Environmental groups say the government's aggressive pro-industry stance is part of a coordinated strategy to curb opposition to the Northern Gateway. It's a "transparent attempt to divert attention from the real issues" surrounding tar sands development, said Gillian McEachern, deputy campaign director at Environmental Defense Canada. "Climate change is a global issue ... we're working across borders."
Megan Leslie, a member of Parliament who represents the New Democratic Party on matters of environmental policy, said "this issue is not about the fact that U.S. foundations are contributing to environmental groups. It's about silencing the environmental groups." The New Democratic Party holds the second highest number of seats in the federal House of Commons (Canada's main legislative body), which is dominated by Harper's Conservative party.
An Unusual Audit of Charities
In late March or early April, the House of Commons Finance Committee will begin reviewing how Canada's charities spend their money. Brian Jean is a member of that committee.
The government has done spot checks on individual charities in the past, Leslie said, but she couldn't recall a systematic audit of the entire charitable sector. "We're keeping a really close eye on it to make sure it isn't just an attack on environmental groups," she said.
Current regulations prohibit charities from spending more than 10 percent of their budget on advocacy, but the definition of advocacy is "murky" and open to interpretation, said Todd Paglia, executive director of the charity ForestEthics. He fears the committee may use the review to selectively restrict the advocacy of anti-tar sands organizations.
The upcoming review, coupled with the strong rhetoric against environmentalists, is "creating a culture of fear," Paglia said.
"Every nonprofit I talk to in Canada is worried about the next shoe dropping," he said. The government "is looking for ways to stifle dissent, and it's having a pretty serious impact on us."
Much of the debate has revolved around Paglia's organization. ForestEthics was founded in 2000 and has offices in Canada and the United States. The group employs 28 people and its total annual budget is $3 million. In 2011, it spent $1.4 million in Canada on a variety of issues, including clean energy, forest ecosystems and climate change. About 14 percent of that money went to tar sands campaigns.
ForestEthics has a history of working with industry and the Canadian government. In 2006, the group helped broker an internationally acclaimed conservation plan for British Columbia's Great Bear Rainforest, which balanced sustainable development with ecosystem protection.
Like other Canadian environmental groups, ForestEthics is organizing grassroots resistance to Northern Gateway. But what distinguishes ForestEthics is its simultaneous campaign to persuade U.S. companies—the primary consumers of Canada's oil—to turn away from tar sands crude oil. Since 2010, ForestEthics' efforts have led 15 U.S. corporations (including Walgreens) and the city of Bellingham, Wash. to reduce their use of tar sands-derived fuel. Canada's federal and Alberta governments responded by urging people to boycott the products those companies produce.
Paglia believes that its U.S.-based campaign is the real reason ForestEthics has become a target—and why the government is pressuring Tides Canada, one of ForestEthics' main funders, to drop its support for the group.
Tides Canada is an umbrella organization with charitable tax status. The organization connects individuals or philanthropic foundations with initiatives they want to support. Tides Canada (which operates separately from the U.S.-based Tides Foundation) currently supports more than 30 social, educational and environmental organizations. By operating within Tides Canada, these groups receive charitable tax status as well as administrative assistance.
Paglia said ForestEthics is considering leaving Tides Canada voluntarily in order to protect Tides' other 30 organizations.
"What we're seeing is that every decision we make on fossil fuels ... brings more pressure on Tides," Paglia said. "We don't want to stay at Tides if it means the other  projects pay the price for them keeping us."
"If ForestEthics is feeling they may create negative impacts, I think they're taking a responsible approach," said Merran Smith, director of the energy initiative at Tides Canada.
In a Jan. 31 statement, Tides Canada CEO Ross McMillan denied that the Prime Minister's Office had told Tides to cut ForestEthics. But McMillan said he was "profoundly disturbed by the current political atmosphere in which it is apparently acceptable for our elected officials to discredit and dismiss the very real concerns of the people they serve."