By BERNIE BELLAN (September 6, 2024) For several weeks we’ve been writing on this website about the quandary in which JNF Canada now finds itself as a result of the CRA’s announcement on August 10 that it was revoking JNF Canada’s charitable status. What follows is a detailed review of what’s happened since the CRA made that announcement. As a result of that decision JNF Canada has not been able to issue tax receipts for donations – and, in the worst case scenario, could be hit with a penalty amounting to 100% of its assets (which are over $32 million).

Here’s what’s happened: On August 10, the Canada Revenue Agency dropped a bombshell with an announcement in the Canada Gazette that JNF Canada’s charitable status had been revoked.
Not only did the announcement catch JNF Canada by surprise, it came on a Saturday – which JNF Canada regarded as especially hurtful considering it was Shabbat.

What the CRA has done has enormous ramifications, not only for an organization that has had a storied history in the development of Israel, but for many Canadians – Jews and non-Jews alike, when it comes to charitable giving, no organization has had a higher priority than the Jewish National Fund Canada.

As such, prior to publication, we did contact the Canada Revenue Agency to try to get a better idea why it had revoked JNF Canada’s charitable status, asking in an email dated August 29: “What I’ve been trying to understand is whether there is any one key issue that has led to the CRA’s revoking JNF-Canada’s charitable status or is it as a result of many issues?”

Email sent to jewishpostandnews.ca by CRA

The CRA did respond, writing “We can confirm that the charitable status of the Jewish National Fund of Canada Inc. / Fonds National Juif du Canada Inc. (the Organization) is revoked effective August 10, 2024, in accordance with the Income Tax Act (the Act).
 
“As the charitable sector is supported by all Canadian taxpayers, the Canada Revenue Agency (CRA) is committed to increasing the transparency and accountability of charitable organizations by providing relevant information about them to the public, in accordance with the disclosure provisions of the Income Tax Act (the Act).

“For more information, please visit Canada Gazette, Part I, Volume 158, Number 32 and the CRA’s List of charities and certain other qualified donees. Furthermore, under the Act, the CRA can release a copy of the letter(s) it sent to the charity outlining the reasons for its revocation. Please find here a copy of the letters the CRA has sent to the Organization about the reasons for revocation. Any redactions found in the documents are intended to protect confidential taxpayer information as required by the Act.”

JNF CEO Lance Davis questions the CRA’s stance

Also, prior to publication, we invited JNF Canada to respond to the CRA’s decision. On September 5, we received a response from Lance Davis, CEO, JNF Canada (It should be explained that Davis refers extensively to the term “charitable object.” Later in this article there will be a detailed explanation of what that term means and why the CRA maintains JNF Canada deviated from its charitable object.) Here is what Lance Davis wrote:
“The CRA’s confirmation of revocation letter, focusing on JNF Canada’s work in 2011-12  is fundamentally about our founding charitable object, meaning the key purpose of the charity.  If the charitable purpose is not charitable then all of our subsequent work would be problematic.  We disagree and have argued to the CRA that our work for the past five decades is indeed charitable. 
“Secondly, if after more than fifty years, CRA changes its opinion about an object that it accepted in 1967, then a simple solution would have been to work with JNF to identify a new charitable object and ensure its compliance.  JNF Canada submitted ten potential charitable objects to the CRA and they ignored these suggestions.  We called upon the CRA more than 10 times to help us resolve this dispute and these requests were not answered.  Interestingly, representatives of the CRA did accept meetings with organizations calling for the revocation of our charitable status, but not JNF. 
“The CRA did address two recent projects, meaning they were realized long after the time frame of the audit.  They identified two rather small administrative issues.  We do our work in Hebrew and submitted some documentation in Hebrew which is not illegal.  However, we should have translated it before we shared it.  We are involved with two psychiatric hospitals in Jerusalem and there was an error in the documentation provided, which we acknowledge.  It was human error.  It could have been solved with a simple phone call or email asking for clarification.  If this is an issue worthy of inclusion in the letter of revocation, it certainly is a draconian response.  The projects in question were built properly.  The receipts for the work were submitted.  We have professionals on the ground checking the work.  One simply has to look at the photos of the before and after to see that that we realized important charitable social service projects assisting Israel’s most vulnerable populations: those suffering from the most severe mental illnesses and special needs children.”
 

In order to understand the significance of the CRA decision one need only consider some aspects of how much JNF Canada has contributed to Israel since its inception in 1968 (when it was created as a wholly separate entity from the Keren Kayemet Le’Yisrael (Jewish National Fund).
In the years since its creation JNF has funded over $200 million for more than 180 projects in Israel and has planted over 2 million trees. As of 2022 JNF Canada had almost $32 million in assets in Canada.
Now, with the decision to revoke its charitable status, while JNF has assured its supporters that it will carry on even if it is no longer able to issue charitable receipts, the danger is that it will be forced to pay a penalty amounting to 100% of all its assets in a year’s time from the date of revocation.

In the days that followed the decision to revoke JNF Canada’s charitable status – and ever since, for that matter, there has been much confusion as to what led the CRA to take such drastic action.
The CRA cited a number of reasons for the decision to revoke, including that JNF Canada failed “to be constituted for exclusively charitable purposes;” was engaged in activities that are not in furtherance of charitable purposes;” was not exercising “direction and control over the activities undertaken in Israel and thus not devoting its resources to its own charitable activities;” provided “funds to non-qualified donees;” and failed to have “insufficient documentation to substantiate the activities undertaken in Israel and its failure to keep information in such form that would enable the Minister to determine whether there are grounds for the revocation of its registration.”

On August 14, we reported on the JNF’s response to the CRA’s shocking announcement by running a story on jewishpostandnews.ca that was first published on a website known as Algemeiner. That story noted JNF Canada’s response to the CRA’s decision to revoke its charitable status: The “CRA usually takes certain measures, like negotiating compliance agreements or invoking sanctions, before drastically revoking an organization’s charitable status,’ JNF Canada said. ” But, in its dealing with JNF Canada, the CRA ‘not only skipped steps 1-3, it also refused to enter into a dialogue with us and to entertain our suggestions of new objects for our charity or to discuss a compliance agreement,’ the Jewish group said. ‘We maintain that the CRA erred both in fact and in law and that the process was flawed and unfair, which is why we have ended up in court.’
The story went on to say that “JNF Canada also maintains that it has addressed CRA’s concerns about its work with KKL by taking steps such as reducing the number of its projects with the group and engaging in a compliant agreement with the Israeli charity.
“ ‘KKL works for JNF Canada, just like any other agent that we utilize. JNF Canada selects the projects we wish to support and we always have direction and control over all of the funds as we reimburse expenses upon receipt of valid expense reports. In short, we have addressed the CRA’s concerns.’ ”

The CJN criticizes JNF Canada
Also on August 14 the Canadian Jewish News released a podcast with well-known journalist Ellin Bessner in which Bessner examined in great detail the charges laid by the CRA that had led to its revoking JNF Canada’s charitable status. For part of the podcast Bessner also interviewed lawyer Mark Blumberg, who specializes in charity law. (We have been in touch with Blumberg several times since, asking him about the CRA’s decision. At the end of this story you can read a very interesting comment by Blumberg about the suggestion that politicians should intervene in this situation to reverse CRA’s decision.)
During her podcast Bessner was critical of JNF Canada and, in an article subsequently published by the CJN many of those criticisms were repeated in print, including:
“Canada Revenue Agency (CRA) warned JNF Canada in 2019 it planned to take away its charitable status and then warned them again in 2023 and in 2024, due to ‘repeated and serious non-compliance’ with the Income tax Act rules governing charities, particularly covering JNF Canada’s work in Israel.
The article went on to say that “Documents recently released to The CJN by the CRA show the venerable Canadian Jewish charity–that has helped reforest and build infrastructure in Israel since the late 1960s—had been warned repeatedly to clean up its act between 2016 and 2023, and even earlier. 
“ ‘The CRA letter dated Aug. 21, 1989, raised concerns about the [JNF Canada’s] direction and control, and maintenance of books and records,’ according to the CRA documents. ‘The major concerns about the Organization’s activities overseas have been present since the first audit.’
To clarify, the CRA began auditing JNF Canada in 2011 and sent letters to JNF Canada in 2016 and 2018. The CRA began issuing warnings to JNF Canada beginning in 2019 that JNF Canada’s charitable status could be revoked.
The CRA released 358 pages of documents to Bessner and we were able ourselves to see those documents. In fairness to JNF Canada, many of the documents are simply repetitions of other documents. The gist of the CRA’s complaint with JNF Canada is that it had not been in compliance with regulations in the Income Tax Act that govern the behaviour of charities, nor had it taken proper steps to correct its behaviour even though it has been given repeated warnings for many years.

JNF Canada’s “charitable object” comes in for close scrutiny
One particularly interesting aspect of the CRA’s criticisms of JNF Canada had to do with what is known as JNF Canada’s “charitable object.” Every charity, in order to be allowed to issue tax receipts, has to have a “charitable object” that would have to have some sort of humanitarian purpose.
Now, in order to understand something about the JNF’s charitable object you have to go back to the inception of JNF Canada in 1968. Until that point there was no such thing as JNF Canada. There was only what was known as “Keren Kayemeth Le’Yisrael,” which is how many of us knew of the organization. When JNF Canada was created in 1968, it declared that its “charitable object” – you may be surprised to learn, was “the relief of poverty” – by employing “indigent workers” to plant trees and prepare parks.
It may be a digression, but in looking at the 358 pages of documents that CRA had sent to JNF Canada, I was surprised to see the extent to which CRA examined in minute detail how much those “indigent workers” were paid. CRA concluded that, based on Israel’s minimum wage for the periods which were examined, workers were overpaid quite a bit for the work they did. (We cite that only to show how far CRA went in examining JNF Canada records.)
In other instances, CRA complained that there was an insufficient paper trail for projects undertaken by JNF Canada in Israel or, as was noted in one particular instance, receipts and invoices were submitted to CRA in Hebrew. As well, CRA noted JNF provided documentation for the wrong project when it was asked to provide documentation for a particular project.
JNF Canada responded strongly – both to the reasons CRA cited in revoking JNF Canada’s charitable status, and the manner in which Ellin Bessner reported on the CRA decision – claiming that Bessner had not gone to JNF Canada for a response to CRA’s criticisms before publishing a piece that cited CRA criticisms of JNF Canada.

JNF Canada responds to the CJN story
JNF Canada published a response to the CJN story on its website, saying in part:
“Although JNF was in regular contact with the CJN reporting team prior to the publication of the article on the history of our relationship with the CRA, we were never asked for our views on critical issues raised in the article. Furthermore, the behaviour of the CRA or their findings, are never questioned or criticized. Rather, it assumes that the CRA is righteous and just, and JNF is the guilty party.

“Not surprisingly, this leaves the readers with a one-sided and unbalanced impression. 

“A few issues raised
“Due to human error, we provided the CRA with documentation on the wrong psychiatric hospital project. We annually oversee funding for multiple projects and at the time, we were supporting two psychiatric facilities in Jerusalem. A phone call would have quickly resolved the matter.
“Hebrew is the language of work in Israel, the language in which we receive 100s of documents, and a language our leadership can read and work in. While there is no law that requires documentation to be submitted to CRA in English or French, we should have translated certain documents to make it easier for the CRA to review. Again, a phone call would have resolved the matter quickly.

“And still, these are periphery issues in the matter of our revocation. The CRA revoked our charitable status without a fair process even though we have addressed their principal concerns. Fundamentally, CRA is questioning our charitable objects and therefore our charitable activities in support of the people of Israel.” (emphasis mine)

Added to the entire issue is the concern which many supporters of JNF have expressed that CRA has acted in response to demands from vehemently anti-Israel groups, such as Independent Jewish Voices, to cancel JNF Canada’s charitable status. Those anti-Israel groups had long voiced criticisms that JNF Canada was providing support for projects operating over the “green line,”i.e., in the “occupied territories,” and on Israel Defence Forces bases.
JNF Canada claims that it fully responded to those allegations but that it never heard back from CRA with regard to its responses.

Finally, in the same post on its website in which it provides a vigorous defence against the criticism levelled against it by CRA, JNF Canada now notes that it is appealing the CRA decision before the Federal Court of Canada (in two separate cases).
JNF Canada also says “that we are calling on our elected representatives to take responsibility. To date, Liberal MPs have situated the actions of CRA as a bureaucratic response to JNF ‘s charitable objects because of audits undertaken in 2014. If elected officials are arguing that unelected bureaucrats have been delegated the authority to make a decision of this magnitude, that was a mistake.  The Government should take responsibility.  The Minister of National Revenue and the Government of Canada should put the revocation of our charitable status on hold until the courts have ruled, as is customary in situations like ours (based on our lawyer’s review of over 200 cases).”

Can the government intervene?

We have been in touch with various elected representatives to gage their reaction to what has happened. As one might well understand, this is an extremely sensitive matter. The entire aspect of political involvement in as consequential a bureaucratic matter as the CRA’s decision to revoke the charitable status of as important a charity as JNF Canada has huge ramifications.
But, as lawyer Mark Blumberg advised us in an email, with reference to the Minister of Revenue’s intervening in a decision taken by CRA, “This is from the CRA’s website with my underlining:
 “The Minister of National Revenue
“The Minister is responsible to Parliament for all CRA activities and exercises powers relating to regulation-making and providing reports to Parliament or the Governor in Council (Cabinet). It is a longstanding practice that the Minister does not direct officials how to interpret the law in individual cases. This practice preserves the Minister’s right to be informed while at the same time protecting the Minister from allegations of political interference in taxpayers’ affairs.”