Muslim charities want a tough talk with the CRA

This spring, a meeting was held between leaders of the Muslim philanthropic sector and the Canada Revenue Agency (CRA) to address fundamental questions around the targeting of Muslim-led charities by intrusive audits — ostentatiously, the start of a dialogue to address the tension between the sector and the Charities Directorate that has been building for more than a decade.

Leaders who attended the session organized by the Institute of Islamic Studies at the University of Toronto were hoping to engage in an open and transparent dialogue. They were seeking clarity about why a disproportionate number of Muslim-led charities have been selected for audit by the CRA’s research and analysis division.

They expected their concerns around how the charities were selected and how the audits were conducted to be addressed. They wanted to learn what guidelines the CRA uses to ensure the audit process is transparent and how the CRA ensures its audit decisions and compliance approaches are fair as well as timely, as some audits remained open for more than eight years.

What followed was disappointing. The main meeting featured five panelists and pre-selected questions. No follow-up questions were allowed from the audience. The second meeting was a more focussed session with selected sub-sector leaders and was more open. The meetings were conducted under the Chatham House Rule, meaning off-the-record.

An open dialogue can bring clarity to these questions. It can also provide a platform for better policies and can promote public-sector integrity by focusing on transparency, accountability and fairness.

Those hoping for an open and provocative encounter were left underwhelmed by the depth of the conversation. At the center of these audits is a little-known division (RAD) charged with investigating terrorist financing in the charitable sector. RAD audits trace their roots to reactionary post-9/11 anti-terrorism legislation and policies.

Those audits sent a chill across the Muslim charitable sector for many years. However, they started to get public attention only after the release of two reports that exposed troubling systemic biases.

The first report titled “Under Layered Suspicion: A Review of CRA Audits of Muslim-led Charities,” raised concerns that Muslim-led charities in Canada were being unduly targeted for surveillance, audits and revocation of their charitable status based on a faulty and unsubstantiated national security “risk assessment” approach to the monitoring of terrorism financing. A similar review from the International Civil Liberties Monitoring Group (ICLMG) found at least 75 per cent of the 16 completed audits by RAD targeted Muslim-led charities. This finding was confirmed by Geoff Trueman, assistant commissioner of the legislative policy and regulatory affairs branch at the CRA, during his testimony in the Senate Inquiry about Islamophobia. He confirmed that out of the 14 revocations, 12 charities were Muslim-led.

The actual audits conducted by RAD are 39.

The CRA is less comfortable discussing RAD-administered audits. Instead, they refer to their generic audit process and dismiss the concerns around the RAD audits by claiming that they are a very small fraction of the total audits the directorate conducts annually.

Despite the fact these audits were conducted for over a decade, they gained little public attention or scrutiny. But the testimony of the taxpayers’ ombudsperson, Francois Boileau, before the Senate’s Human Rights Committee shifted that.

Boileau declared that the CRA was obstructing his investigation on the grounds of national security and his lack of jurisdiction. A CRA briefing note Canada’s National Observer obtained through an access-to-information request confirms the findings of Boileau.

Muslim charities fear these audits were just a smokescreen for an undeclared agenda, as they lacked transparency and precision and, most critically, a robust means of legal recourse within CRA audit procedures. At minimum, they helped to cast Muslim lifestyles and activities as inherently foreign or outsider. They also unduly raised suspicions that Canadian Muslim-led charities serve foreign interests.

A recent Senate report on Islamophobia validated those fears. It concluded that “various forms of structural bias appear to be responsible, including bias that casts Muslims as outsiders and a threat to national security, and bias that views valid religious activities as primarily those that are grounded in Christian ideals and practices'.” It further confirmed that “RAD’s work to date – regardless of the intentions of its employees – has demonstrated structural bias against Muslim charities.” More broadly, the report confirmed that “Islamophobia is present in Canadian society and in many of our institutions”.

Canada’s struggle with discrimination and racism, both historical and contemporary, has always been hidden. Systemic Islamophobia within the federal government agencies and regulatory bodies is the result of legislation and directives. These audits are a window into how that plays out in daily exchanges between the government and the governed. As the Senate Report concluded, such “laws, policies and practices continue to systemically disadvantage Muslims” and have “profound and lasting effects on Muslim communities.”

It is important to realize that the future is likely to be shaped by the past unless we purposefully confront that past. This requires government action and not just dialogue.

As a first step, the CRA must take seriously the systemic biases existing within its operations. The federal government must show leadership and commitment to address the troubling findings of the Senate report on Islamophobia, particularly when it comes to recommendations about the CRA audits. Those include a comprehensive review of Canada’s national security framework, and the updating of the National Inherent Risk Assessment using the lens of intersectional Islamophobia, a mandate to bring more transparency to the CRA audit process, including a review of the mandate and functioning of the RAD, and the establishment of an independent civilian body to review decisions of the CRA’s Charities Directorate and provide timely decisions on appeals.

Because of the power imbalance in the relationship between the regulator and the regulated, such integrity is key to maintain any trust in the regulator.

Abdul Nakua is an executive with the Muslim Association of Canada. He served on the board of directors for the Ontario Nonprofit Network, and is a member of the non-profit sector’s Equitable Recovery Collective. He also is a member of the external advisory committee for Statistics Canada’s project on non-profit organizations and their diversity.