In its preparation for the annual federal budget, Parliament’s Finance Committee invites Canadians, businesses, and organizations to submit policy requests. The Committee, which is made up of members of Parliament from all parties, then writes a report and makes recommendations – hundreds of them – about what public policy changes should be included in the next federal budget. 

Many of these recommendations are technical and boring. This year, however, the Finance Committee made a recommendation that would have a significant negative impact on the finances of countless Christian charities. Not only did the committee recommend that pro-life organizations be stripped of charitable status (something the government was already actively trying to do), but they also recommended that the federal government exclude the “advancement of religion” as a charitable purpose. This would strip charitable status from every church and potentially many parachurch organizations. 

Canadian law allows organizations to apply for charitable status if their main purpose is the relief of poverty, the advancement of education, the advancement of religion, or certain other purposes deemed beneficial to the community. Donations to charitable organizations are eligible for a charitable donation tax credit in which donors receive 15%-33% of their donation back from the government. For example, if you work an average job and you tithe $5000 to your church as a charitable donation, the government will give you $1,422 (approximately 29%) back on your tax return at the end of the year. Overall, the government currently remits about three and a half billion dollars of tax revenue via tax credits to Canadians who donate to charity, and a major portion of charitable donations are given by religious Canadians to religious organizations. 

It’s not just donors, churches, and individual charities who would be negatively impacted. Revoking the “advancement of religion” as a charitable purpose would also be economically and socially devastating for the broader society. A study by Cardus, through their Halo project, estimates that for every dollar a religious congregation spends, the broader community receives $3.39 in various benefits, everything from free building space to marriage services to sponsoring refugees. That adds up to approximately $18.2 billion of socio-economic benefit per year!  

Christian Legal Fellowship notes that “Religious charities account for nearly 40% of all charities in Canada, including churches, mosques, temples, synagogues, and other faith communities, operating programs such as soup kitchens, shelters, refugee homes, and food banks. They provide indispensable social, economic, and spiritual support, filling a significant gap in our communities and meeting the needs of millions of Canadians.” 

Meanwhile, charitable giving in Canada is already falling. Only about 19% of Canadians donate to charities, down from over 23% in 2010. And the amount being donated is also falling. While 0.60% of all personal income was donated to charity in 2010, only 0.49% is now being donated. Rather than stripping charitable status from an entire class of organizations, the federal government should be finding ways to encourage charitable giving.  

The federal government is already an outlier in this regard. The average charitable tax deduction rate for donations over $200 in most provinces is 47%, far higher than the 29-33% the federal government remits. 

With the current tax credit for charitable giving, the government implicitly recognizes that charities provide benefits to Canadians. One report by the Canadian Council of Christian Charities to Canada’s Special Senate Committee on the Charitable Sector described four ways that religious charities benefit their local communities: 

1. “Religion develops and activates prosocial attitudes and behaviours, resulting in high levels of generosity and volunteerism that benefit both religious and secular charities, and improves public civility. 

2. Religion results in better personal outcomes that reduce demand on the state’s resources for rehabilitation and health care and improves quality of life and individual contribution to society. 

3. Religion has tangible community benefits in terms of social capital, infrastructure, and neighbourhood viability, and a twelve-times return on investment related to tax concessions. 

4. Religion creates tangible benefits for the public at large based on a core of people who are other-centred, civically engaged, and willing to work together sacrificially for the common good.” 

In some ways, the favourable tax treatment of religious organizations is also a recognition of sphere sovereignty. It represents respect and appreciation by the civil government for the mission and work of the church and other institutions, to disciple people in the way of God and to minister to the poor and needy. By eliminating or at least reducing the tax burden, these charitable institutions are able to do more good in their communities.  

Christians should be concerned with the proposal to revoke charitable status from religious organizations. Not only would it affect our personal tax receipts, but more importantly it reflects a lack of awareness of and respect for the work of the church and other religious charities. Reach out to your MP and neighbouring MPs, making it clear that this is a very bad policy recommendation that would negatively impact not just religious organizations, but also the broader communities these organizations serve.