In a move that some may call baffling, overly literal or just plain uncharitable, the CRA has told Oxfam Canada that it has to drop ‘prevention of poverty’ from its mission statement, or risk losing its charitable status.
The saga began, as many of these do, with the implementation of new legislation. In 2011, the Not-for-profit Corporations Act was passed to replace Part II of the Canada Corporations Act, which dealt with the administration of not-for-profit corporations, an umbrella term which includes charities. October 17, 2014 is a red-letter day in this regard, because as of this date, all not-for-profits incorporated under the old legislation must transition to the terms of the new one.
As part of their transition to the new legislation, Oxfam Canada submitted documentation to Industry Canada, the body responsible for administering the new Act. In its application, Oxfam stated that its charitable purpose is to “prevent and relieve poverty, vulnerability and suffering by improving the conditions of individuals whose lives, livelihood, security or well-being are at risk.” Charitable? Yes. Charitable enough for the CRA? Not quite.
As part of the review of their charitable status, Oxfam required the approval of the charities directorate of the CRA. After thoughtful review, the CRA determined that the goal of ‘preventing poverty’ was not acceptable, as it could be interpreted as ‘providing for a class of beneficiaries that are not poor.’ Put in other words, the CRA is concerned that money may be raised for people who aren’t poor and who aren’t at a risk of poverty. In an interview with the Canadian Press, OxFam Canada’s executive director called the CRA’s interpretation ‘absurd,’ and it is quite tempting to agree with his characterization of the situation.
While it is fathomable that a group of affluent business men could incorporate a charity that exists solely to prevent them from falling into poverty, funnel the funds into their pockets while benefitting from the special tax status of charities (HST exemptions, ability to provide charitable receipts to donors, etc), this isn’t the situation. Oxfam is a renowned and well-established charity. And, frankly, the CRA’s literal mincing of words seems to ignore the entirety of the charity’s mission statement. While the goal of ‘preventing poverty,’ in a vacuum may not be kosher, the whole mission statement must be read as one: “prevent and relieve poverty, vulnerability and suffering by improving the conditions of individuals whose lives, livelihood, security or well-being are at risk.” Read as a whole, it becomes clear that the goal of ‘prevention of poverty’ is intricately connected to a group of persons who are already teetering on the verge of poverty. As well, Oxfam operates almost exclusively in some of the most impoverished regions on earth, serving some of the most destitute classes of people. While this amounted to little more than a shot across the bow, it’s troubling to think a charity so well known for its advocacy and aid, is being taken to task by the CRA for little more than a game of interpretive gymnastics.