Environmentalists are fearful that the Conservative government is planning to limit their advocacy role after Prime Minister Stephen Harper complained that groups flush with "foreign money" are undermining a controversial pipeline review.
Mr. Harper and Natural Resources Minister Joe Oliver stoked activists' fears in recent days by lashing out at environmental groups that have taken money from U.S. donors to build opposition to the $6.6-billion Northern Gateway pipeline that would carry oil-sands bitumen to the British Columbia coast.
The Conservative-dominated Commons finance committee is set to begin a review of the charity sector, and several activists say government MPs have told business groups that the committee will look at the environmental sector's transparency, its advocacy role and the flow of funds from outside the country.
PMO spokesman Andrew MacDougall dismissed as "speculation" the concerns that the government is targeting the environmental sector. He said Ottawa is focused on streamlining the environmental-review process so that groups can't employ delaying tactics, echoing Mr. Oliver's pledge to introduce new rules in the coming months.
James Rajotte, chair of the Commons finance committee, said the study is aimed at finding ways to make Canadians give more to charity.
He acknowledged that MPs are free to raise issues such as accountability of charities – but Mr. Rajotte said he couldn't prejudge where things will go, noting the review hasn't even begun yet.
He said any recommendations the committee makes would affect all charities.
"The whole view that this is a way of taking funding away, that's not it at all," he said. "And you don't make a recommendation as a committee targeting one set of charities; you make a recommendation that would apply to all charities."
But John Bennett, executive director of the Sierra Club of Canada, isn't reassured.
"I'm quite convinced that we're the next on the hit list of this government that doesn't know how to find compromises but only bully people," Mr. Bennett said. "On the charitable status, we could have some significant challenges." He added that he is concerned that the statements the Tories have made are intended to prepare the ground for a crackdown on environmental groups.
An official at a national organization who asked not to be identified for fear of retribution said activists have been told of conversations in which Conservative MPs speak of their eagerness to clip the wings of environmental organizations.
"We've been told that they believe charity should be about churches, schools and hospitals and do not believe that advocacy should be funded by charities," the official said.
Currently, charitable groups are limited in their political activities, with the boundaries established by the Income Tax Act and a Federal Court ruling, as well as the Canada Revenue Agency's interpretation of those two standards.
They can pursue non-partisan political activity that is directly related to their primary charitable objectives and does not account for more than 10 per cent of their overall budget. They can also pursue educational activities so long as they are balanced and informative rather than emotional in nature.
Lawyers that work in the charitable sector say it would be difficult for the government to restrict the activity of the environmental groups without sideswiping others.
"Further restrictions imposed on charities' ability to conduct political activities would not only affect progressive environmental charities but also evangelical churches, pro-Israel lobby groups or angler/hunter organizations," Toronto lawyer Mark Blumberg said.
Still, the Canadian Revenue Agency has delisted charities in the past when it concluded that they had overstepped the bounds between charitable activity and unacceptable political activity.
"Charities engaged in these activities are engaged in a balancing act," said Pamela Cross of the law firm Borden Ladner Gervais in Ottawa.
"Charities which do not pay attention to CRA's assessing practices could find themselves forced to defend their activities in the courts, a costly and lengthy process."