The Canadian Bar Association
Charity and Not-For-Profit

Ukraine eager to explore and learn from Canadian legal standards

Toronto charity lawyer Taras Kulish believes there's a grassroots movement in Ukraine eager to adopt a Canadian-like system of law to fight back against what's perceived by the general population to be widespread corruption, especially in the charities sector.

Kulish, a senior associate with Steinberg Title Hope & Israel LLP, returned from Ukraine in late June after giving a lecture at the Ukrainian Catholic University in Lviv and says his meetings with charities, NGOs, law students, faculty, and lawyers leads him to believe there’s an appetite for change from the ground up.

“I don’t think it could come from the top down,” he tells AdvocateDaily.com. “There is really so much corruption it is epidemic and endemic.

"Certainly, the grassroots want to change the legal system across the board, not just in charity law. They are very interested in how Canada’s laws and processes are structured and I think we have a great deal to offer them in terms of experience and support, especially those of us with connections to Ukraine, the language and the culture.”

Kulish’s lecture in Lviv outlined the legislation affecting charities in Canada such as the Income Tax Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). His message was that charities globally need to be vigilant in who they associate with and how they disburse funds collected from donors as well as how they monitor the progress of their efforts, especially when it’s overseas.

 “I was asked for copies of my presentation and had several follow-up meetings,” Kulish says.

His main thrust was to outline the principles on which Canadian charity laws and regulations are founded such as the “four heads” of charity: poverty relief, educational advancement, religious advancement and other purposes as defined by the courts that benefit the community.

Kulish also explained the role of the Canada Revenue Agency's Charities Directorate in approving, monitoring and auditing charities.

However, a major topic of discussion was how authorities — and charities themselves — must be transparent and vigilant lest they become unwittingly used by terrorist organizations or criminals to divert funds or launder money.

 “Of course, anti-terrorism and fraud factors get people’s interest and unfortunately Ukraine has a reputation that charities are too often used for fraudulent purposes," Kulish says. "There’s also the issue where directors’ compensation is over elevated and, generally, that there aren’t enough checks and balances.”

He said it takes about three days to get charitable status in Ukraine. In the United States, it can take a couple of months because the process is more complex.

However, Kulish says, in Canada, it takes longer still and the rejection rate of applications is much higher.

“In the U.S. the approval rate is reported at 94 per cent most recently, up from 82 per cent in 2010,” he says. "In Canada, only about 46 per cent of applications were registered.”

There are many hurdles ahead and change won’t come easy, in the most part because the entire legal system in Ukraine needs an overhaul, Kulish says, and because the corruption is entrenched and difficult to weed out.

“While there are some people in Canada who wish we were less stringent,” he says, “our system is well based and highly monitored, which is a good thing. And they will revoke charities’ status if they find a breach of the rules in Canada so it’s backed up with enforcement which is critical.”

Kulish says the opportunity to meet face to face with charity sector stakeholders and law students interested in making a difference was inspirational.

“I think there’s a real interest and that Canada can make a big difference by reaching out,” he says. “Now is really the time to engage.”

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