publication date: Nov 9, 2016
author/source: Mark Blumberg
The November 8, 2016 US election was a shock and I am still spinning from the results. Canada and the US have very close ties and unfortunately when one country has upheaval or conflict it has a real impact on the other country.
The full implications of a Trump presidency will not be known for a long period of time but with the Republicans controlling essentially all branches of government the impact of this election is going to be felt for decades. I pray that my concerns are exaggerated and that Trump did not mean everything he said he was going to do.
For those who are despondent we should remember that the US suffered through 8 years of George Bush or more importantly Vice-President Cheney. In Canada, although we don’t like to admit it we have also had our fair share of politicians who have behaved really badly, albeit without access to nuclear codes. Trump’s presidency may very well be as bad as we think, but in many cases it is not the president who completely controls his own agenda. Remember events such as the depression, WW1 and WW2, 9/11 etc.
Some people will choose to deal with the Trump presidency by putting their heads in the sand for the next 4 or 8 years and only watch the Daily Show to get their news! This may not be the best way for charities and non-profits to deal with their beneficiaries and mission.
It is so difficult to know what Donald Trump stands for in terms of actual policy and whether or not that's consistent with other Republicans or Democrats.
Here are some high level and tentative thoughts that may be helpful for some Canadian charities and non-profits:
- Be aware, be agile and be professional in dealing with these challenges. Be prepared to allocate resources for appropriate charitable or political activities.
- Trump’s promises of protectionism could have very adverse economic consequences for Canada, which would put a real stress on Canadian charities who are often involved with picking up the pieces of economic downturns. On the other hand, if the US economy becomes stronger in the next few years and there is not the expected protectionism, that could be good for the Canadian economy.
- The impact of the Trump presidency is going to affect different groups in different ways. Trump’s campaign was rife with racist, sexist and other appalling comments. His run has already emboldened certain hate groups and now they may feel empowered, to voice and act on their views in ways that are harmful and detrimental to society both in the US, Canada and elsewhere. Have you considered those who will be most negatively affected and how your strategies could help those beneficiaries? Much of the work to promote human rights is considered by CRA to be charitable.
- Americans, including some US charities, are going to be reeling from the events. If these are your partners or friends, how can you potentially work with them to ameliorate the negative effects of any change? Some Canadian charities are operating in the US and many US charities operate in Canada. It may be important for Canadian charities to look at what they can do to deal with the difficulties that will potentially be arising in the US and elsewhere.
- Some of the US issues that many Canadians are upset by including racism, voter suppression, gerrymandering, lack of functional literacy, inequality of income, scapegoating religious minorities, policing problems, corporate media consolidation, etc. are also issues in our own country and we need to be as aware of it here as we are in the US and think about what we or our charities can do about them.
- When historians are looking at the Trump victory they will discuss many issues and one of them will be the effect of the US Supreme Court case Citizens United, which essentially entitled all corporations to “freedom of speech” and limited the ability of government to prevent the corrosive impact of too much money being ploughed into non-profits by some very wealthy people over the last few years. It would be nice if we avoided making the same mistake in Canada.
- Trudeau is in a difficult, unenviable position in having to deal with Trump. Just to think of one potential issue - there may be tremendous pressure on him relating to approval of a pipeline, which many environmental groups may be opposed to. Some environmental charities may ignore the rules and go on partisan rants against the Liberals. Expect CRA to potentially audit some charities if there are complaints from the public. Then those charities will argue the rules for political activities are vague and dispute CRA’s allegations that the charity conducted partisan activities and spent 75% of your resources on political activities! Or you can spend a few hours and a few thousand dollars to come up with better alternatives that are not going to potentially sink your registered charity. It is your choice. Charities need to take political activities more seriously, professionally, invest the necessary resources and comply with the Income Tax Act limitations on political activities.
- Although there have been tremendous strides around the world, over the last 8 years there has also been some terrible humanitarian disasters such as the Syrian refugee crisis. Will the Trump presidency result in more and worse crises? Canadian charities are allowed to conduct foreign activities as long as they have appropriate direction and control and if there is an increase in humanitarian need this could affect Canadian charities.
- Be careful about restricting funds in long-term arrangements without the necessary thought and flexibility. In this ever changing world unrestricted funds are gold and restricted funds can be sometimes close to useless. Have serious discussions with donors about the importance of flexibility and carefully review your standard donor agreements.
- The US may embark on a program of massive tax cuts especially for corporations and the wealthy, which could mean significant cuts in government services and funds for charities and increased inequality. The US charity sector is still recovering from the 2008 economic crisis and is unable to handle much more.
- With all the anxiety around Trump some international organizations may not want to be headquartered in the US or carrying on as much of their operations there. Over the last few months I have had a number of clients come to me to set up international operations in Canada, when they may have otherwise ordinarily done so in the US. With the "extreme vetting" that Mr. Trump had promised, many charities will not be wanting to have meetings or conferences in the US out of concern that there will be harassment of the attendees or denial of entry.
- Although after every election there is a lot of talk about Americans moving to Canada, typically, almost nothing happens. During the Vietnam war a huge number of Americans ended up coming to Canada and that was a major milestone in building up Canada. Unfortunately, the events in the US may encourage some very mobile, skilled and knowledgeable people to consider moving to Canada. If the situation is as bad as some predict, Canada may benefit from that displacement.
- To the extent that certain non-profits or religious groups are closely aligned with Trump, his actions could negatively affect public sentiment and trust towards those groups.
- Canadian charities receive approximately $1.8 billion in foreign funds, much of which probably comes from the US. Will US charities with additional strains cut back on funding Canadian non-profits and charities?
For those who are interested in political activities, and the new CRA consultation on political activities you might find this webinar I am delivering the Canadian Charity Law Association helpful and also these helpful questions for charities considering conducting political activities. Charities and non-profits are used to dealing with adversity – the next few years in the US may be very challenging but proactively and strategically dealing with it may result in greater chance of success.
Mark Blumberg is a lawyer at Blumberg Segal LLP in Toronto, Ontario. He can be contacted at firstname.lastname@example.org or at 416-361-1982. To find out more about legal services that Blumbergs provides to Canadian charities and non-profits please visit www.canadiancharitylaw.ca, www.globalphilanthropy.ca or www.charitydata.ca
This article is for information purposes only. It is not intended to be legal advice. You should not act or abstain from acting based upon such information without first consulting a legal professional.