Public must be warned

When citizens are donating their hard-earned dollars to charities, they should have every reason to believe their money is really going to a good cause.

But what if that’s not the case? What if a Canada Revenue Agency (CRA) audit indicated that donations were not going to charitable goals, but to $27,000 worth of comic books, or movie tickets or a family trip to Disneyland — as was the case for the Humane Society of Canada for the Protection of Animals and the Environment? And what if knowing that, the CRA still did not inform the public?

Sound unbelievable? It’s not. That’s why there needs to be a lot more transparency in how the agency oversees Canada’s 88,000 charities.

Consider the group of four charities run by Michael O’Sullivan — the Humane Society of Canada, Ark Angel Fund, the Ark Angel Foundation and the Humane Society of Canada Foundation — which have collected $9 million in donations over the last 15 years.

As the Star’s Dale Brazao and Mary Ormsby reported on Tuesday, though the government’s charity regulator flagged the Humane Society of Canada for spending infractions as far back as 1998, and the Canada Revenue Agency recommended in 2009 that it be stripped of its charitable status, the organization is continuing to collect donations and issue official receipts to this day.

The charity hasn’t even been suspended or fined, as the agency has the power to do, because O’Sullivan has been fighting the revenue agency’s findings all the way to the Supreme Court of Canada, delaying any actions by the CRA.

This must stop. The agency must be empowered to suspend a charity, even in the midst of legal actions, so it cannot continue to solicit donations for years while the case winds its way through the courts. There are other ways the CRA can keep donors in the loop about troubled charities.

First, the agency rightly lists organizations whose charitable status has been suspended on its website. But it gives no indication as to why. That means donors have no way of knowing whether the suspension is for an innocent accounting error that the charity is clearing up, or something much more serious. That should change. The public needs more details to make informed decisions about charities.

Second, when it is recommending that a charity’s licence be revoked, the Canada Revenue Agency should go public and always issue a news release.

Third, when it actually revokes a charity’s licence it should always issue a news release rather than simply publishing the fact in the official Canada Gazette. The more publicity directed at sham charities, the better.

This is not to say that charities do not have the same right to privacy and protection as individuals when they are being audited by the CRA. No one wants to see charities that are simply undergoing a regular audit being identified. That would taint legitimate charities that have done nothing wrong.

And no one wants to see a charity that has made an honest error lose its reputation. That’s why the government should explain on its website exactly why a charity’s licence has been suspended.

But in the end, the public has a right to know when the CRA believes a charity should lose its licence — court cases or not.

During the election campaign the Liberal party promised to invest an additional $80 million over four years to help the Canada Revenue Agency crack down on tax evaders. Part of that money should go to creating a more transparent system on how charities are regulated. Too much charitable good needs to be done with too few dollars for anyone to allow fraudsters to operate unscathed.

This organization is continuing to collect donations