Date: November 1, 2012
Type: Commentary
Document:
Nearly a half-century ago, Lord Wilberforce considering a House of Lords case which touched on the definition of charity, commented on the imperative “to keep the law as to charities moving according as new social needs arise or old ones become obsolete or satisfied.” In Canada, the pace with which the definition of charity is moving can only be described as glacial.
By Peter Broder
Nearly a half-century ago, Lord Wilberforce considering a House of Lords case which touched on the definition of charity, commented on the imperative “to keep the law as to charities moving according as new social needs arise or old ones become obsolete or satisfied.” In Canada, the pace with which the definition of charity is moving can only be described as glacial.
This past June the Federal Court of Appeal weighed in again on the issue of what qualifies as charitable in Canada for purposes of eligibility for registration under the Income Tax Act. For those familiar with Canadian jurisprudence in this area in recent years the result was unsurprising.
The case of News To You Canada v Minister of National Revenue (News To You Canada) dealt with the refusal of the Canada Revenue Agency to grant registered charity status to an organization mandated to research, produce and delivery news and current affairs programs and information over a variety of media to the general public in an objective and unbiased manner. It sought registration either as advancing education or, alternatively, as charitable under the head of “other purposes beneficial to the community as a whole in a way which the law regards as charitable”.
The Court rejected registration under either category.
In doing so, it found that the organization neither met the expanded definition of education endorsed by Justice Iacobucci in Vancouver Society of Immigrant and Visible Minority Women v Minister of National Revenue nor satisfied the requirement that “others purposes” (commonly known as “fourth head”) charities be beneficial to a sufficient segment of the public and the same as or analogous to a purpose previously recognized as charitable.
The United Kingdom has relied increasingly over the years on its Charity Commission to determine what should qualify as a charity, and in 2006 enacted a statutory definition of charity. A number of other common law jurisdictions have either adopted a codified definition or have developed jurisprudence that is more reflective of evolving community needs and values.
Although the approach to charity law in the United States is somewhat different from that taken in other jurisdictions, in the context of the News To You Canada case it is worth mentioning that under U.S. law ProPublica – a group mandated to produce and publish investigative journalism – qualifies as a 501(c)(3) organization, which is broadly the equivalent of a registered charity in Canada.
In Canada because there is no statutory definition of what constitutes a charity, it falls to the courts to determine based on the common law whether the purposes on an organization make it a charity. In the case of organizations seeking federal registration as a charitable organization or foundation this determination is made by the Federal Court of Appeal (FCA).
Provincial courts make the determination when the question in issue is a property and civil rights matter or otherwise within the scope of provincial authority over charities as set out in the Constitution. The Supreme Court has considered only a handful of cases in this area over the last fifty years.
After rejecting News To You Canada as advancing education since its activities were not sufficiently structured for educational purposes, the FCA distinguished two earlier Canadian cases that the appellant sought to rely on as authority for the its purposes being recognized as charitable in Canada. Those two cases, though dating from the 1980s and 1990s, represent perhaps the high water mark in the evolution of the definition of charity in Canadian law.
In 1986 in Native Communications Society of B.C. v Canada (M.N.R.) (Native Communications), the Court found that production and dissemination of information through various media for a native audience was charitable. Because the activities sustaining the purposes of News To You Canada were targeted at the general public rather than a population occupying the special legal position of natives in Canadian society, the FCA held that the fact that the B.C. Society was charitable could not be used as grounds for finding News To You Canada charitable.
Ten years later, the Court held in Vancouver Regional Freenet Association v M.N.R. (Freenet) that provision of free access to the “information highway” was charitable. The Court ruled that providing facilities and support for access to electronic information was analogous to providing the physical public infrastructure, which had previously been recognized as charitable.
However, the FCA distinguished this from News To You Canada by noting that it was the infrastructure supported by Freenet that was charitable, rather than the content carried by that infrastructure. Thus, even though it was targeted at the general public, rather than a specific population, a distinction could be drawn between Freenet and News To You Canada.
With respect, while it is difficult to quibble with the logic of the analysis of these two cases, one wishes the FCA would have brought the same alertness of evolving needs and social realities that informed the Native Communication and Freenet decisions to its consideration of News To You Canada. As the establishment of ProPublica in the United States shows, the economics of gathering and disseminating news are rapidly changing. In the face of that change we ought to be open to new ways of doing things. And at something more than a glacial pace.
Peter Broder is the former Executive Director of The Pemsel Case Foundation. A version of this article was first published in LawNowmagazine, and can be found at http://www.lawnow.org/ . The views expressed do not necessarily reflect those of the Foundation.