revoked charity status greenpeace_canada_charitable_foundation 16 august 1994

8/11/2019 Revoked Charity Status Greenpeace_Canada_Charitable_Foundation 16 August 1994

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ATTACHMENT TO NOTICE OF INTENTION TO REVOKE

OF

DECEMBER 6, 1995.

y REGISTERED MAlL

Greenpeace

Canada

Charitable

Foundation

185 Spadina Avenue

Toronto,

Ontario

MST 2C6

Attention: MS Vicki Slemin

Operations Director

August

16,

1994

Dear Ms S1emin:

Re:

Charity

Audit

81924

Tel: (613) 954-1362

This l e t te r i s f u ~ t h e r to

an

audit of the

books

and records and

act ivi t ies of Greenpeace

Canada

Charitable Foundation (the Charity )

which

was

conducted

by a representative of the Department

for the period

January

1,

1990 to December 31 1993.

The audit has raised serious concerns about the Charity's compliance

with

certain

provisions of

the Income Tax Act (the Act ).

For

a

registered charity

to

re ta in

i t s registration,

i t

must comply with

the

provisions of the Act. I f a particular registered

c h r i ~

does not

comply

with these provisions, the Minister may

revoke

that chari ty 's

registration

in

the manner described

in subsection 168(2) of

the Act.

The balance

of

this l e t te r describes

the

Department's concerns.

CHARITABLE

ACTIVITIES

The

Charity

is

registered as

a charitable

organization. To

sat isfy

the

definit ion of

a

charitable

organization

pursuant

to

subsection

149.1(1)

of the Act, a charity must devote i t s resources exclusively to

charitable act ivi t ies carried on by

the organization i t se l f

or

to

other

ancil lary and

incidental

activities such as pol i t ical act ivi t ies which

meet

the

requirements

of subsection 149.1(6.2)

of

the

Act. The term

charitable

is not defined in the Act and

we

must therefore refer to


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the

principles of

common

law to determine whether a

particular

purpose

or

act ivi ty is

charitable.

The Charity was

regis tered

with the

following

object:

The

object

o f

the

Corporation i s

to further the

advancement

o f education

and for the purpose o f

furthering

such

object and to the extent that such

ct iv i t ies are not inconsistent with such object:

a

to

educate the

public

on environmental i ssues,

b

to

support environmental

preservation

through

education means

c to conduct research

on

environmental

i ssues,

and

/

d

to

make available

to the

public the results

o f

such

research.

I

To

be chari table , an

educational

activity

must either

t ra in

the

mind,

prepare a person for a career or broaden the sphere of human knowledge

(as in scient i f ic research). Research, as a particular area of

education, must be directed to gaining more knowledge about a particular

question,

and

the research

procedures

and

i t s results must be explained

to the public ful ly and fair ly . The courts consider that simply

providing

selected information and opinions on a

subject

is not

educational, in

that

i t does not present a ful l and fa i r examination

of

the

subject

and t

lacks

the necessary degree of tra ining or

ins truct ion.

In summary for an organization's over-all act iv i t ies

to

meet the

requirements of

the

Act

the

following cr i t e r i a

must be

met:

the act iv i t ies must meet the

legal

definit ion of charitable

act iv i t ies as

defined by

the Courts;

a registered charity must carry out i t s own

charitable

act iv i t ies

directly or

give funds to

qualified donees;

and,

pol i t ical act iv i t ies must

be

ancil lary

and

incidental to

the

charitable act iv i t ies

The expenditures

you

identified as

charitable on

your T3010

Charity

Information Return for

the

years 1990 to 1993 inclusive consisted of

the

publication

of the newsletter

Greenlink

and

pledges

to Stichting

Greenpeace Council

( International

.

Based

on

the

audit

results,

we

do

not

perceive any

of these expenditures to be charitable

expenditures.

The basis for th is conclusion is as

follows:


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- 3 -

reenl ink

Our review

of

th is

publication has

concluded

that i t s

content

is not

advancing education

in

the charitable sense.

The

publication

principal ly consists

of environmental news stor ies and supports the

advocacy act ivi t ies

of

Greenpeace Canada.

In addition, t is not

your

activi ty.

The audit

results

show

that the

publication is an act iv i ty of Greenpeace

Canada

and

that

the Charity is

charged for

the related expenditures a t

year

end through

the

intercompany account.

Pledges to Stichting Greenpeace Council

Basically the

Act permits

a

registered charity to

carry

out i t s

charitable purposes, both

inside and outside Canada

in

two

ways:

Firs t t can make-grants to other organizations

which

are

qualif ied

donees

as described

in

the

Act.

Second,

t can carry on i t s ow charitable act iv i t ies . In

contrast

to

the relat ively

passive

t ransfer

of money or other

resources

involved in

making

grants to qualif ied

donees,

carrying

on

one s ow activi t ies implies

active

part icipat ion on the part

of

the Canadian charity in a program or project that d i rect ly

achieves

a charitable purpose. The Act

clearly

does

not

allow a

Canadian charity to

carry

out i t s mandate

by

handing over i t s

resources toanother organization (unless

that

organization

is

a

qualif ied d o ~ e e .

The Department

has

no objection

to

a Canadian

charity arranging to

accomplish i t s

ow educational

or

other charitable act iv i t ies

through

contractual

agreements with

organizations outside

Canada.

However the

requirement to

be

sat is f ied

here is

that

the

charity is

devoting i t s

resources

to act iv i t ies for

which i t

is

responsible

as

a

co-participant

or

principal .

What

is

important in such

cases is

that the arrangement

provide for

suff ic ient

direction

and control by

the Charity over the

use

of i t s

resources to sat is fy

the requirement of the

Act

that

these

resources

be

devoted to charitable

act iv i t ies

carr ied

on

by

the

Charity

i t s e l f .

The Department

accepts that charit ies

can, in

fact , fu l f i l the

requirements

of

the Act as

outlined above,

through agency relationships

with other organizations or individuals operating

abroad

wherein

the

charity retains

a presence

in the

field. The

Department s acceptance of

such an agency

relationship

between a charity and

another

organization

or individual

as a means

of ensuring

the

char i ty s compliance with the

Act would be subject to certain minimum

standards for departmental

purposes.


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- 4 -

However

once

an agency

agreement

has been executed,

the

Canadian

charity

must in fact show a

reasonable degree of on-going

in teres t and .

control

in the

project

carried out by the

agent.

The agent should report

back

to the

Canadian charity

on a reasonable and regular basis

on

the

progress of the project(s) . Documentation relat ing to the carrying out

of

the

project

by

the

agent

should

be

part

of

the

chari ty 's

records,

available

in Canada.

The chari ty 's

continuing el ig ib i l i ty

for

charitable regis t ra t ion will depend

on

whether or

not

i t is

in

fact

maintaining

a suff ic ient degree of ongoing control as required

by the

Act and provided for in the agreement.

e

note

that an agency agreement was signed between the Charity and

International on

October

1st,

1990. The agency agreement

provided

that

the

Charity

unds shall

be

applied

by

SG only

in such manner

as

the

Charity

directs

in writing

and solely

in satis faction of the Charity 's

charitable objects .

The Charity

reported the

following expenditures on

i t s T3010 Charity Information Return as

charitable expenditures

made

under the agency agreement which

were intended

to

establish

a

World

Park

in

Antarctica:

1990 - 700,000

1991 - 350,000

1992 - 350,000

The 1990 expenditure was paid to International by the Charity

on

June

14, 1991. In response to your

April

12, 1991

l e t te r

the Department did

not

object

to

the

payment

of

the funds to

your

agent, which

were

to have

been disbursed on

your

behalf pursuant to your direction,

for the

year

1990

even though

a

separate

bank

account

was not

maintained

by the

agent.

I t was our understanding that the

agent

did maintain a separate

accounting

for

these

funds and

i t

would

be

able to

provide

you

with

vouchers and

cancelled

cheques. The agent was

to

have maintained a

separate bank account for

future

years.

The 1991

and

1992 expenditures

consisted

of pledges

which

were made

by

the

Charity to International . The audit

results indicate tha t

the

pledge amounts were added

to

the amount owing from Greenpeace Canada

to

International. International

subsequently

forgave the

pledge

amount

owing to t

by

Greenpeace Canada.

Based on the facts which were provided during the audit , we believe that

these resources were actually used by Greenpeace Canada in i t s

operations:

The

Charity did

not advise

International that i t

approved the 1990

act iv i t ies or draft budget unti l

af ter

the expenditures

had

been

incurred; namely by facsimile dated February 11, 1991. I t would

therefore

appear that

the 1990

expenditures

were

not

incurred by

International pursuant to

the

Charity's direction.


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- 5 -

The

1991

payment

of 700,000

from

the Charity to International

was

made on the understanding that International

would provide

a

loan.

to Greenpeace Canada. International did provide

a

loan of

700,000 to Greenpeace Canada. Greenpeace Canada

subsequently

reduced i t s loan payable

to

the Charity

by

500,000.

The

Chari ty 's

pledges to

International

for 1991

and

1992

in the

amount of

350,000

each were

not paid.

ue to the fact that

Internat ional

t reated

Greenpeace Canada and the Charity

as one

ent i ty Greenpeace Canada was able to

add the pledge

amounts to

i t s balance

owing

to International. Greenpeace

Canada was

subsequently forgiven the 700,000

in

pledges, except

for a

balance of 70,202 which was allocated to the Charity.

You

have

indicated

that although the pledge amounts were not

actual ly

paid to

International,

Greenpeace

Canada

paid

for

Internat ional campaigns

carried

out

in

Canada

in order

to

offse t

the payment

of

tha

pledges.

However the

audit

results indicate

tha t Internat ional

advanced funds

to

Greenpeace

Canada

in

the form

of grant

revenue in

order

to pay

for

these

International

campaigns.

The

Charity

has not

exercised

sufficient control over

i t s

resources. We note that you were able to provide the

Greenpeace

Annual

Report

1990-1991

which

does make reference to the

Antarctica campaign. However the report does not detai l how the

Chari ty 's resources were actually

spent. You

did

subsequently

obtain

a general

breakdown of the al locat ion of

the

expenditures

for 1990;

these

expenditures

detai l the amount of 350,000 rather

than the 700,000 that was actually sent to International for

expenditures incurred during the

1990 year.

We

were also

advised during the audit that International is

jus t

now completing i t s 1992 audited statements and for

this

reason you

have not received subsequent annual reports

respecting

the

funds

allocated.

I t

therefore

appears

that the act iv i t ies and related expenditures

respecting the Antarctica World

Park are

not

those

act iv i t ies of the

Charity.

As a resul t t appears that the

Charity has

fa i led to devote a l l i t s

resources

to chari table act iv i t ies

and

therefore

does not meet

the

defini t ion

of

a

chari table

organization pursuant

to

subsection

149.1(1)

of the Act.

Paragraph 168(l)(b) of the Act provides that for a regis tered chari ty to

be ent i t led to

re ta in

i t s registered status,

i t

is required

to

comply

with the

requirements

of the Act relat ing

to

i t s registrat ion

as

such.

I f

a registered

chari ty

ceases to comply with these

requirements,

the

Minister

may

give

notice

to the charity that he proposes

to

revoke

i t s

regis t ra t ion.


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6

USE OF

RESOURCES Y

NON QUALIFIED DONEES

We refer

you to your undertaking

given

on regist rat ion (copy

attached)

which

s tates

tha t

the

Charity will

not make

i t s

resources (including

human

resources)

available to

any

organization

which is not a qualified

donee .

Should

a

chari ty

wish to

loan funds to

an organization

which is

not a

qualif ied donee,

in

order to be acceptable

to

Revenue Canada, the

transaction would have to be

properly

characterized as an investment.

We would expect the

loan to

be for a

reasonable

term, be

adequately

secured and be made on

terms similar to an

arm's

length

transaction (the

interes t

charged and received by the chari ty would

be

similar

to

that

charged

in the

open market between two ent i t ies acting independently of

each other).

The audit

resul ts indicate that the Charity's loan

receivable from

Greenpeace

Canada

is

n o ~ i n t e r e s t

bearing, has no specif ic terms of

repayment,

and

is

unsecured.

In addition, the following

factors

cumulatively

indicate that

the

Charity

does not

operate

as a separate ent i ty

which is

dis t inct from

the

operations

of Greenpeace Canada:

Greenpeace Canada

has

a

Sublicensing

Agreement with the

Charity

respecting

the use

of

the name Greenpeace . The pledge amounts

for

both

organizations are

reported

to International jo in t ly

The forgiveness of the 1991 and

1992

pledge amounts,

except

for

the $70,202 balance from 1990 in the Charity 's records, was

recorded

in

the

books

of

Greenpeace

Canada

and

was not

reflected

in the records of the

Charity.

The

fundraising act ivi t ies

which fa l l under

the

name Partners in

ction

do not distinguish

the act iv i t ies

of the Charity

from

those

of

Greenpeace Canada.

The payment in 1991 by Greenpeace Canada against

the

Loan

Receivable in

the

amount of $500,000 was

actually

a

circulat ion

of

the Charity 's funds that

were

sent to

International.

The Charity

and Greenpeace

Canada had a

jo in t general

ledger

and

jo in t board

meetings

up

unt i l

December 31, 1992.

We

do note

that

you

have

provided

separate

Board Minutes

for the 1993 year

and

that

the

Charity now has i t s own general

ledger.

However the

Charity

continues

to transfer funds from

i t s

account

to

Greenpeace

Canada on a

regular basis.

Greenpeace Canada executed a Loan

Agreement with

International on

February

18,

1994.

This

Agreement provided that Greenpeace Canada

~ o u d make no material

changes

to

the

budget

(defined

as amounts

greater than $25,000) without the approval of International . The


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7

budget includes the revenues

of

the Charity, which strongly

suggests that the Charity is seen as

being part

of Greenpeace

Canada.

Pre-authorized

payments

from donors

to

the Charity

continue to be

made direct ly

to

the

bank

account

of

Greenpeace

Canada.

As

a

resul t

t appears

that the Charity has fai led

to devote a l l i t s

resources to charitable

activi t ies

and

therefore

does not

meet

the

definit ion

of

a

charitable

organization

pursuant to

subsection

149.1(1)

of

the Act.

Paragraph

168(l)(b)

of the Act provides that for

a

registered charity to

be ent i t led

to retain i t s registered

status, i t

is

required

to comply

with the

requirements

of the Act

relat ing

to i t s registrat ion as such.

I f

a

registered charity ceases

to comply

with these requirements, the

Minister may give notice to

the charity

that he proposes to revoke i t s

regis t rat ion .

POLITICAL ACTIVITIES IN EXCESS OF THOSE LLOWED

IN

THE ACT

Subsection 149.1(6.2)

of

the

Act

permits

a

charitable

organization

to

devote some

of

i t s resources to non-partisan

pol i t ical a ct iv i t ies

provided that

such

pol i t ical act iv i t ies are

ancil lary

and incidental to

i t s chari table act iv i t ies

and that substantially a l l of i t s

resources

are

dedicated to

charitable

act iv i t ies

carried on by i t .

The

Department

accepts the t e s t

that

substantially a l l of a

charitable

organization s

resources

be devoted to

charitable act iv i t ies

is

met where

ninety

percent thereof are

so

devoted. Accordingly,

a

charitable organization

may devote

up

to ten percent of i t s

resources

to ancil lary

and

incidental

pol i t ical act ivi t ies

of

a

non-partisan nature.

The

courts

have established that act iv i t ies

which are designed

essent ia l ly to

sway

public opinion

on

pol i t ical

issues

or matters of

public policy are pol i t ical in

the

sense understood a t law. These types

of act iv i t ies include the

following:

1. presenting

publications, conferences, workshops;

2. placing advertisements in newspapers, magazines or on

te levision or radio designed to

at t ract

interest in, or gain

support

for,

a charity s position on

poli t ical

issues

and matters

of

public

policy;

3. public

meetings

or lawful demonstrations that are organized to

publicize

and

gain support for

a

chari ty s

point

of

view on

matters of public policy

and

pol i t ical issues; and,

4. organizing

mailing

campaigns where a charity asks i t s members


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8

or the

public

to

write

to the media and government expressing

support for the chari ty s views on

pol i t ical issues

and matters of

public policy.

The

fact that

such act iv i t ies

are

carr ied

out

by

an

organization with

charitable

objectives

does

not

make

the nature

of

the

act ivi ty less

poli t ical .

We

refer

you to the enclosed Information Circular 87-1

enti t led

Registered Charities

ncillary and

Incidental

Polit ical

Activ i t ies

On

the

contrary, i t

appears that

the

Charity

is

devoting

substantial

financial, material

and human

resources to

pol i t ical act iv i t ies

which

are not

incidental

and

ancillary to

charitable objects.

That

is purposes

and act iv i t ies that are directed a t legislat ive

change

or

change in public policy or

attitudes

are

considered

poli t ical in

nature, and not

charitable a t law.

For

example,

these

activi t ies

and

related expenditures include

your fundraising le t ter campaigns

and

various ar t ic les in the Greenlink publication.

You have also made your

resources available to an organization which carr ies

out

pol i t ical

act ivi t ies;

more

specifical ly non-interest

bearing

loan

to

Greenpeace Canada discussed below.

Based

on the

above

analysis, i t appears

that

the

Charity has not

devoted

substantially a l l of

i t s

resources

to charitable

act iv i t ies

and

therefore has fai led to

meet

the prerequisite of subsection 149.1(6.2)

of the Act.

Once

again, pursuant to paragraph 168(l)(b) of the Act, fai lure to

comply with the provisions of the Act relat ing to a char i ty s

registrat ion may

cause

the Minister to

propose

revocation.

DISBURSEMENT QUOT

Registered chari t ies are

required

in each year of operation to meet or

exceed a

disbursement quota.

This

quota relates to

expenditures

that

must be

made

during

the

year

and

that

are of

a

charitable

nature.

In

the case of

a

charitable organization, the

Act

st ipulates that this

minimum

annual

disbursement quota is equal to eighty percent of

the

prior year s official ly

receipted

donations less certain types of

gif ts

received.

s discussed above, t

would

appear that the Charity

has

not

made

the

required

amount

of

expenditures

on

charitable

act iv i t ies .

This has

resulted in

a

disbursement quota

short fal l

as follows:


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- 9 -

Disbursement Quota

for

1990 -

80 of

1989

Receipts:

(410,387 x .80) 328,310

Less claimed

1989 charitable

expenditures

Disbursement

Quota

for

1991 -

80

of

1990 Receipts (306,920 x .80)

Disbursement Quota for 1992 -

80

of

1991

Receipts (625,734 x

.80)

Disbursement Quota for 1993 -

80 of

1992 Receipts (637,900 x

.80)

(154.851)

Shortfal l

173,459

245,536

500,587

510,320

As a resul t

i t

appears

that the

Charity

has

fai led to meet the

requirements

of

p r g r p ~ 149.1(2)(b) of the Act.

Paragraphs 168(l)(b) and 149.1(2)(b) of

the

Act provide

that

for a

registered chari ty to be

ent i t led

to retain i t s registered

s tatus t

is

required to comply

with

the requirements of

the

Act relat ing to i t s

regis t rat ion as

such. I f

a regis tered

chari ty ceases to

comply

with

these

requirements,

the

Minister may give notice to

the

charity

tha t he

proposes to revoke i t s regist rat ion.

OFFICIAL

DONATION

RECEIPTS

The law

provides various requirements in respect of

official

donation

receipts issued

by

registered

chari t ies . These

requirements are

described

in

some

detai l

in

Interpretation

Bullet in IT-110R2 ~ n t i t l e

Deductible-Gifts

and

Official

Donation

Receipts

a

copy

of

which

has

been enclosed for your review. Official donation receipts shal l be

issued

only

in

respect of

gif ts and

donations

(Regulation 3500). A

gi f t

or donation can

only be

considered to have been

made when

a l l three

of

the

following

conditions have been met:

1)

property was transferred;

2) the t ransfer was

voluntary; and,

3)

the

t ransfer

was made without

expectation

of return.

The Spring

1994

publication ent i t led News Update states that Partners in

Action

members

receive benefits

in

connection with access

to

the

computerized

bul le t in

board

enti t led

Alternative

BBS

the

100

sign

up

fee is waived and members are given a

free

one-year

subscription which

costs 79 to the public. Where a donor receives from a

chari ty

something

of

more than nominal

value

as an inducement for making a

contribution, no

offic ia l

receipt

may

be issued. This

is

so even i f the

amount

of

the contribution exceeds the value of the inducement.


10/20

- 10 -

Paragraph

168(l)(d) of the Act provides

that where

a registered

charity

issues an off ic ia l donation receipt for a gi f t or donation otherwise

than in accordance with the

Act

and

Regulations

or issues a receipt

that

contains

false

information,

the

Minister

may give

notice to the

registered charity that he

proposes

to revoke i t s

registration.

CONCLUSION

The consequences to a registered charity of losing i t s

registrat ion

include:

1.

the

loss

of i t s tax exempt

status

as a registered charity

which

means tha t the

Charity

would become a taxable enti ty under Part I

of the Income Tax Act unless, in the opinion of the Director of

the applicable Dist r ic t Taxation Office,

i t

qualif ies as a

non-profi t

organization as described under paragraph 149(1)(1) of

the Act;

2. loss of the

r ight

to issue official

donation

receipts for income

tax

purposes which means that

gif ts

made to the Charity would

not

be allowable as.a

tax

credit to individual donors as provided by

subsection

118.1(3)

of the

Act

or as a

deduction allowable

to

corporate donors under paragraph l lO.l l ) a) of the

Act;

and

3. the

possibi l i ty of

tax

exigible under Part V

subsection

188(1)

of

the Act.

For your

reference,

we

enclose

a copy

of Information

Circular No. 80-lOR

ent i t led Registered

Charities Operating

Registered Charity and we

bring to

your attention

Appendices

C and D which

describe

the provisions

of

the

Income Tax

Act

concerning

revocation

of

registration,

the

tax

applicable

to revoked

chari t ies

and the appeal provisions from the

Minister s issuance

of a notice of intention to revoke a registered

chari ty s registrat ion.

I f you

do not agree

with

the

above,

or i f

you

wish to present your

reasons as

to

why the Minister

of

National Revenue should not revoke the

regis t ra t ion of the Charity in accordance

with

subsection 168(2) of the

Act, you are invited to submit your representations to us within s ixty

days from

the date

of this le t ter . Subsequent to this date,

the

Director,

Charities

Division,

will

decide

whether

or not

to

proceed

with

the

issuance

of a notice of

intention

to

revoke

the

registrat ion

of the

Charity in the manner described in

subsection

168(1) of the

Act.

I f you appoint

a

third

party

to

represent

you

in this

matter,

please

notify

us in

writing.

Ye attach as Appendix A our

response

to your queries respecting proposed

act iv i t ies for the future. However our review of

the

Charity s current

operations give us reason to believe that i t does not

qualify for

continued

registered status.


11/20

- 11 -

I f you have any questions on

these

matters please

telephone

me at

r J Shelvock

a t

I . or write to 400 Cumberland

Street

Room 5004C, Ottawa

Ontario

KlA OL8

Yours sincerely

/Jd de

Richard Labelle

CGA

Assistant

Director

Audit

Section

Charities Division

Enclosures:

IC

80-lOR

IC

87-1

IT

110R2

Undertaking


12/20

Revenue Revenu

Canada Canada

BY REGISTERED MAIL

Greenpeace Canada Charitable Foundation

185

Spadina

Avenue

Toronto,

Ontario

MST

C6

Attention: Ms.

Jeanne

Moffat

DE

Dear Ms.

Moffat:

RE:

GREENFEACE

CANADA

CHARITABLE FOUNDATION

Your file Vot ' rel6 'nce

Sl

z

Nolte

relefflff tl

Tel:

(613) 954-1362

I

refer

to

the Department's

l e t te r

of

August

16,

1994, copy attached,

requesting

your representation$

as

to why the Minister of National

Revenue

should

not revoke

the regis t ra t ion

of

Greenpeace Canada

Charitable Foundation

( the

Charity )

in accordance with

subsect ion

168(2) of

the

Income

Tax ct

( the Act ).

We

have reviewed representations

made

on

your beha l iby Chan Co. in

~ h i r

l e t t e r s

dated November

29,

1994

and

March

27,

1995,

as

well

as

representat ions made to our auditor when she

attended

a t your

accountant 's office. on

August

24 and

25, 1995 to

review addit ional

documentation submitted

by

you

(including

the

Chari ty 's

1994

act iv i t ies . We

also refer to a meeting held a t your request on

October

10, 1995 a t our office and

attended

by Mr. John Doherty, Mr. Chris Chan,

Mr.

Arthur Drache and

yoursel f on behalf of the Charity.

We must

advise tha t

the

submissions did

not al levia te our

concerns.

As

a resul t , we have determined tha t the Charity does not sa t i s fy the

def ini t ion of a chari table organization in accordance with

subsection

149.1(1),

has fa i led to

meet the prerequisi te of

subsection 149.1(6.2),

has fa i led to

meet i t s disbursement

quota in accordance

with the

requirements

of

paragraph 149.1(2)(b)

of

the

ct

and

has

issued

off ic ia l

donation receipts which are not in compliance with

Part

XXXV

of the

Regulations to

the

Act.

Canada


13/20

CHARITABLE ACTIVITIES

Greenlink

In your November

29,

1994 l e t t e r you s ta te tha t

the

publication of the

newsletter

is

one

of the

functions

of

the Information

Office

and

as such

i s not

in and of

i t s e l f

the

only chari table act iv i ty of the

Chari table

Foundation . Your l e t t e r also refers

to

a number of educat ional and

research ac t iv i t i es conducted

by

the Information

Office. You

have

attached

a l i s t of

meetings organized

d ~ r i n g 1993

and

1994 by the

Charity,

but s ta te tha t no writ ten formal documents

or

speeches are

avai lable.

Your representations

do not

convince

us that the described ac t iv i t i es

under Information Office were conducted by

the Charity

and, even i f

such

should

be the

case, the resources

devoted

to

ac t iv i t i es other

than

the

newslet ter

are minimal.

The

predominant act iv i ty of the Information

Office i s the publicat ion

of

the newsletter: Greenlink and the French

Reseau

Vert

As s ta ted in our

attached

l e t t e r

the courts

consider tha t simply

providing

se lected

information and opinions on a

subject

i s

not .

educational

in the

chari table

sense. A regis te red char i ty i s permit ted

to

publ ish

a

newslet ter , but

since

th is

i s

not

an

act iv i ty which i s

chari table in and of i t s e l f

i t .must

be clear ly anci l la ry and incidental

to

the

organizat ion 's

s t r i c t ly

chari table purposes

and

ac t iv i t i es .

The

newslet ter

does

not refer to ac t iv i t i es of the

Charity

i t s e l f .

A

careful

perusal

of the

newsletter indicates tha t the content

i s general

information

on

the ac t iv i t i es of Greenpeace Canada. You make reference

.to a circula t ion

of

the

publication

of each issue of

between 150,000

and

200,000.

However, the

publication

advert ises tha t the

newslet ter

i s

offered

to

members of Greenpeace Canada who pay a membership fee to

Greenpeace Canada of $30 per

year.

You s ta te tha t the Information Office was star ted by

the

Charity in

May 1993. However, the

Charity's

l e t te r

of

November

12,

1993

to the

Department refers

to the

Information

Office and

newslet ter as proposed

ac t iv i t i es

nor did

the

Charity s ta te tha t th is

was

one of i t s

ac t iv i t i es

during

the audit

conducted in May 1994.

We make-the

following addit ional comments:

The

predominant act iv i ty of the

Information Office is

the

publicat ion of

the newsletter; the

resources

devoted

to

th is

ac t iv i ty

in 1993 and

1994 as

a

percentage of to ta l

c h ~ r i t b l e

expenditures

(as

indicated

on the T3010

Charity

Information

Returns) were

100 and 78

respect ively. In addi t ion, the

Charity

was

al located 65

($70,643) of Greenpeace Canada's

newslet ter

costs in

1992.

You

have

also indicated

tha t the Information Office commenced in

May 1993. However,

expenditures

charged to the Charity for the

cost

of

newsletters

commenced in 1992.


14/20


15/20

The

documentation submitted

on

the

Antarctica World Park does not

make reference to the

Charity.

In fact , the

documentation

refers

in teres ted par t ies to

contact the Greenpeace

Antarctica

Campaign

in

the following

countries: Greenpeace

USA Greenpeace

International ,

and

Greenpeace

New

Zealand.

The

Charity did

not

maintain

any minutes of board meetings

pr ior

to January, 1993;

reference

to the Charity is

found in

the

minutes of

Greenpeace

Canada.

Absent from

the

minutes

is reference to the act iv i t ies in

Antarctica.

You

have referred to weekly campaign

reports

from Greenpeace

Internat ional on

the Antarctica

Campaign. These reports are

to

Everyone and appear

to

be e-mailed to a l l Greenpeace

offices.

You

have

s ta ted

tha t the

February 11,

1991 facsimile

from

Mr. Brian I l e r of

the

Charity to Greenpeace

Internat ional

i s only

a

formal confirmation to the verbal agreements

made

in 1990

.

. However, the e v i d ~ n e indicates that the agreement made in 1990

was

for the

Charity

to receive future proposals from

Greenpeace

International ,

ra ther than

to approve

specif ic ac t iv i t i es

There are i n o n s i s t e n ~ i e s in the reports

from Greenpeace

Internat ional

tha t

the Charity provided as

evidence

tha t t

di rected

the.use of i t s funds in the

Antarctica

campaign:

The Charity claimed

to

have disbursed the sum of $700,000

during

1990 on the

Antarctica

campaign on

i t s

199 T3 1 Charicy

Informaciop Recurn

At

the

Department's

request,

Greenpeace

Internat ional

submitted

on June 1, 1994, confirmation tha t the Charity contributed

$350,000 for expenses

incurred

on i t s behalf during

1990.

You

subsequently provided

confirmation from Greenpeace

International , ~ x e d to the Charity on November 29,

1994,

tha t

the Charity contributed

$1,400,000 to

the Antarct ica

Campaign;

$700,000

for 1990, and

$350,000

for each of 1991

and

1992.

We

do

not accept th is subsequent confirmation

as

evidence

tha t

the funds were

actual ly

applied to ac t iv i t i es carried on

by

the Charity i t s e l f

The supporting reports

provided

do not show

tha t

the

Charity

di rected

or

control led

the

expenditure

of

funds,

nor was a

separate accounting provided as

required

under the

agency

agreement.

The evidence shows tha t any funds advanced to

Greenpeace

International by the

Charity

were made on the understanding that

Greenpeace Internat ional would

re turn

these

funds

to Greenpeace

Canada.


16/20

- 5 -

As discussed with you,

the

l e t t e r

of

April 8, 1991 from Greenpeace

International to Mr.

Brian

I ler and

the

March 31,

1992

memo to

Ms. Vicki

Slemin

show that the

Charity's

1991 payment

of

$700,000

(which is reported in the

Charity's

records as an

expenditure in

1990)

was

l inked to

a

payment

back

from

Greenpeace

Internat ional

to

Greenpeace

Canada

and

that Greenpeace

Canada

would use

a

subs tant ia l

portion of

th is payment ($500,000) to reduce i t s loan

payable to the Charity.

You

have

submitted tha t the 1991 and 1992 t ransact ions between

Greenpeace Canada and Greenpeace Internat ional are

in the

ordinary course of non-profi t act iv i t ies car r ied out by

Greenpeace

Canada and

these

are

completely

different

t ransact ions from

pledges

to Greenpeace

International

by the

Charity.

The fac t

remains tha t the Charity

did

not pay any amounts

to

Greenpeace

International

under

the agency agreement;

the

funds were paid

direc t ly to Greenpeace Canada.

Use

of Resources

by Non-Qualified Donees

We bel ieve the facts cumulatively show tha t the Charity was allowing the

majority

of

i t s resources to

be

used by

Greenpeace

Canada. We do not

accept

the

repor t ing of the loan

as

unsecured

and non-interest

bearing

as

a

c le r i ca l

error . The f inancial

statements were

audited and

reviewed.

These

actions

are

in direct

contravention

of

the

undertaking

provided to the

Department

on regis t ra t ion tha t the Charity

would

not

allow i t s

resources

to be used by a

non-qualified

donee.

The

records show tha t the loan has been increasing yearly, repayment

schedules have not

been

adhered to, and the in teres t for 1992 and 1993

was accrued, but not paid, only subsequent to our August 16, 1994

l e t t e r .

The working papers show tha t the

loan

increased, during 1994 from a

January

1,

1994 balance

of

$830,074 to

a balance

owing

on

December 31, 1994

of

$1,324,670.

In

addition, the loan agreement

subsequently

provided,

executed on August 25, 1995, shows that as

of

tha t

date,

the

Charity had

not

received any

payments on

the

loan

during

1995 and tha t the f i r s t payment

is not due unt i l

December

31,

1995. The

loan receivable represents

85 of

the Charity's

to ta l resources.

We do not consider

the

mailing

l i s t

to be tangible securi ty for the

loan: there has been no valuation on the loan and the original mailing

l i s t purchased by Greenpeace Canada from the

Charity

has been writ ten

off the

books.

You

indicated

during

our

attendance in Toronto on August

25,

1995,

tha t the

$800,000

loan

between Greenpeace n t e r n a t ~ o n a l

and

Greenpeace Canada, which

also pledged

the

mailing

l i s t

as securi ty ,

did

not actua l ly occur. However, our review

of

the minutes of October 1-3,

1993 of Greenpeace Canada sta te that the

loan

from Greenpeace

In terna t ional has been

secured and

t ransferred.


17/20

6

During your

at tendance a t

our of f i ce

on

October 10,

1995,

you s ta ted

tha t

the loan

had

now been reduced

by

$125,000 on p r i n c i p a l and $94,000

on

i n t e r e s t .

e are unable to accept th i s payment,

which

still leaves

an

unpaid balance

o f $1,105,670,

as

an

acceptable

so lu t ion

to our

concerns .

In add i t ion ,

we

bel ieve t ha t

the

loan

balance

should

be

inc reased

by an add i t i ona l

$500,000, plus accrued i n t e r e s t ,

which

amounts r ep r esen t

the

c i r cu l a t i on

of

funds

from

t he

Chari ty ,

to

Greenpeace In t e rna t iona l ,

to

Greenpeace

Canada,

and

back

to the

Char i ty

in

1991.

In our view,

the

Char i ty has been

plac ing

i t s as se t s

a t r i s k

by

advancing funds

to

Greenpeace

Canada

in

a

non-arm's

l eng th arrangement.

As a

r e s u l t ,

we bel i eve

t h a t the

Chari ty has

f a i l ed

to

devote

a l l i t s

resources

to .cha r i t ab l e

a c t i v i t i e s ,

and the re fo re does no t meet

the

d e f i n i t i o n o f a cha r i t ab l e

organiza t ion

pursuant to subsec t ion 149.1(1)

o f

the e

Paragraph 168( l ) (b) of the c t provides tha t for a

r eg i s t e r ed

char i ty to

be

e n t i t l e d

to

r e ta in

its r eg i s t e r ed s t a tu s , it

i s

r equi red to comply

with the

requi rements o f

the

c t r e l a t i ng

to

i t s

r e g i s t r a t i o n

as such.

f a r eg i s te r ed char i ty

ceases

to

comply

with these requi rements , the

Minis ter

may

give not i ce to the

char i ty t ha t he

proposes to revoke

i t s

r e g i s t r a t i o n .

POLITICAL ACTIVITIES

You

make

re fe rence to

Appendix

B

of

Information

Circular 87- l

t i t l e d

Regi s t ered Char i t i es nc i l lary nd

Inc identa l

Pol i t i c a l c t i v i t i e s

which r e f e r s

to

a cha r i t y t ha t asks people

to

p ress for s t r i c t e r

l e g i s l a t i v e

s tandards fo r environmental protec t ion and th i s

ac t iv i ty

i s

deemed

as

subordinate to

i t s char i t ab le ac t iv i ty . Please

note

t ha t

a l though

t h i s c ~ i v i t y i s allowed,

it

i s

sub jec t

to the

es t ab l i shed

expendi ture

l imi t a t i ons .

e

have determined t ha t

the

Char i t y ' s

re sources devoted

to

p o l i t i c a l a c t i v i t i e s are

in

excess o f

anc i l l a ry

and

i nc iden ta l

a c t i v i t i e s .

e remain

o f

the

view

t h a t

the

Char i ty ' s p o l i t i c a l c t ~ v ~ t ~ e s

and

r e l a t e d expend i tu res

inc lude i t s

fundrais ing

l e t t e r campaigns and

var ious

a r t i c l e s

in

the

news le t te r .

t

has a lso made i t s

resources

ava i lab le

to

Greenpeace

Canada, an

organizat ion

which

ca r r i e s

ou t

p o l i t i c a l

a c t i v i t i e s .

These

resources inc lude

the

pr inc ipa l amount

of

the loan r ece ivable

and

in te r e s t

foregone

on the debt .

Based

on the

above ana l ys i s , it

appears

t ha t

the

Char i ty

has no t

devoted

s u b s t a n t i a l l y a l l

o f

i t s resources to

char i t ab le

a c t i v i t i e s ,

and

t he r e f o r e

has f a i l ed

to meet

the

prerequi s i t e of

subsec t ion 149.1(6 .2)

o f

the c t


18/20

- 7 -

Once

again,

pursuant to paragraph l68(l)(b) of the Act fa i lure to

comply with the

provisions

of the Act relat ing

to

a

char i ty s

regis t ra t ion may cause

the Minister to

propose

revocation.

DISBURSEMENT QUOTA

As

d ~ s u s s e d above,

we

are unable to accept

your

representations tha t

the

Chari ty

fa i led to

include

chari table expenditures

of 20,157 in

i t s

expenditure on chari table

act iv i t ies

due to a cler ica l e r ror .

Likewise,

the Chari ty has not

provided

us with substant iat ing documentation to

prove tha t

gi f t s of capi ta l

received

by

way of

bequest

or

inheritance

for the years 1989 to

1992

should be removed from i t s disbursement quota

calculat ion.

As

indicated

above,

we

remain

of the

view tha t the Charity

has fa i led to carry

out

char i table

act iv i t ies for the years under audit

(1990

to

1993).

In addit ion,

your

representat ions

for

the

1994

year

indicate

tha t

the Charity

has

incurred an addit ional disbursement quota

short fal l .

As

a resu l t , t

appears

tha t

the

Charity has fa i led to meet the

requirements of paragraph 149.1(2)(b) of the Ace

Paragraphs 168(l)(b)

and 149.1(2)(b)

of the

ce

provide tha t for a

regis te red char i ty to be ent i t led to re ta in i t s

registered

sta tus ,

t

is

required to comply with

the

requirements of the ce re la t ing to

i t s

regis t ra t ion

as

such. I f a registered chari ty ceases to comply

with

these

requirements,

the

Minister may give notice to the char i ty tha t

he

proposes to revoke i t s regis trat ion.

OFFICIAL DONATION RECEIPTS

Yeti s ta te on page 8 of

your

l e t t e r of November 29, 1994, tha t the

inducements

offered

in connection with

access

to the computerized

bul l e t in

board have

no rea l economic benefi t

to

the donor as the

membership is not

t ransferrable and has

no

resale

value.

However,

the

fac t tha t

the

membership is not t ransferrable i s not an

indicat ion of

the fa i r market value of the

inducement,

which the

Charity

puts a t 179

in i t s

advertisements.

Paragraph 168(l)(d) of

the Act

provides

tha t

where a

regis tered

chari ty

issues

an off ic ia l

donation

receipt

for

a

gi f t or donation otherwise

than

in accordance

with the Act

and Regulations, or issues

a

receipt

tha t contains false

information,

the

Minister

may give notice to

the

regis tered

chari ty

tha t he

proposes

to revoke i t s regis t ra t ion.


19/20


20/20

- 9 -

draw

your

at tent ion to

paragraph

149 1) 1) which s ta tes the def ini t ion

of a non-profi t organization

and

subsection

149 12)

which s tates the

f i l ing requirements of

a non-profit organization.

Attachments

c c

Mr.

Arthur

Drache

Yout'S.

t ruly,

R.A. Davis,

CGA

Director

Charit ies Division

Drache, Burke-Robertson Buchmayer

184 Lisgar Street

Ottawa,

Ontario

K P OC

revoked charity status greenpeace_canada_charitable_foundation 16 august 1994

Documents