A joint fundraising campaign by a sex-ed advocacy group and a fringe Ontario party appears to be taking advantage of the substantial tax credit on political donations to build a war chest for possible legal battles ahead.

The arrangement is legal, experts and Elections Ontario say, but it raises questions about how elections finance laws can be used to channel money to advocacy organizations.

A group called Parents As First Educators — which staunchly opposed the introduction of a modernized sexual education curriculum by the previous Liberal government in 2015 — recently sent out an email blast to members soliciting donations. PAFE is headed up Tanya Granic Allen, a one-time Progressive Conservative leadership candidate who became the face of the movement against the updated sex-ed syllabus.

In its message, the group says its "opponents" are raising money online "to help cover their legal costs" before advising members that they can instead donate to the Stop the New Sex-Ed Agenda Party, a little-known political party registered in 2016 by Queenie Yu, herself a vocal critic of the modernized sex-ed curriculum. Yu is also a leader of PAFE.

"You can take advantage of a generous political tax credit by donating to Stop the New Sex-Ed Agenda. A contribution of $400 will only cost you about $100," the email said, a reference to the 75 per cent rebate offered on the first $400 of a political contribution in Canada.

Ryerson University political scientist Myer Siemiatycki says this type of fundraising exploits the fundamental purpose of political donations, which is ostensibly to help parties field candidates in elections.

The email from Tanya Granic Allen's Parents As First Educators account said: 'It is clear that the Ford government is under immense pressure from the NDP and radical activists to back down on its promise to repeal the Wynne/Horwath sex-ed. We must act now!' (Parents As First Educators)

"There is a question of if this is consistent and compatible with the spirit of why we have tax-deductible donations to political parties," he says.

"It really could lead to a proliferation of this funnelling of donations to lobbying and advocacy groups through political parties."

While PAFE and the Stop the New Sex-ed Agenda Party are connected by their top leadership, the exact details of the fundraising effort are not clear. Granic Allen did not respond to a request for comment. CBC Toronto spoke briefly with Yu, however did not hear back from her before publication of this article.

'It's not surprising'

It's not an especially common practice, but a similar approach has been used on the federal stage. Duff Conacher, co-founder of Democracy Watch and an adjunct professor at the University of Ottawa, points to the example of the group Environment Voters and its political entity, the Animal Protection Party of Canada (APPC).

Members of Environment Voters — an organization of like-minded animal activists — registered the APPC in 2005, partly in response to limits on third-party spending that were upheld by a Supreme Court of Canada ruling a year earlier.

"Parties can use money they raise for pretty much anything — in between elections," Conacher explains, so the funds generated could be used for various causes once campaign season ended.

As the thinking goes, the tax incentive for political donations results in donors giving more than they would to an advocacy group, or even to a registered charity, which offers just a 17 per cent tax deduction.

"It's not surprising to see a group play that game and say, 'OK, if parties get that favour, then we'll just align with, or set up, a party to get that benefit and raise more money for our cause," Conacher said.

"It's surprising, in a way, that it hasn't happened more."

The fact any such murky arrangement is possible at all is symptomatic of a regime that puts little emphasis on transparency around political fundraising, Conacher said. Parties are able to keep reporting on money spend outside of election seasons fairly vague.

"There should be much more detail required to be disclosed by political parties of what they're doing with the money they raise in between elections," he adds.

Ethical questions

In an email to CBC Toronto, Elections Ontario made clear that the joint fundraising effort by PAFE and Stop the New Sex-Ed Agenda does not contravene any current rules.

"There is nothing in the Election Finances Act that prohibits Parents As First Educators from asking their supporters to directly contribute to Stop The New Sex-Ed Agenda, or making them aware of the tax credits available through doing so," an agency spokesperson wrote.

The Stop the New Sex-Ed Agenda Party fielded three candidates in the 2018 provincial election, including Yu herself in Spadina–​Fort York.

Jack Siegel, a Toronto labour lawyer who also serves as counsel for the Ontario Liberal Party, argued that using political party donations for anything other than, for example, paying down the campaign expenses of its candidates, potentially raises ethical concerns.

"Tax credits weren't intended for special interest groups to engage in issue-advertising and advocacy, they were designed to facilitate supporting of candidates in elections," Siegel said.

""But if they're raising money to be applied to any other purpose other than something that is election oriented, then I have a huge problem with it on an ethical level, if not a legal one."

With files from Lucas Powers, Chris Glover