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“Like every contributor to the Foundation, the Clinton Giustra Enterprise Partnership (Canada) is publicly listed as a donor on our website. But as it is a distinct Canadian organization, separate from the Clinton Foundation, its individual donors are not listed on the site. This is hardly an effort on our part to avoid transparency — unlike in the U.S., under Canadian law, all charities are prohibited from disclosing individual donors without prior permission from each donor.”

— Clinton Foundation’s Acting Chief Executive Maura Pally, blog post on foundation’s website, April 26, 2015

Amid heightened scrutiny over the Clinton Foundation’s finances, the organization’s acting chief executive recently released a statement in a blog post acknowledging “mistakes” in filing tax forms. Pally defended a Canadian charity affiliated with the foundation, which had come under fire for not disclosing its individual donors.

Critics say that the Clinton Foundation should voluntarily disclose information about donors to the Canadian charity — the Clinton Giustra Enterprise Partnership (Canada) — as a part of a 2008 agreement between the Obama administration and Hillary Rodham Clinton to publicly disclose donors. Learning about donors to the Canadian charity would reveal whether any may have had business before the State Department when Clinton was secretary of State in President Obama’s first term.

Pally noted in her blog post that the charity, under Canadian law, is prohibited from “disclosing individual donors without prior permission from each donor.” The charity has begun reaching out to its 28 largest donors — out of 1,100 total donors — to seek permission to release their names, our colleagues reported. (For more, read Rosalind S. Helderman’s earlier coverage.)

The Fact Checker does not take a position on whether the donations should be made public. Instead, we examined the layers of Canadian legal requirements for charities to see which laws would apply to the Clinton Giustra Enterprise Partnership (Canada), a.k.a., CGEPartnership. Is Pally’s statement accurate?

The Facts

CGEPartnership raises money for the similarly-named Clinton Giustra Enterprise Partnership, one of the Clinton Foundation’s initiatives. There is no blanket prohibition on charities to ever release donor names. (Hat tip to Mollie Hemingway at The Federalist, who wrote a lengthy examination of whether a blanket federal ban exists.)

Canadian privacy law is quite complex, so we will spare our readers the minutiae.

In general, charities registered with the Canadian federal government are subject to provisions in the Income Tax Act, the federal privacy law, and any provincial laws that may apply.

The Income Tax Act regulates whether the Canada Revenue Agency (equivalent of the Internal Revenue Service) can disclose taxpayer information, including donor information. It does not regulate whether a registered charity can disclose donor information.

The federal privacy law is called the Personal Information Protection and Electronic Documents Act, or PIPEDA. This law requires organizations to get permission from donors if they are releasing their information for a commercial purpose, which is defined as “selling, bartering or leasing of donor, membership or other fundraising lists.” (This is a key point that we will return to momentarily.)

Most non-profits are not subject to the PIPEDA because fundraising is not a commercial activity. But charities are not automatically exempt. The law does not prohibit charities from releasing information for non-commercial purposes.

According to Valerie Lawton, spokeswoman for the Office of the Privacy Commissioner of Canada (the agency that oversees compliance with this law): “If a charity is not engaged in a commercial activity such as selling, bartering or leasing a donor list, then PIPEDA would not apply to the charity’s activities – including whether it makes public a donor list. That being said, there may be other Canadian laws which don’t fall under our jurisdiction that could apply to the publishing of donor lists.”

Those other laws may be on the provincial level. Not all provinces have their own privacy laws, but British Columbia does. And guess where CGEPartnership is domiciled? Vancouver, British Columbia.

British Columbia’s privacy law is stricter than the federal law, though substantially similar. It requires organizations to get donor permission when they collect, use or disclose their personal information. The province does not have a public database that shows which charities are subject to this law, and a spokeswoman for the Office of the Information and Privacy Commissioner for British Columbia could not immediately confirm whether CGEPartnership was subject to provincial law. This law does not apply to federally-regulated organizations already governed by PEPIDA.

It is not entirely clear which law applies to CGEPartnership. The organization did not clarify when we asked. Some experts said it would operate under provincial law because the federal one generally applies to corporations like airports and banks. Others also said it would make sense for CGEPartnership to be regulated by federal law, as it applies to data that cross provincial or national borders and the charity is federally registered.

CGEPartnership’s memo about donor lists says the charity and its directors are “mindful of their obligations” under the federal law. The charity has interpreted the release of donor names as “bartering,” and considers it a “matter of caution and good governance” to take a “wide view of the definition [of bartering], in terms of CGEPartnership’s duty to keep donor information completely private without the consent of the donor or unless compelled by law.”

Adam Aptowitzer, Ottawa-based charity lawyer, said CGEPartnership is taking a “rather shaky” and an “extremely conservative view” of the law: “It is difficult to see how releasing the list would be bartering, given that there seems to be no payment or consideration for the release of the list.”

The memo also says the Board of Directors has a fiduciary responsibility when maintaining its donor list, especially for donors who gave money in confidence. Using donor lists for any reason other than “furtherance of its own current charitable purposes” will constitute a breach of fiduciary duty, it says.

Many charities already get consent from donors to give recognition and have boilerplate language when asking for donations, said Mark Blumberg, Toronto-based charity lawyer. CGEPartnership did not answer The Fact Checker’s request for any consent agreements or policies for donors.

“Many organizations ask, ‘Do you wish to remain anonymous?’ This is pretty common stuff,” Blumberg said.

The Clinton Foundation referred us to CGEPartnership and offered no comment, though officials there were copied on emails. [Update: After this fact check published, CGEPartnership posted a Frequently Asked Questions page for the media and released a legal opinion dated April 29, 2015. The legal opinion, which re-affirmed points in the charity’s earlier memo, is embedded below. The attorneys have now said the provincial law would apply, in addition to the prohibition against “bartering" charitable donor lists under the federal law.]

The Pinocchio Test

The Clinton Foundation said “all charities are prohibited from disclosing individual donors without prior permission from each donor” under Canadian law. It is unclear whether the foundation is referring to federal or provincial law. If it is the later, the statement would be accurate.

However, the charity’s own memo says it is operating under federal obligations and its fiduciary duty for its board of directors. The federal law does not explicitly ban charities from disclosing individual donor names without permission. In fact, it only applies to commercial use of personal information. The public release of donor names for a non-commercial purpose is not prohibited. The charity, however, interprets the release of donor records as “bartering,” which experts have questioned.

The charity’s memo notes that under Canadian law, donors have the right to privacy, and that the board of directors has a fiduciary responsibility to use donors’ personal information for its own charitable purposes. While that may be the case, Pally’s statement implies that there is a blanket Canadian law that bans charities from disclosing donor information without permission. That is not exactly the case.

Three Pinocchios

 


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CGEP Legal Opinion by Michelle Lee