On September 14, 2017, Bill 154, The Cutting Unnecessary Red Tape Act, 2017 passed first reading. As of October 3, 2017, it continues to be debated as part of second reading. If fully implemented, the bill would bring changes to regulations for charities and not-for-profits in Ontario through a number of modifications to the Charities Accounting Act, an act that applies to all charities operating in Ontario.
Bill 154 proposes to add new social investment provisions to the Charities Accounting Act, allowing trustees to use trust property in order to make social investments. Social investments are defined under the proposed provisions as investments made to directly further the purposes of the trust and also achieve a financial return. The fact that social investment may have other additional results does not prevent it from being regarded as such. The power to make such investments can be restricted or excluded by the terms of the trust.
Trustees who make social investments with trust property will have duties, one of which is the duty to consider whether advice respecting a social investment should be sought and, if so, to obtain and consider the advice. These duties cannot be restricted or excluded by the terms of the trust.
Some concerns have been raised about the social investments proposals and their implementation. Among them is the concern that there is an absence of a clear definition concerning what social investments are and are not, resulting in confusion for charities in deciding on what type of investment to embark. The duty to determine whether or not to seek advice is also an area of uncertainty as Bill 154 provides no clear guidance as to from whom a charity should seek advice..