TORONTO, September 25, 2000 -- The
system of granting charitable status to organizations needs to be
substantially reformed to make it more open and accountable, says
Patrick Monahan, Law Professor at York University's Osgoode Hall Law
School, in a hard-hitting new book about the regulatory framework
governing the voluntary sector.

A considerable number of applications for charitable status
registration are denied by the Canada Customs and Revenue Agency (CCRA),
and the public never knows the reasons for those decisions, says the
co-author of Federal Regulation of Charities: A Critical Assessment
of Recent Proposals for Legislative and Regulatory Reform (York
University, 2000).

What's more, there is no simple, informal way for charitable
organizations to appeal decisions. Unlike the internal appeals mechanism
within the CCRA that applies to taxpayers in general, charities must
take their appeals directly to the Federal Court of Appeal. It's a
costly, time-consuming and outmoded appeals process that has resulted in
less than 20 appeals in the past 15 years.

"We haven't had any significant reform in this area for 30
years," says Monahan who co-authored the book with Elie Roth, an
Osgoode graduate who now works at the law firm Davies, Ward & Beck
LLP in Toronto. "We are saying that there should be significant
reform but it should be measured and incremental reform, as opposed to a
totally new system."

In particular, the authors critically examine the options for
regulatory reforms that have been presented in previous reports and
studies including last year's reports of the Panel on Accountability and
Governance in the Voluntary Sector, headed by former NDP leader Ed
Broadbent, and the Federal/Voluntary Sector Joint Tables.

The Broadbent Report had called for the establishment of an
independent body that would include representatives of the voluntary
sector reviewing CCRA decisions on whether to register an organization
as a charity. Such registration gives an organization the right to issue
receipts to donors for income tax purposes. Monahan and Roth argue
against the establishment of such an outside body, saying that it might
tend to unduly politicize decision-making on applications for charitable
status.

Their review of the regulatory framework governing the voluntary
sector follows on the heels of the Government of Canada's announcement
in June that it will commit more than $90 million over the next five
years to developing its relationship with the voluntary sector. Of that
amount, $7 million has been set aside to deal with regulatory issues
ranging from the introduction of a shorter tax form for charities to the
examination of a new appeals process to greater transparency when
applications for charitable status are filed.

The tax credit for charitable donations by individuals and
corporations currently costs the federal treasury about $1.3 billion
annually in foregone revenue.

One of the most contentious of the 21 conclusions and recommendations
in Federal Regulation of Charities is the authors' call for the
abolition of the existing "10 per cent rule" for political
activities of charities.

Monahan and Roth argue that charities should have the option of
choosing a higher quantitative limit similar to the United States, which
allows spending up to 20 per cent on political activities.
Alternatively, the authors say a charity should be able to opt for a
qualitative system, whereby it can engage in political activities
providing they are incidental to its charitable purpose.

Osgoode Hall Law School of York University is one of Canada's leading
law schools with some of the country's most innovative law programs.
These include the undergraduate Bachelor of Laws (LLB) program, with
more applications for admission each year than any other law school in
the country; the Graduate Program in Law, leading to the degrees of
Master of Laws (LLM) or Doctor of Jurisprudence (DJur); and Canada's
most popular Professional Development Program.

Funding for Federal Regulation of Charities was provided by
the Non-Profit Sector Research Initiative, established by the Kahanoff
Foundation to promote research and scholarship on non-profit sector
issues. However, the views expressed are those of the authors and do not
necessarily represent the views of the Kahanoff Foundation or the
Non-Profit Sector Research Initiative.

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For free copies of the book and more information, please call:

Virginia Corner
Communications Manager
Osgoode Hall Law School of York University
(416) 736-5820
E-mail: vcorner@osgoode.yorku.ca

Joanne Rappaport
Centre for Public Law & Public Policy
Osgoode Hall Law School of York University
(416) 736-5515
E-mail: joanner@yorku.ca
YU/094/00