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The International Journal
of Not-for-Profit Law

Volume 4, Issue 4, June 2002

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

Table of Contents


The Legal Framework for Civil Society in East and Southeast Asia
Barnett F. Baron

A Flaw in Comparative Studies of the Tax Benefits for NGOs in Latin America
Antonio Itriago M. and Miguel
Itriago M

The Principle of Subsidiarity in Italy: It's Meaning as a "Horizontal" Principle and It's Recent Constitutional Recognition
Andrea Maltoni

A Synopsis of Law Reform for Iranian NGOs
Zahra (Sahar) Maranlou

Tax Treatment of NPOs in Macedonia
Prof. Dr. Vesna Pendovska

Competition and Abuse of Association Membership
Assoc. Prof. Ivo Telec


Working with the Non-Profit Sector in South Africa
Working with the Non-Profit Sector in Nigeria

By the Charities Aid Foundation / Allavida
Reviewed by Karla Simon

Legal and Organizational Practices in Nonprofit Management
By Pacquale Ferraro
Reviewed by Karla Simon

Promoting Legal and Institutional Frameworks for Corporate Social Responsibility in Peru
By Javier de Belaúnde L. de R., Beatriz Parodi L., and Delia Muñoz M.
Reviewed by ICNL Staff

Social Responsibility: 12 Case Studies from Chile
by Soledad Teixido, Reinalina Chavarri, and Andrea Castro
Reviewed by ICNL Staff

Case Notes

Asia Pacific:
Hong Kong

Newly Independent States: Russia

North Africa:

North America:
Canada | United States

Sub-Saharan Africa:

Western Europe:
United Kingdom

Country Reports

FATF | World Bank

Asia Pacific:
Regional | Australia | Indonesia | Japan | New Zealand

Central and Eastern Europe: Bosnia and Herzegovina | Czech Republic | Hungary | Lithuania | Macedonia | Slovakia

Latin America & The Caribbean: Chile | Peru

Middle East and North Africa: Kuwait

Newly Independent States: Armenia | Azerbaijan | Kyrgyzstan

North America:
Canada | United States

South Asia:
India | Pakistan

Sub-Saharan Africa:
Nigeria | South Africa | Tanzania

Western Europe:
Regional | Belgium | Germany | Italy | United Kingdom

- - - - - - - - - -

Editorial Board

Country Reports: North America


By Robert Hayhoe*

1.Reform of the Canada Corporations Act

Because of Canada’s federal political structure, both the provincial governments and the federal government have the constitutional ability to provide for the incorporation of companies.  Although the provincial corporate law applicable to non-share capital corporations varies from province to province and is more or less modern in different provinces, federal incorporation is also available in all provinces and territories.  However, the federal Canada Corporations Act , R.S.C. 1970, c.C-32 is viewed by some as outdated and there have been ongoing calls for its reform.  As part of the Voluntary Sector Initiative (described in the Volume 2 Issue 4 Canada Country Update and referred to in the Volume 4 Issue 2/3 Canada Country Update ), Industry Canada undertook to look at the issues surrounding non-share capital corporations.  A consultation paper was issued and a series of discussions was held across Canada. 

Industry Canada has now synthesized the results of the consultation process and its own research and produced a proposal for the reform of the Canada Corporations Act .  The proposal is for a comprehensive redraft of the Act.

2.  Foreign Agency Agreement Case

For a description of a recent case involving the use by a Canadian charity of a foreign agent, see the North American Case Notes Section.

3. Future Directions Initiative

As described in the Volume 4 Issue 2/3 Canada Country Update , the Canada Customs and Revenue Agency is in the process of the Future Directions Update, a review of how it administers tax law in various sectors (including charities).  One of the aspects of the review is a series of consultations with charities lawyers as well as volunteers and administrators from various types and sizes of charities.  The reports of the most recent round of the continuing consultations have now been released and focus on such issues as lack of timeliness, problems arising from excessive staff turnover and the almost total lack of policy guidance in many areas.

4. Privacy Law

In 2001, the federal Personal Information Protection and Electronic Documents Act , S.C. 2000, c.5 was introduced.  Because Canada is a federal state with legislative jurisdiction divided between the federal government and provincial governments, the federal Act applied initially only to commercial activities with an interprovincial element.  However, to the extent that in three years from proclamation, a particular province does not comparable legislation, the federal Act is designed to apply within the province.

Because the Constitution Act, 1867 provides in section 92(7) for provincial jurisdiction over “Hospitals, Asylums, Charities, and Eleemosynary Institutions in and for the Province” there is some question whether the federal Act can apply to charities.  Nevertheless, the federal Act defines “commercial activities” to include the transfer of fundraising lists by charities. 

Provinces are currently responding to the federal Act (and to the policy purposes behind it) by introducing their own legislation.  The province of Ontario introduced a discussion draft of its privacy legislation (the Privacy of Personal Information Act, 2002 ) in February, 2002 and has invited comments.  The Ontario Act applies explicitly to the voluntary sector and requires consent for the collection, use or disclosure of personal information about an individual.  Although the details of the type of consent that will be needed for charities will be disclosed in regulations which have not yet been released in draft, there is an expectation that charities will be required to obtain explicit (rather than implied or even negative-option) consent to the use of personal information in fundraising.  Canadian umbrella organizations for charities and professional fundraisers have generally opposed this development. 

The draft Ontario Act also prohibits disclosure of personal information outside Ontario unless a similar privacy law applies.  This should be of particular interest to charities which are members of international affiliations. 

* Robert Hayhoe is a Barrister & Solicitor at Miller Thomson LLP in Toronto, Canada. He also serves as Regional Coordinating Editor (North America - Canada) for IJNL.  He can be contacted at rhayhoe@millerthomson.ca


United States

Selected Issues in the United States

1. American Bar Association committee formed.  The ABA International Law Section has formed a Committee on Not-for-Profit Legal Issues, which is chaired by Aaron Schildhaus of Washington, DC.  Its formation meeting was held in New York on May 10, 2002.  The meeting included a presentation of issues about creating an enabling environment for NPOs in developing and transition countries. 

The first project of the committee will be a presentation at the World Conference on Sustainable Development in Johannesburg, South Africa in late August.  The official ABA delegation to WSSD will include members of the committee.  For further information, please contact Aaron Schildhaus at Schildhaus@aol.com .

2. American Law Institute project formed.  The American Law Institute has formed a project to consider possible changes in the not-for-profit laws in the United States (both general legal framework and tax).   The Reporter for the project is Assoc. Prof. Evelyn Brody of the IIT-Chicago-Kent Law School.  She can be reached at ebrody@kentlaw.edu .

3. September 11 charities.  There has been an incredible amount of publicity and activity with respect to the September 11 charities.  They have received guidance from the IRS with respect to who can receive disaster-specific aid, etc.  They have also been subjected to considerable scrutiny because of their slow distribution of funds collected from the general public.

4. Real property taxes.  Various local jurisdictions in the US have been considering subjecting not-for-profit organizations to real estate taxes.  A recent report in the Chronicle of Philanthropy discusses a letter from the Mayor of Montpelier, VT, to the city’s NPOs, asking them to make “voluntary” contributions to the city’s tax base.  This has become an increasingly “hot” topic, as many localities are experiencing decreasing revenue bases with the growth of the American NPO sector. 

5. Federal Election Commission.  The FEC has proposed rulemakings that relate to NPO advocacy issues, according to OMB Watch.  These rulemakings are in accordance with the new Bipartisan Campaign Finance Reform Act (BCRA), which passed Congress last autumn.  Although the BCRA is subject to a federal lawsuit seeking to have it voided for violation of the First Amendment, the FEC is proceeding with rulemakings that will deal with the “soft money,” “issue advocacy,” and “coordinated and indirect expenditures” portions of it.  NPOs are carefully watching these developments and expect to participate in the rulemakings.

In a related development, the Fourth Circuit Court of Appeals has upheld a Federal District Court ruling holding the Federal Election Campaign’s ban on corporate contributions unconstitutional as applied to NPOs.  A discussion of this case, Beaumont v. FEC, will be found in a forthcoming issue of IJNL.



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