charities’ political activities to 10 per cent represented an infringement of their charter rights to freely express themselves. He struck down the relevant section of the Income Tax Act. The threshold was arbitrary and had “no justification,” Morgan opined. “The applicant is not alone in finding the current state of the law to be unduly restrictive…”
By that point, the members of the expert panel had handed over their own findings about the political activities rule. “[W]hat is considered to be ‘political activity’ is itself very confusing and difficult to follow…and it is often interpreted by the charitable sector to mean partisan activities—which are clearly prohibited,” the panel concluded in its 2017 report. “This problem of terminology lies at the root of much of the confusion and uncertainty that exists through the charitable sector.”
The Trudeau government took that advice to heart: it didn’t appeal Morgan’s ruling and, late last year, amended the Income Tax Act, repealing the provisions limiting political activity.
According to philanthropic sector insiders, however, there’s little evidence that Canadian charities are taking advantage of the relaxed rules. John Beebe, director of Ryerson University’s Democratic Engagement Exchange, points to the example of get-out-the-vote drives organized by charities seeking to mobilize individuals who depend on their services, but tend not to cast ballots. “In the U.S.,” he says, “[these campaigns] are an industry. Here, it’s ad hoc at best.”
* * *
While Canadian charities with an advocacy outlook are either sitting out the election or exercising maximum caution, the same can’t be said about the intensely partisan third-party groups that have appeared on the social media margins of the race. A good number of them offer climate denial messages or push back hard against the Liberals’ climate policy record, such as it is.
At least we know who they are. Under pressure from, well, everyone, Facebook these days offers plenty of disclosure about the source of its online political advertising—more transparency, in fact, than even Elections Canada provides.
For example, according to Canada Proud’s interim campaign return, filed with Elections Canada, the right-wing group has spent about $111,560, the bulk of which has gone to expenses related to partisan advertising pumped through social media. Facebook’s “Page Transparency” report for Canada Proud further reveals that the group spent more than $126,000 since June on ads stockpiled in Facebook’s ad library.
They include such useful contributions to public policy discourse as: a video tagged “Major Trudeau fail: Is he lying or really this stupid?” (up to 200,000 impressions); “Justin Trudeau just sold out Canadian workers…to benefit China” (up to 500,000 views); and “EXPOSED: Trudeau and McKenna’s climate change scam on Canadians.” The ads, according to Elections Canada, were created by Mobilize Media Group, which offers no information about itself on its website beyond a claim about its ability to produce “compelling content that creates communities.” The firm’s founder, however, is Jeff Ballingal, who set up Ontario Proud, which lobbed bombs at Kathleen Wynne’s Liberals during the 2018 provincial race won by Doug Ford.
Suffice it to say that the conspicuous balance in the platform comparison chart created by Gray’s network of ENGOs is nowhere to be seen in Canada Proud’s ads.
For years, Elections Canada maintained transparency-oriented rules governing the activities of third parties during campaigns. If you are an organization with something to say after the writ drops and intend to spend money saying it, the federal government wants to know who you are and where those dollars came from.
This kind of disclosure is mostly lacking in the U.S.. There, the Supreme Court ruled in the infamous Citizen’s United case that corporations have the same free speech rights as individuals. That decision has allowed hundreds of millions of mostly anonymous dollars to flow into instant advocacy groups that fill the airwaves and social media feeds with attack ads and fake news.
By contrast, Canadian governments and courts have, in recent years, sought to limit or ban corporate and union money from political fundraising, and require disclosure from organizations that seek to influence elections. So far so good.
But Canada’s transparency rules and third-party spending limits haven’t prevented the emergence of attack-dog groups like Canada Proud, whose largest backer is Calgary resources magnate Ronald Mannix and his private equity firm Coril Holdings, whose blue-chip board includes former Tory cabinet minister Rona Ambrose. Mannix and Coril provided $100,000 of the $250,000 raised by Canada Proud—a figure that hugely exceeds the $1,600 maximum that Mannix could have donated to a party. This “group,” just two years old, may not be an anonymous, deep-pocketed U.S.-style superPAC, but it is set up to behave like one. What’s more, it can shout with impunity, unlike Canadian charities with an advocacy outlook.
When the Liberals swept to power in the fall of 2015, their democratic reform agenda focused on electoral fixes such as replacing our first-past-the-post system with ranked ballots. Looking back, those were innocent times, as we know now—that over-ripe moment before the Facebook/Cambridge Analytica scandal and shocking revelations about Russian hackers mucking with the 2016 U.S. election.
As of last year, Ottawa’s new focus was far more defensive than structural: shoring up the elections machinery so it can withstand cyber attacks. That goal meant tighter controls on online political advertising and third parties, a category that includes charities as well as other groups, companies or individuals. The changes, announced at the beginning of 2019, took effect in the summer, starting with the imposition of spending limits during the pre-election period, which began on June 30.
Some observers think the federal government cast the net too wide with the Canada Elections Act by putting the spending threshold at such a low dollar value, and thus potentially limiting democratic participation with regulatory over-burden. “For a small organization that spends $600 on social media, I’m not totally convinced that that’s achieving the underlying goal of keeping big money out of politics,” says Cara Zwibel, the Canadian Civil Liberties Association’s director of fundamental freedoms program.
Then there are all the content questions. Despite their apparent distance from formal political organizations, third-party ads can be explicitly partisan. Case in point: a billboard that surfaced in late August in Halifax showing Maxime Bernier’s face, the People Party’s logo and a line calling on voters to “say no to mass immigration.” A Toronto mining executive purchased this ad on behalf of an astro-turf group called True North Strong & Free Advertising Corp., according to media accounts and Elections Canada. Its $60,000 in funding comes from a Toronto agricultural commodities company called Bassett & Walker International. True North, which isn’t a charity, had to register.
No charity in its right mind would create such an ad; the concern, rather, has to do with unresolved regulatory ambiguities for other types of advertising or advocacy. The federal government hasn’t sought to ensure that the legislative reforms to laws governing charities and their political activities are consistent with the definition of what constitutes “regulated” advertising in the Canada Elections Act.
If a charity runs ads on an issue “clearly associated with a party of candidate,” Elections Canada requires the organization to register as a third party, which could expose it to accusations of partisanship and perhaps even an audit that threatens its charitable status. It’s a classic catch-22: on one hand, the government has told charities they shouldn’t be scared to engage in non-partisan advocacy, but if they do so during an election, they run the risk of being dinged as too partisan.
The expert panel looking at the political activities rule did note that it would be important for the various laws to be consistent with one another. “We were asked to deal with the tax rules on political activities,” Marlene Deboisbriand, the Boys and Girls Clubs of Canada executive who chaired the group, said in an email response. “We weren’t focusing on recommendations to other legislation. Indeed, the reality is that the feds were loosening up one law (the Income Tax Act rules for charities) while tightening up another (the Canada Elections Act rules for third parties).”
Imagine Canada, the charities association, is trying to offer its members some online guidance about how to advertise and communicate during the election. For example, charities can still send out messages via social media or eblasts to followers without triggering Elections Canada’s rules. But Environmental Defence’s Tim Gray remains worried about getting tripped up in a kind of definitional no-man’s land. “If you need to register as a third party and Elections Canada has deemed you to be partisan under their rules, does that trigger CRA’s rules [preventing charities from partisan activity]?”
* * *
Absent test cases that clarify these regulatory ambiguities, many advocacy-minded charities seem to be sitting out the election, leaving the field open for the static and misinformation being generated by some third-party groups.
And the chill isn’t only being felt at the federal level. In Alberta, Jason Kenney’s campaign talking points included regular attacks on one environmental group, the Pembina Institute, and its former executive director, Ed Whittingham, who had been serving on a provincial energy panel appointed by Rachel Notley. Kenney’s operatives even pushed Pembina’s backers, including some large energy companies that have worked with the organization on clean energy research, to withdraw their funding.
Since taking office, Kenney has set up a $2.5-million public inquiry to sniff around allegations of foreign money flowing into the coffers of environmental groups—a practice that is not illegal and pales in comparison to foreign direct investment in the oil sands. Among the inquiry’s stated goals: “recommending the interpretation of existing eligibility criteria or the creation of new eligibility criteria for attaining or maintaining charitable status.”
It’s a somewhat odd objective, given that the federal government—and not the provinces—regulates charities. But if Andrew Scheer’s Conservatives win this fall, they’ll likely be more than happy to adopt the changes Kenney’s inquiry recommends, especially if those changes make it more difficult for ENGOs to challenge the fossil fuel sector.
Like the CRA audits ordered up by the former Harper Conservatives almost a decade ago, Kenney’s posturing and now the inquiry have become a worrisome distraction, says Pembina’s acting executive director Simon Dwyer. “Canadians,” he notes, “want to talk about climate change.”
It’s a shame the confused rules around advocacy and election speech are effectively preventing that conversation from taking place.
CORRECTION, Oct. 3, 2019: An earlier version of this story stated that Elections Canada set election spending limits when in fact that is determined by the government under the Canada Elections Act.