Fraser Institute disputes Revenue Canada contention that some of its work is not charitable

Tax Freedom Day might come much later next year for the Vancouver-based Fraser Institute. Michael Walker, executive director of the 25-year-old free-market think tank, told the Georgia Straight that Revenue Canada officials have informed him that they believe that some of the institute’s activities cannot be considered “charitable” under its guidelines for registered charities.

“They’re saying that the Fraser Institute engages in what they regard to be political activities,” Walker said in an interview. He added that Revenue Canada hasn’t told him yet which of the institute’s activities fall into the realm of “political” actions.

Walker said the Fraser Institute has been audited by Revenue Canada on many occasions. He said the most recent “saga” began in January 1998, when Revenue Canada officials came in to conduct an audit and interviewed every staff member.

“They took away copious amounts of paper, and they did, of course, all the financial probing,” he recalled. Walker alleged that Revenue Canada officials eventually admitted to him that they delayed telling him the results of the audit until they had time to “promulgate” guidelines for think tanks to obtain charitable registration.

Revenue Canada spokesperson Michel Proulx said he wouldn’t comment on specific organizations. Speaking generally, Proulx said Revenue Canada officials have not changed the guidelines for think tanks.

“They’ve looked at various jurisprudence and provided criteria to help our examiners determine the charitable status of research institutes,” he said.

The Supreme Court of Canada ruled last January that certain activities conducted by the Vancouver Society of Immigrant and Visible Minority Women did not qualify under its registration as a charity with Revenue Canada. In the decision, the court recommended to Parliament that it develop new guidelines to define charities in Canada.

The Fraser Institute was originally formed to examine the role of competitive markets in achieving economic ends. It obtained registration as a charity with Revenue Canada, which enables it to issue tax receipts to donors.

Revenue Canada’s 14-page set of written guidelines for think tanks notes that the Income Tax Act does not contain a definition of “charitable” or “charity”. The guidelines state that the courts have recognized four broad categories of charitable activities: relieving poverty, advancing education, advancing religion, and providing certain other benefits to the community, such as hospitals, public parks, or homes for the elderly.

Walker said the Fraser Institute meets the requirement of “advancing education” and therefore should retain its status as a registered charity. He also said that the guidelines as they are written now are “inappropriate”.

He noted that the Fraser Institute collects donations from 18 different countries and has obtained the equivalent of registered-charity status in the United States.

“Parliament will have to suck up its courage and make a law, a statute, with regard to this stuff,” he said. “Or, as they have done in Britain, there will have to be an interpretation of the common-law cases which permits the existence of this kind of organization. Because surely the government of Canada does not wish to create a situation where Canada is the only country in the G-7 where you can’t have an independent research organization voicing opinions about the conduct of policy.”

Revenue Canada’s written guidelines for think tanks state that “political activities must remain ancillary and incidental and cannot rise to the level of an objective”. According to the guidelines, registered-charity status may be prevented if “the organization’s efforts to influence politicians, bureaucrats, media and public on political matters are a constant, integral and inseparable aspect of its mission”.

In addition, a think tank cannot obtain registration if its “continuous political activities are integral to and inseparable from its objectives, or it devotes more than ten percent of resources to them”.

Walker said the Fraser Institute doesn’t engage in political activity, and its board has no editorial control over publications. “We don’t seek access to political figures,” he said. “We don’t lobby. We send out press releases. We do send our publications to members of Parliament, members of legislative assemblies. That’s where it stops. We don’t phone them up and say, ‘What do you think about that?’ ”

Walker provided the Straight with a copy of the Fraser Institute’s 39-page written submission to Revenue Canada arguing that it should be allowed to retain its registered-charity status. It stated that the institute’s research agenda is “determined independently”, with no input from the board of trustees.

The document also claimed that legislative and common-law definitions of charitable education are “woefully outdated”, because they prevent “many beneficial educational endeavours from receiving charitable status”.

“The most obviously antiquated requirement is that education must be structured in nature and aimed at forming the mind,” the document stated.

These days, it argued, education involves forms of less structured learning, and the definition of charitable education must be amended to reflect this. In addition, the paper argued that the second major deficiency with the current definition is it “excludes the provision of information”.

The institute’s third objection, according to the paper, is that charitable education “must not advocate a particular viewpoint”.

It claimed that very few departments in individual universities meet this requirement. “As this obviously would be impossible to achieve even for a large university, it is completely unrealistic to expect think tanks to do so, dealing as they do with complex issues of public policy,” it stated.

Walker emphasized that Revenue Canada officials regard their differences with the Fraser Institute’s interpretation of the guidelines as a “collegial difference of view” rather than an instance of law-breaking. “They haven’t told us to stop issuing receipts,” he said.

Seth Klein, director of the B.C. office of the left-wing Canadian Centre for Policy Alternatives, told the Straight that he believes the Fraser Institute is “very clearly engaged in a very political activity”. He noted that the institute regularly makes submissions to federal and provincial legislative committees.

“I think it would be a big stretch to say what they’re doing is charity,” Klein said. “My feeling is they are advancing the policy interests of the Canadian corporate sector.”

Two years ago, a leaked copy of the institute’s five-year plan stated: “A central focus of our program during the next five years will be the expansion of our penetration of the national media.”

In addition, the institute planned to double the number of students who would be exposed to the institute’s ideas in any given year.

The five-year plan also raised the possibility of spinning off the institute’s monthly bulletin, the Fraser Forum, into an independent publication that might attract advertising. Objectives included expanding the number of subject areas, and injecting “more humour” to attract readers.

In addition, the five-year plan stated that at least 25 multinational corporations and 100 copublishers would be enlisted to support the development of the “Fraser Institute Freedom Index”, which would measure the amount of economic freedom, freedom of commercial speech, freedom of choice in education, and freedom in the labour market around the world.

Walker said if the Fraser Institute’s work is deemed not to be charitable, then every other think tank in Canada will probably lose its status as a registered charity, including the Canadian Centre for Policy Alternatives. Walker gave the Straight a copy of a recent CCPA fundraising letter, which alleged that the Fraser Institute and groups like the Business Council on National Issues get millions of dollars each year from big corporations to attack health care, public schools, and the public pension system.

“Clearly, this kind of letter would not pass the guidelines,” Walker said.