TO:        Members of the Standing Committee on Finance, House of Commons

FROM: Andreae Sennyah, Director of Policy, Cardus

    Daniel Liegmann, Junior Policy Analyst

DATE:    August 1, 2025

SUBJECT: Protecting the Charitable Sector in the Fall Budget 2025

Cardus is a non-partisan think tank dedicated to clarifying and strengthening, through research and dialogue, the ways in which society’s institutions can work together for the common good.

Canadian charities are currently eligible for registration under four charitable purposes: relief of poverty, advancement of education, advancement of religion, and other purposes beneficial to the community. 1 1 Canada, Canada Revenue Agency, Charitable purposes https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/registering-charitable-qualified-donee-status/apply-become-registered-charity/establishing/charitable-purposes.html These charitable purposes have developed through common law. During the previous parliament, the Standing Committee on Finance recommended an amendment to the Income Tax Act to enshrine a definition of charitable purposes that removes the designation of “advancement of religion”. 2 2 Canada, Standing Committee on Finance, Pre-Budget Consultations in Advance of the 2025 Budget https://www.ourcommons.ca/Content/Committee/441/FINA/Reports/RP13466781/finarp21/finarp21-e.pdf As the committee makes recommendations for the Fall Budget 2025, greater clarity is needed to protect all existing charitable purposes.

The government should continue to support all existing charitable purposes, including the advancement of religion. In a time of rising economic uncertainty and declining charitable giving, all charities should be able to continue their good work within the existing legal and regulatory framework.

Significant effect on local communities: The sector-wide implications of changing the rules for charitable status would be significant. It is estimated that roughly 38% of charitable organizations are registered under the advancement of religion. 3 3 Canada, Canda Revenue Agency, Charities Program Update (2015) https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/about-charities-directorate/charities-program-update-2015.html This means that the removal of this charitable purpose would eliminate a large portion of the charitable sector. Further, faith communities make significant contributions to the lives of individual Canadians. For example, research has found that active participation in the activities of religious communities is associated with a lower likelihood of debilitating social isolation, lower mortality and morbidity rates, and better quality of life. 4 4 Vachon, Rebecca and Micah Allat. "Social Isolation, Loneliness, and Christian Communities." Cardus, 2025. https://cardus.ca/research/health/reports/social-isolation-loneliness-and-christian-communities/.

Contributions of faith communities: Cardus has studied the “Halo Effect” of religious congregations. This calculation quantifies several contributions of places of worship including: the provision of open space (e.g., for recreational use), the magnet effect (e.g., spending by visitors attending weddings, funerals, etc.), individual impact (e.g., assisting with refugee resettlement), and social capital and care (e.g., volunteer activities, food banks). This research finds that for every dollar spent by a religious congregation, the local community receives an average of $3.39 in economic benefits. 5 5 “About Halo Project”, Cardus, https://haloproject.ca/#about Further research shows that the total net positive socio-economic contribution (Halo Effect, minus the value of tax exemptions and credits) of all religious congregations in Canada is approximately $16.5 billion. 6 6 Wood Daly, Mike. "Why Religious Tax Exemptions Benefit All Canadians." Cardus, 2024. https://www.cardus.ca/research/spirited-citizenship/reports/why-religious-tax-exemptions-benefit-all-canadians/. This Halo Effect demonstrates that in addition to the intangible benefits provided by religious communities, the quantifiable benefit of their contributions is also significant. This Halo Effect would decrease significantly if the federal government removed the “advancement of religion” as a charitable purpose. The elimination of this charitable purpose would significantly reduce their ability to provide services, leaving significant gaps within the communities they serve across Canada.

Sector-wide destabilization: Politicizing the eligibility for charitable status would destabilize the Canadian charitable sector writ large. These changes would create significant uncertainty across the charitable sector as charities navigate the potential elimination or amendment of other charitable purposes.

CONTACT

We would welcome the opportunity to meet with you and assist with future considerations on this issue. Please do not hesitate to contact us at asennyah@cardus.ca.