Canadian charities are politically engaged in the election campaign despite a "chill" from controversial audits targeting the sector by the Canada Revenue Agency, according to a new report.

Imagine Canada, an umbrella organization for the groups, says "despite concerns over political activity audits, charities and non-profits are speaking up on ideas that are critical to Canada's social good."

The organization is encouraging them to be "courageous" in challenging candidates and political parties to engage in public debate — without crossing a partisan line.

"While registered charities are prohibited from engaging in partisan activities at any time, election periods present a special set of issues," reads the report. "As charities try to engage in legitimate public debate about issues that matter to the causes and communities they support, they have to be careful not to cross the line, even if that line is not always a clear one."

The "chill" mentioned in the report is a fear to speak out after the Canada Revenue Agency launched a series of audits in 2012 to track political activity of some charities.

This past January, Dying With Dignity Canada, an organization that advocated for the right to physician-assisted death for terminally ill patients, lost its charitable status. It was the first group to be deregistered since the audits began.

The Conservative government initially budgeted $8 million for the audits, which are expected to scrutinize about 60 groups by 2017.

Audits to silence critics?

Critics have slammed the crackdown as an attempt to silence groups not aligned with the Conservative agenda, including some environmental groups. But the CRA has denied those accusations, insisting it is only upholding rules around partisan activities and charitable donations.

Imagine Canada says in spite of the chill, many charities are speaking out to raise awareness and challenge candidates during the campaign, and it calls them a "beacon" to the rest of the sector.

President and CEO Bruce MacDonald said it's "critically important" for charities to discuss their issues during the election campaign.

"Charities have a very long history of engagement in public policy in this country. You can look at everything from stiffer penalties on drinking and driving to smoking in the workplace, and many of the changes that are now commonplace in today's society actually were driven by charitable organizations bringing information and data and research to the attention of decision-makers," he told CBC News.

The Imagine Canada report also outlines how politically charged incidents can arise during election periods.

"Political parties themselves may unwittingly put charities in difficult positions by, for example, wanting to announce a new policy proposal at a charity's premises or with charity leaders alongside them," the report reads.

A controversy around one high-profile charity erupted on the campaign trail last month after federal Industry Minister James Moore, who is not seeking re-election, announced $35 million in federal funds to match donations raised during this year's Terry Fox Run.

In that case, no one from the charitable foundation or family was present at the event, but Conservative Leader Stephen Harper came under fire for exploiting the legacy of a Canadian hero to score political points.

Harper said the campaign pledge was simply honouring an earlier request made by the Terry Fox Foundation, but the Conservatives backtracked on Moore's claim that the Fox family had supported the funding announcement.

Calls for parties to adopt policies

The Imagine Canada report lists a broad range of charities that are calling for parties to adopt policies, from eliminating barriers for disabled Canadians to regulating tobacco and improving mental health, youth employment and food policy.

The report comes as the collapsing price of oil could have a major impact on charitable giving by corporations and individuals.

MacDonald said the shortfall could be offset nationally by boosts in other sectors such as manufacturing, but regions like Alberta are bracing for a potential blow as oil companies may be forced to slow or halt future contributions.

"Certainly in Alberta it could be quite significant," he said. "If you have companies who are laying off employees, then the ripple effect from some of the major producers where supplementary industries that support the oil industry are also being affected, you see that the cascade effect could be quite significant."

Suncor Energy could not speculate on how the slump could affect future donations, but said it will deliver on its existing promises.

"We will honour all existing, committed, community partnerships and continue to look for a variety of other opportunities to remain engaged in and support communities," spokeswoman Nicole Fisher said.

"The Suncor Energy Foundation has prepared for tough times and has a reserve fund in place to ensure we can honour our commitments."