New guidance on CASL's charitable fundraising exception

Charities and Not-for-Profit Alert

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Our previous post about Canada’s pending anti-spam legislation (CASL) mentioned a key exception for charities: commercial electronic messages that are sent by a registered charity and whose primary purpose is to raise funds for that charity are fully exempt from CASL.

However, there are some questions around that exception’s scope. First, what is required to make a message’s “primary purpose” the raising of funds?

Second, what does CASL mean by “raising funds,” and is that the same as the Canada Revenue Agency’s (CRA) definition of “fundraising”? The CRA’s Fundraising by Charities Guidance Document CG-013 states: “As a general rule, fundraising is any activity that includes a solicitation of present or future donations of cash or gifts in kind, or the sale of goods or services to raise funds, whether explicit or implied.”

It is not clear on CASL’s face whether “raising funds” per CASL is the same as “fundraising” per the CRA definition.

Imagine Canada, a national charitable organization that supports Canadian charities and nonprofits, reports that Industry Canada has provided the following guidance on the fundraising question:

  • Any activity that fits into the CRA “fundraising” definition will be captured by CASL’s “raising funds” exception. So long as an organization is a registered charity, it can send commercial electronic messages whose primary purpose fits into the CRA “fundraising” definition without express or implied consent, and without the content that CASL requires of most commercial electronic messages.
  • Some other activities that do not fit into the CRA “fundraising” definition will also be covered by CASL’s “raising funds” exception. Apparently these include newsletters promoting fundraising events even if they mention (or presumably link to) corporate sponsors, promoting charitable activities with cost-recovery components, and promoting events and ticket sales whose proceeds go directly to the charity (e.g., by performing arts organizations).

However, Imagine Canada later issued another update that reports the CRTC, one of the other entities responsible for regulating CASL, indicates that it interprets CASL’s fundraising exception differently from Industry Canada. Although the CRTC has yet to provide any official guidance, it apparently has indicated that it will be releasing an FAQ about charities in the next few weeks (though presumably after CASL is already in force).

This episode highlights an ongoing problem with CASL’s implementation, namely, a lack of comprehensive guidance on CASL’s many intricacies, combined with ongoing inconsistency in the guidance that has been issued by various regulators.

We will have to wait and see how the CRTC interprets CASL’s charity rules. In the meantime, it seems that charities cannot necessarily rely on Industry Canada’s interpretation as reported by Imagine Canada – although to what extent remains unclear.