Tracking Political Activity
The Income Tax Act requires that a charity devote “substantially all” of its resources to charitable activities. The remainder may be spent on allowable political activity. But what exactly is political activity? How can we measure how much political activity we engage in?
The Canada Revenue Agency (CRA) provides guidance on these matters. You can read the full policy statement, or watch a series of videos on political activities by charities. This web page is largely based on a CRA self-assessment tool.
Assessing Your Congregation’s Political Activity
In brief, the CRA says that a charity engages in political activity when it
- explicitly issues a call to political action: that is, encourages the public to contact an elected representative or public official and urge them to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country;
- explicitly communicates to the public that the law, policy, or decision of any level of government in Canada or a foreign country should be retained, opposed, or changed;
- explicitly indicates that the intention of any of its activities is to incite, or to organize to put pressure on, an elected representative or public official to retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country; or
- makes a gift to another qualified donee (an organization that can issue tax receipts) to support the political activities of the recipient.
If a charity does any of these, then it is carrying on a political activity.
Only certain kinds of political activity are allowable for charities:
- The political activity must be nonpartisan. This means that it must not support or oppose, either directly or indirectly, any political party or candidate for public office.
- The political activity or issue must be connected (ancillary) or incidental (subordinate) to the charity’s purposes. This means it must be a minor focus of the charity. If it becomes the main way that the charity furthers its purposes, it may have become the charity’s end or unstated purpose, which is not acceptable to the CRA.
- The charity’s views must be based on a well-reasoned position.
Find out more about allowable and prohibited political activity here.
Tracking Your Political Activity
The Income Tax Act require that charities devote “substantially all” of their resources to charitable activities. The CRA usually interprets this to mean 90 percent or more, although it may, at its discretion, set a lower requirement for charities with annual incomes under $200,000; see section 9 of the policy statement. But how can you calculate how much of your resources are being spent on political activity?
You should examine and track
- financial expenditures on political activities, such as the percentage or amount of salaries and other human resources costs
- capital assets used for political activities, such as the percentage or amount of building and office space and any proceeds of or withdrawals from investments
- donations used for political activities, such as the percentage and amount of volunteer hours and donated resources
When you file your T3010 Registered Charity Information Return, you must describe your political activities and indicate how much you spent on them.
Contact the CUC’s executive director for more information.