§ 04 / The Contestation

The Senate committee, Bill S-222, Bill S-216, and the 2022 budget.

The contestation of the architecture documented in §§ 02–03 has been sustained, organized, and conducted substantively from within the Senate and from within the charitable sector. The contestation has not been a marginal civil-society project; it has produced parliamentary legislation that has passed the Senate unanimously and that has been substantively, if partially, implemented through the federal budget process. The history of the contestation is itself part of the case.

2018 · Establishment of the Special Senate Committee on the Charitable Sector

The Senate of Canada established the Special Senate Committee on the Charitable Sector to examine the impact of federal and provincial laws governing charities, non-profit organizations, foundations, and other similar groups. The Committee was co-chaired by Senator Ratna Omidvar and Senator Terry Mercer, with substantial witness participation from Indigenous-led organizations and Indigenous legal scholars.5

June 2019 · The Catalyst for Change report

The Committee released its report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector. The report's recommendations included reform of the "direction and control" requirement, a shift to an "expenditure responsibility" model that would permit Canadian charities to provide resources to non-qualified donees without the conduit requirement, and explicit recognition of the need to support Indigenous-led organizations and Indigenous self-governance through the charitable architecture.5

February 2021 · Bill S-222 introduced by Senator Omidvar

Senator Ratna Omidvar introduced Bill S-222, the Effective and Accountable Charities Act, in the Senate. Senator Omidvar's stated rationale: "to enable charities to establish equal partnerships with non-charities, especially empowering the voices of BIPOC organizations, while still ensuring accountability and transparency." The Bill proposed replacing "direction and control" with a "resource accountability" standard: a charity could transfer resources to a non-qualified donee provided that the charity took reasonable steps to ensure the resources were used for a charitable purpose.6

June 2021 · Bill S-222 passes the Senate

Bill S-222 passed third and final reading in the Senate on 17 June 2021. It was introduced to the House of Commons for first reading on 23 June 2021. Progress halted when the House adjourned for the summer and was derailed by the 2021 snap federal election.

November–December 2021 · Bill S-216 reintroduced

Following the federal election, Senator Omidvar reintroduced the same legislation as Bill S-216 in the first session of the new Parliament. Bill S-216 passed its second and third readings in the Senate in December 2021, with unanimous support. The Bill was introduced to the House of Commons by Conservative MP Philip Lawrence (Northumberland–Peterborough South) and seconded by the NDP. The cross-party support is on the public record.7

February 2022 · Bill S-216 first reading in House of Commons

Bill S-216 passed first reading in the House of Commons on 3 February 2022. The Bill did not, in the form Senator Omidvar had introduced it, proceed to further House readings.

April 2022 · Federal Budget partial implementation

In the April 2022 federal budget, the Liberal government announced that it would amend the Income Tax Act in a manner "intended to implement the spirit" of Bill S-216. The subsequent budget-implementation legislation modified the direction-and-control regime, permitting charities to make "qualifying disbursements" to non-qualified donees subject to a reasonable-steps test and accountability requirements. The qualified-donee categorical structure itself — the nine categories of § 02 — was not amended. Indigenous governance was not added as a distinct category. The colonial-municipal recognition condition remains.8

2022 → present · Implementation and continuing limits

The 2022–23 budget-implementation amendments addressed the "direction and control" doctrine substantially but not completely. The reform reduced — but did not eliminate — the colonial-functional character of the relationship between Canadian registered charities and non-qualified-donee Indigenous organizations. Indigenous-led organizations that do not fit the registered-charity, registered-municipality, or "performing a function of government" categories of § 02 continue, as of this case's filing date, to operate without qualified-donee status. The substantive question — whether the Income Tax Act's recognition of governance should be amended to include Indigenous governance as a distinct category — has not been answered.9

The contestation is, on the public record, ongoing. Senator Omidvar's continued advocacy, the work of the First Nations-led financial institutions under the First Nations Fiscal Management Act, the engagement of the Assembly of First Nations on the qualified-donee question, the litigation and advocacy work of Indigenous-led legal organizations (Aboriginal Legal Services, Indigenous Bar Association, Native Women's Association of Canada), and the substantive work of organizations like the Future of Good and the Philanthropist Journal in documenting the architecture all constitute the field of pressure that has produced the partial 2022 reform and that continues to push for the substantive amendment of the qualified-donee categorical structure. The architecture's reform, where reform has occurred, has been produced by this contestation. It has not been produced by the federal tax architecture's own internal review processes.