Royal Gifts indeed!

Royal Gifts indeed!

In June 2018, the Canadian government re-instated Aga Khan Foundation on an elite list of foreign charities to receive “Royal gifts from Her Majesty”. There is no clear rationale why the Swiss, private foundation of His Highness, the Aga Khan, needs this special status.

The Royal Gifts is a peculiar loop-hole in Canadian charity legislation. It gives the government discretion to add charities without any requirements for transparency and accountability. It hides the amount of money going to foreign charities and from whom. The Royal Gifts rules were tightened in 2012. Apparently, these reforms were undone in 2015. Adding the private Swiss foundation, Aga Khan Foundation, to the Royal Gifts list makes no sense to Charity Intelligence and raises concerns about transparency and accountability.

There is no need for the private Swiss foundation, Aga Khan Foundation, to be a Royal Gift charity. Canadians can already support its work through the separate Canadian charity, Aga Khan Foundation Canada. Aga Khan Foundation Canada is a Canadian registered charity that gives its donors tax receipts for support. Its annual filing shows how much money it received, broken out by donors, foundations, and governments.  

Learn more about Aga Khan Foundation Canada here.

Royal Gifts is a charity category unknown to many donors, yet it is a list worth keeping an eye on. Charities on the Royal Gifts list are a special category of foreign charities. There are only a few, currently three. At the discretion of the government, these foreign charities on the Royal Gifts list can issue Canadian donation receipts.

 

 

The original purpose of the Royal Gifts list was to allow the Canadian government to act quickly in disaster responses or humanitarian crises. Being a Royal Gift charity would allow Canadians to donate to a foreign charity without the delays of registering as a Canadian charity. Being a Royal Gift charity also allows it to receive grants from Canadian foundations.

More recently the purpose of Royal Gift charities may be a favour to friends. Recent Royal Gift charities include the Bill, Hillary & Chelsea Clinton Foundation in 2013 and the William J. Clinton Foundation in 2010.

Here is the list of charities on the Royal Gifts list.

 

Money Go-Round

 

There is no clear rationale why the private Aga Khan Foundation in Switzerland needs this special status. If a Canadian donor wants to support the Aga Khan Foundation in Switzerland and receive a tax receipt, this already happens by donating to the Canadian charity.   

Each year, money transfers between the Canadian Aga Khan Foundation and the Swiss private foundation (see the flow of funds below).  Aga Khan Foundation in Switzerland granted to Aga Khan Foundation Canada $25.3 million in 2017 and $34.1 million in 2016.[i] Similarly, Aga Khan Foundation Canada gave Aga Khan Foundation in Switzerland $46.9 million in 2017 and $56.2 million in 2016.[ii]

As a Royal Gift charity, we will never know how much money it received, how the money is spent, nor the results it achieves. As a private Swiss foundation, financial statements for Aga Khan Foundation (Switzerland) are not available.

This is not a politically partisan issue. Successive Canadian governments have always had close relations with His Highness, the Aga Khan. Over the years, many Canadian governments have given Royal Gift status to Aga Khan Foundation (Switzerland) and the Aga Khan University Foundation, also based in Switzerland.

 

About Gifts From Her Majesty

 

The 2012 Federal Budget tightened the criteria for Royal Gifts. It required that the foreign charity must be doing one of the following:

  1. Carrying on i) relief activities in response to ii) a disaster, with disasters specified as a sudden catastrophic event that causes widespread damage or great loss of life, for example, disaster appeals to support earthquakes and hurricanes.

 

  1. Providing urgent humanitarian aid, the intensity of a crisis is such that the aid is necessary to save lives and alleviate human suffering for events that do not qualify as a disaster e.g. famine, armed conflict, or severe civil unrest.

 

  1. Carrying on activities in the national interest of Canada.

The 2012 reforms stated that Royal Gift charities could not be private foundations or grant-making charities.[i] These reforms were apparently undone in the 2015 Federal Budget. Aga Khan Foundation is both a private foundation[ii] and a grant-making foundation.[iii] 

 

Lack of transparency, accountability too

Charity lawyer Mark Blumberg’s concerns about the Royal Gift list pertain to the lack of transparency on how charities make it on this special list.[iv] 

In addition to the lack of transparency, Charity Intelligence’s concerns are focused also on the lack of accountability about how much money is receipted – and not reported –, how this money is spent, and the results this giving achieves in Canada’s “national interest”.

Charity Intelligence has the greatest respect for His Highness, the Aga Khan, and the work of the many Aga Khan organizations. Such great work should be of the highest standards in transparency and accountability. The Aga Khan Foundation does not need to resort to backdoors for funding.

The Royal Gifts list raises more questions than answers. Royal Gifts should only be used sparingly and for urgent needs when a registered Canadian charity is unable to respond. That’s doesn’t appear to be the case in this situation.

 

 

 Sources:

 

1. Ernst & Young LLP, Aga Khan Foundation Canada audited financial statements 2017, Financial Note 1

2. Aga Khan Foundation Canada T3010 filing Charities Directorate, Programs, Schedule 2 Activities Outside Canada for 2017 and 2016.

3. Charities Directorate Guidance CG-023 Commentary and Criteria June 16, 2016 compared with Summary of recent legislative changes for foreign charities that have received a gift from Her Majesty in effect January 1, 2012 to June 23, 2015.

4. Aga Khan Foundation website

5. Wiki, Aga Khan Foundation 

6. Mark Blumberg, Global Philanthropy, “List of registered charitable organizations that receive a gift from Canada down to two”, November 1, 2018

 

Legal disclaimer:

The information in this report was prepared by Charity Intelligence Canada and its independent analysts from publicly available information. Charity Intelligence and its analysts have made endeavours to ensure that the data in this report is accurate and complete but accepts no liability.

The views and opinions expressed are to inform donors on matters of public interest. Views and opinions are not intended to malign any religion, ethnic group, organization, individual, or anyone or anything. Any dispute arising from your use of this website or viewing the material hereon shall be governed by the laws of the Province of Ontario, without regard to any conflict of law provisions.

 

 


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