26 Jul Bill C-19: New legislation for charities

New legislation around funding organizations without charitable status

How recent changes to Bill C-19 positively impact United Way Simcoe Muskoka’s ability to work with local, grassroots organizations.

Disclaimer: this blog post should not be considered a legal opinion; rather, it is United Way Simcoe Muskoka’s interpretation of the policy change and why we think it is in line with our own commitment to strengthening communities.

Bill C-19 and charities

The federal government recently passed legislation that will have a positive impact on the broader not-for-profit sector. Specifically, the changes outlined in Bill C-19 will change how charities, like United Way Simcoe Muskoka, work with and fund grassroots organizations.

Previously, under the Canadian Income Tax Act there were requirements that made it difficult and administratively costly for registered charities to work with groups without qualified donee status. The rules also prevented charities from providing funds to non-charities to deliver an initiative in partnership, unless they entered into an agreement whereby the charity exercises “direction and control” over the activities of their partner.

Guidelines on implementing this legislation is still to come, however what we understand is that with these recent changes, charities can more easily provide funding to organizations that are not registered charities.

The imbalanced power dynamic

There are many groups and organizations without official charitable status that are doing meaningful and important work in our community, addressing a variety of causes. Advocates for this recent policy change, United Ways among them, felt that the previous rules created barriers for charities and grassroot non-profits to work together. For grassroot organizations led by and serving Indigenous and equity deserving communities, this further perpetuated an imbalanced power dynamic and long term systemic barriers to change.

Consider the following:

Organization A is an established registered charity with a long institutional history of service to Canada and Canadians. Organization B is an emerging, grassroots not-for-profit that has expertise or connections to a community that Organization A lacks. In this example, Organization B services a racialized community.

Under the previous rules, Organization A could only fund Organization B within the parameter of the following conditions: Organization B was “contracted” by Organization A to do work on Organization A’s behalf and in service to Organization A’s mission and vision.

Critics of previous legislation felt that this arrangement:

• Gives Organization A power over Organization B
• Suggests that Organization A knows better how to serve the population Organization B is deeply connected to
• Promotes the long-term systemic imbalance between the racialized community served by Organization B and the institutions that serve them

Now, imagine if Organization B is serving a specific racialized community and Organization A has a history of systemic racism and/or marginalizing the population served by Organization B. In this scenario, while the funds do reach the racialized community, it does a disservice to efforts for us to move forward as a society that values diversity and strives for equality.

Institutions, including charities in the business of “helping people”, need to change the way we work with marginalized communities and other organizations driven by those with lived experience.

In summary

This legislative change introduced by the Federal Government creates a more level playing field where grassroots organizations can take the lead on matters where they know best, and for charities, like the United Way, to listen, follow, and provide financial support.

As an organization that champions social inclusion, United Ways across Canada commend the Federal Government for passing this legislative change as an example of policy that strengthens communities and reduces barriers to working with diverse organizations, including those led by and serving Indigenous and racialized peoples.

Your United Way looks forward to hearing more about how these changes will come into effect and we are committed to working with our partners in a collaborative manner in the spirit of this legislative change.

To learn more, have a listen to this podcast on Charity Village.

Sincerely, 

Brian Shelley
Chief Executive & Philanthropy Officer
United Way Simcoe Muskoka

Sources: Bill C-19, United Way Centraide Canada, Charity Village.