The International Journal
of Not-for-Profit Law

Volume 1, Issue 3, March 1999

A quarterly publication of the International Center for Not-for-Profit Law

Table of Contents

Letter from the Editor


Creative Uses of Program Related Investments
Milt Cerney

Redes y Redes de Redes
Miguel Angel Itriago Machado and Antonio L. Itriago Machado

The Katz Report - Finally a Reality

Recent Experiences with Re-Registering Foundations in the Czech Republic
Lenka Deverová and Petr Pajas

Canadian Developments
Arthur Drache

Creating an Enabling Environment for Private Philanthropy: the Role of Charity Law in Northern Ireland
Kerry O'Halloran

Establishing New Interactive Forms of Collaboration Between Non-Profit Organizations and Enterprises.- Competitive vs. Collaborative Relationships
Maria Beatriz Parodi Luna

Reflexionando sobre Consolidación de Organizaciones Cúpula de la Sociedad Civil en Venezuela
Charo Méndez


Studies of – and prospects for the revision of the tax laws governing non profit organizations 
By Fondazione Italiano per il Voluntario

Protecting Human Rights Defenders - Analysis of the newly adopted Declaration on Human Rights Defenders
By the Lawyers Committee for Human Rights

Las Asociaciones Civiles en el Derecho Venezolano (Qué son y cómo funcionan)
By Miguel Angel Itriago and Antonio L. Itriago
Reviewed by Caroline L. Newman

Philanthropy and Law in Asia
Edited by Thomas Silk

Case Notes

CIT v Sri Gujarathi Mandal | CIT v Nagi Reddi Charity

Association Eglise de Scientologie
| Albert & others v Association club du chien-guide d'aveugles d'Ile de France

United Kingdom:
Varsani v Jesan | Singh v Bhasin | The Zoological Society of London v Customs & Excise / Dean & Canons of Windsor v Customs & Excise | National Trust v Hoare

United States:
United Cancer Council v Commissioner | In Re Bishop Estate

Country Reports

Asia Pacific:
Regional | Australia | China | New Zealand | Papua New Guinea | the Philippines | Singapore | Vietnam

Central and Eastern Europe:
Albania | Bulgaria | Croatia | Czech Republic | Hungary | Latvia | Lithuania | Macedonia | Romania | Slovakia

Latin America and the Caribbean:
Brazil | Columbia | Falkland Islands/ Malvinas | Peru | Venezuela

Middle East and North Africa:
Regional | Egypt | Kuwait | Morocco

Newly Independent States:
Armenia | Azerbaijan | Belarus | Georgia | Kazakhstan | Kyrgyzstan | Moldova | Russia | Tajikistan | Turkmenistan | Ukraine | Uzbekistan

North America:
Canada | the United States

Sub-Saharan Africa:
Cameroon | Ethiopia | Ghana | South Africa

Western Europe:
Regional | Belgium | France | Germany | Republic of Ireland | Italy | Malta | Sweden | Switzerland | the United Kingdom

Self-Regulation Initiatives

Code of Conduct for NGOs In Ethiopia- A Review Article
Eddie Adiin Yaansah

International Grantmaking

What’s Behind the Foreign Public Charity Equivalence Affidavit?
Betsy Buchalter Adler and Ingrid Mittermaier

International Developments

International Fiscal Association Congress 1999

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Editorial Board

Subscription Information

Previous Issues

ICNL Homepage

Canadian Developments

The months of January and February saw a number of developments relating to non-profit organizations in Canada, though the ultimate impact of these events remains to be seen.

In the second issue of this Journal, an article appeared dealing with the decision of the Supreme Court of Canada in the case of the Vancouver Society of Immigrant and Visible Minority Women. While the Society lost that case by a vote of 4-3 and thus was not registered as a charity under the Income Tax Act, the reasoning of the majority is still being studied to determine the implications of its rationale, which included a greater emphasis than in the past on an organizations purposes as well as an explicit broadening of the meaning of the term "education" within the classic common law definition.

With a short period of time, we had the following developments.

Revenue Canada also issued a long-awaited paper on Community Economic Development (CED) which tries to come to grips with finding a position between the common law position that a charity cannot offer economic benefits to individuals except within the limited common law definition (ameliorating poverty, scholarships and the like) and the growing recognition that job creation and economic development are crucial methods to fighting many of society’s current economic woes. (The British Charity Commission is struggling with this issue as well.)

The paper, which is stated to be a discussion paper but which de facto now represents Revenue Canada’s policy on the topic can be found at the Charity Division’s web site. The address is

The paper has received widespread approbation in the Canadian charity community and many from outside Canada who have seen it have been favourably impressed with its attempt to meet current needs while at the same time remaining consistent with common law principles.

The so-called Broadbent report came out in early February, delayed many believe, until the Supreme Court came down with the Vancouver decision. This report, entitled Building on Strength: Improving Governance in Canada’s Voluntary Sector was the final report of the group and was based on cross-country hearing and submissions which were stimulated by its earlier discussion paper, Helping Canadians Help Canadians: Improving Governance and Accountability in the Voluntary Sector .

As expected, the very lengthy report came up with a series of recommendations in the various areas it studied and heard submission on. These were:

It is beyond our capacity to review all of these areas in these pages, but we would first say that generally speaking, we feel that the panel did a remarkable job, particularly since the members were (deliberately) chosen from outside the sector. It was believed that "outsiders" who know well the working of both organizations and government would carry more weight than having a panel made up of "experts" who might be seen to have their own agendas. We suspect that this decision was very wise, indeed, in the process of trying to get the ideas accepted by both organizations and government.

We have had strong interest in a few of the areas covered (which does not mean a lack of interest in the others) and we trust we will be forgiven if we focus primarily on the recommendations in these areas.

One of our long-time concerns has been what has come to be known as the "definition" problem, which organizations will be recognized as charities for tax purposes. The report deals with this subject under the rubric of "access" to the tax system. It’s recommendations, which we wholeheartedly agree with , are summarized as follow:

"We propose the following process for establishing a legislated definition:

We believe that a modern democratic process of deciding which voluntary organizations get full access to the federal tax system will go a long way to promoting greater transparency and credibility of the sector."

The Committee then looks at another matter close to our hearts, the issue of what body should regulate charities and make decisions:

"After further research and consideration, we recommend an institution that might be seen as a blend of our original models 2 (a federal commission) and 4 (the non-governmental model), with elements taken from each. We have concluded that the new agency should be attached to the federal government for two main reasons:

There is further discussion about the role, functioning and makeup of such a commission. We happen to agree, once again, with almost the entire set of suggestions n(including federal government financing). While we know there will be debate about details, we hope that the discussion will now go beyond the current status of whether the process should be taken away from Revenue Canada (it indubitably should) and focus on the nature of the replacement body.

The Report also deals with a third contentious tax related issue, the business activities of charities and non-profits.

"In our view, a business should be considered related and permissible if it:

This last recommendation would follow the practice of many countries, including the United States. While we recognize in principle that this is a valid approach, we remain concerned that the approach will lead to the kind of mare’s nest found in the U. S. where there are continuing legal fights about what is or is not a "related" business. The Broadbent "tests" of relatedness are fine as an expression of principle, but would be difficult to administer fairly.

We would note, without comment, one other recommendation. A revised system should

reaffirm and maintain the legitimacy of space for non-partisan political advocacy. While partisan activities should continue to be forbidden, the right of bearing a public witness on an issue affecting the very purpose of a charitable organization should be affirmed. The rules governing advocacy activity need to be clarified in ways that can be better understood, that militate against arbitrary application and that cohere with the values of a healthy civil society. In particular, the 90/10 rule has to be regarded as only an approximate standard since allocations under it are extremely difficult for a registered organization to calculate or Revenue Canada to measure. The important tests are that the rule not be applied in an arbitrary or unduly restrictive manner.


Thought this article in much longer than those we normally run in these pages, it does not begin to do justice to the quality of the Report as a whole. (For example, recognizing the need for different reporting requirements based on the size of an organization is a welcome suggestion, implementation being long overdue.) We are optimistic that it will help move the process towards a legislated solution to many problems associated with the non-profit sector. Indeed, the day after the Report was issued, Revenue Minister Herb Dhaliwal said the "political will is in place to push ahead quickly with plans to reform the way governments, charities and volunteer organizations work together". He seemed to suggest that a new "charity commission" was high on the agenda.

As my late grandmother would have said, "from your mouth to God’s ear".

We understand that in the wake of the Report, the Voluntary Sector Roundtable (an umbrella organization for the sector) and the Privy Council Office (essentially the Prime Minister’s bureaucracy) are consulting on personnel (from both the private and public sector) who will be appointed to three main committees set up to more closely investigate options which will allow the government to fulfil its promises to work more closely with the voluntary sector. Three main areas of concentration have been identified and no fewer that seventeen government departments and agencies are involved in the exercise.

We expect that this will be a case of move swiftly but with bureaucratic caution…which means that it all likelihood, it will be a year or more before we see even the outlines of any new federal policies. But given the benign neglect (or worse) many of the key issues of concern to the sector, have received in recent years, we are hopeful that before we reach retirement age, some changes for the better will be implemented.

The web site for the Broadbent Report is on Strength.htm.


Copyright 2008 The International Center for Not-for-Profit Law (ICNL)
ISSN: 1556-5157