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NFFN - Standing Committee

National Finance


Proceedings of the Standing Senate Committee on
National Finance

Issue 21 - Evidence - June 6, 2012 (afternoon meeting)

OTTAWA, Wednesday, June 6, 2012

The Standing Senate Committee on National Finance met this day at 2 p.m. to examine the subject matter of all of Bill C-38, An Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012, and other measures introduced in the House of Commons on April 26, 2012.

Senator Joseph A. Day (Chair) in the chair.


The Chair: Honourable senators, I call this meeting of the Standing Senate Committee on National Finance to order.


Honourable senators, today we are continuing our study of the subject matter of all of Bill C-38, an Act to implement certain provisions of the budget tabled in Parliament on March 29, 2012 and other measures.


Honourable senators, this is our twelfth meeting on the subject matter of Bill C-38. This afternoon, we will be hearing from witnesses with respect to the proposed amendments to the Income Tax Act, a related act, and the Income Tax Regulations contained in Part 1 of the bill, specifically as relating to charities.

This afternoon, we welcome Vivian Krause, who is a Vancouver-based researcher and commentator on Canadian public policy issues. Welcome. We also welcome Marcel Lauzière, President and CEO of Imagine Canada, a national umbrella for charities and non-profits here in Canada.

I understand each of you have some introductory remarks. You know we are dealing with the entire bill. Our primary focus is on charities but, if there is any other part of the bill that relates to charities directly or indirectly, we would be pleased to hear from you in that regard.

Colleagues, I am at page 6 of Bill C-38, clause 7, which I believe is the area we are starting to focus on.

Ms. Krause, you have the floor.

Vivian Krause, as an individual: Thank you, sir. I believe I have roughly five minutes for opening remarks.

The Chair: If you take six, I would not chastise you.

Ms. Krause: That would be appreciated.


I would like to make my comments in English, but I will be happy to answer questions in English or French afterwards.


My name is Vivian Krause. I have a Master's of Science and for 10 years during the 1990s I worked with the United Nations Children's Fund in Guatemala and Indonesia. I have seen firsthand the positive potential of international philanthropy. I have also seen how it is sometimes used as an instrument of foreign policy. During 2002 and 2003, about 10 years ago, I worked in the salmon farming industry in British Columbia, so I am well aware of the environmental campaign against that industry.

Over the past few years, I have written a series of papers and articles published in the Financial Post about the science and the funding of environmental campaigns, particularly against the aquaculture industry and against Canadian oil. I find that, in both cases, environmental activism is being funded as part of a marketing strategy in favour of American interests.

The campaign against farmed salmon, and farmed fish in general, has been funded as part of a $90 million market intervention strategy to prop up the demand for wild fish from commercial fisheries that are deemed sustainable. By scaring consumers and retailers away from farmed salmon, as environmental organizations have been doing, they have swayed market share back towards wild salmon, most of which is Alaskan. This has not helped to mitigate the real environmental impacts of salmon farming, but it has helped to soften the market impacts of aquaculture on commercial fisheries.

Our country has the largest coastline in the world and we are right next door to the single largest seafood market in the world. If aquaculture were to thrive in Canada, it would pose fierce competition to the Alaskan commercial fishing industry and the communities who depend on it for their livelihood and their traditional lifestyle. By funding the campaign to thwart aquaculture in Canada, Americans foundations have helped to protect the market for Alaskan commercial fisheries.

I have no doubt that the people who are on the front lines of environmental campaigns care profoundly about the environment and that the American foundations that fund their campaigns do too, but there is more to it than that. There are economic and trade interests at play.

The campaign against Alberta oil is being funded as part of a massive campaign to foster the renewable energy industry in the United States. The renewable energy industry is domestic energy. It is local, not imported. When you invest in renewable energy, you increase the energy security, the energy independence and the national security of the United States. Americans spend over $1 billion a day on imported foreign oil. That is money that is not going to create jobs in the United States. That creates jobs here in Canada and in other countries from which the Americans import oil. The Americans are now well aware of this, and that is one of the reasons they are so determined to develop the renewable energy industry. It is because it is domestic, not imported.

The role of American charitable foundations in creating the renewable energy industry is described in a strategy paper called  "Designed to Win. " Incidentally, this is also one of the touchstone papers of the U.S. presidential climate change project to create the climate legacy of President Barack Obama. This paper clearly notes that voter and consumer education campaigns are funded as a way to drive massive investment flow from so-called dirty energy, which refers to coal and Canadian oil, oil in general, and toward clean energy, which refers primarily to solar and wind.

Earlier this year, a document from the Rockefeller Brothers Fund was unearthed by Sun News, in which their tar sands campaign against Canadian oil is described. According to this document, the Rockefeller Brothers, the Hewlett Foundation and the Tides Foundation are spending roughly $7 million per year on a coordinated campaign involving leading environmental organizations — the World Wildlife Fund, Greenpeace, Sierra Club, Forest Ethics, the Pembina Institute and others.

The first goal of this campaign is to stop or limit pipelines and refinery expansions. The pipelines that the Rockefeller Brothers are concerned about are listed in this document. They are the Mackenzie pipeline and the northern gateway pipeline.

This campaign seeks to block oil tanker traffic, but only on the strategic coast of British Columbia and in the far North. Never mind the dozens of tankers that bring oil into the United States on a daily basis, the only tankers that the Rockefellers are funding a multi-million dollar campaign against are the tankers that would allow Canadian oil to be exported to Asia.

The way that the Rockefeller Brothers intend to stop pipelines and oil tanker traffic is specifically listed in this document — by raising the negatives, raising the costs, slowing down and stopping infrastructure development and involving key decision makers.

One of the reasons that this campaign concerns me is that I believe that we need environmental activists. We need them to keep government and industry on their toes, but we also need them to play the role of honest broker. I do not see how they can do that at the same time that they are participating in the Rockefeller Brothers' multi-million dollar tar sands campaign that aims to raise the negatives and choke one of our country's most important industries. I can see how a campaign to prop up Alaskan fisheries and a campaign to bolster American energy security provides a tangible benefit to the American people, but I do not see how it benefits Canada when Canadian environmental organizations lend themselves to an American campaign against a Canadian industry.

From a Canadian standpoint, these campaigns do not appear to be exclusively charitable, which is what the activities of Canadian charities are supposed to be. To be considered charitable, the Canada Revenue Agency says that an educational activity must be reasonably objective, based on factual information that is fully and fairly analyzed. Some of what environmental activists are saying is false. A classic example of this is David Suzuki's false claim about farmed salmon being heavily contaminated with PCBs and other toxins. The truth is that farmed salmon are actually low in contaminants and higher in Omega-3 fatty acids than any other commonly eaten fish. Another false claim is that oil sands operations are degrading an area the size of England or Florida. England is 130,000 square kilometres; Florida is 170,000. The Alberta oil sands operate on approximately 600 square kilometres.

I am also concerned because in the U.S. tax returns for some Canadian charitable tax foundations that I have reviewed, I have found surprisingly high salaries, million-dollar payrolls, millions of dollars of payments to consultants and relatively large payments to the spouses of directors that are involved. I see questionable payments made by charities to PR firms and investment firms, where the directors of the charities are involved.

Twenty years ago environmental activists had virtually no money. That has changed. Multimillion-dollar campaigns are now being funded by billion-dollar foundations. With more money comes more responsibility. My hope for the future of the environmental movement in Canada is that as it comes to age, it will rise to the challenge of meeting public expectations for the basic fundamentals of honesty, integrity, transparency, fairness and accountability. Environmental activists expect no less from government and industry. It is fair to expect this from them.

As someone who is currently a director of a federally registered charity, I know that Canadians are generous and trusting of the charitable sector. It is important that this trust is kept. On that note, I support the budget allocation that will allow the CRA to increase is the transparency and accountability of charities, particularly those that are both politically active and foreign funded.

I also believe that Canadians deserve access to sufficient publicly available information so that Canadians can judge charities for themselves. My hope is that in time the CRA will make publicly available roughly the same information as the IRS with respect to the names and compensation of the highest paid directors, employees, contractors and the programs funded by charitable organizations.

In closing, thank you for the invitation to testify today.

The Chair: Thank you very much, Ms. Krause.

We will now hear from Mr. Lauzière.


Marcel Lauzière, President and Chief Executive Officer, Imagine Canada: Thank you for the invitation to appear before the Standing Senate Committee on National Finance. I am the president of Imagine Canada, an umbrella organization for charities in Canada. Our primary mandate is to work to strengthen charitable organizations so that they can better serve Canadians and communities here and around the world.


The federal budget announced new disclosure measures for political activity by charities. There are three things happening: First, there will be some new questions on the T3010 form, which is the annual form that charities send into the Canada Revenue Agency; second, particular foundations will not be required to report differently on that 10 per cent; and, finally, there will be what CRA calls intermediate sanctions that may be applied in the case of inaccurate reporting. That will touch political activity but any type of inaccurate reporting from charities.

I am pleased that these measures in no way change the 10 per cent rule for political activity, a rule that has been in place for many years and that has been working quite well. Charities can still do political activity that is essential as defined by the Canada Revenue Agency just as before. The changes are in how we will need to report on these activities.

With respect to the practical impact on these changes, we will have to see what the new questions are on the new T3010 form and how they will be applied. As always, the devil will be in the details. We have been in communication with the Canada Revenue Agency and the discussions have been productive. Our hope is that the reporting burden will be kept to a minimum so that any new questions will not add to the reporting of charities to the extent of preventing them from fulfilling their mission. We must remember that the new measures will add to that reporting burden, which means added compliance and overhead costs.

Canadians want charities to keep costs as low as possible. During the hearings on charitable giving, the House of Commons Finance Committee commented on the need to keep administrative costs as low as possible. It will be imperative that the burden be kept reasonable and that the cost does not outweigh the public policy benefits.

All of this said our real concern regarding political activity has been recent language used by ministers and some senators. That has, to be frank, created real uncertainties in the charitable sector and beyond the environmental sector. Many have told us that they are worried that they should not engage in public policy at all. This goes well beyond environmental charities. I am talking about charities involved in social services, in poverty alleviation, in the arts, in health, in education and in service to people with disabilities. People from those types of organizations have all told us that they do not get it and that they no longer know what is happening. They are worried about participating in the public policy process. Whether intended or not, this debate and the language used has really impacted the entire sector. That is the main message I would like to put forward today: I am hearing that a number of volunteer board members from across Canada are expressing worry as to whether they can appear before a parliamentary committee such as this Senate committee today.

Charities have a long and proud history of working with government on all levels on crucial policy issues. This has served us well as a country and has been valued by Canadians by governments for good reasons: Charities work at the coal face of most of our intractable social, economic, cultural and environmental issues, dealing with individuals, communities and our economy. As a result, they bring a knowledge base that is crucial and complementary to the knowledge and the data that government can bring. That is a good thing. It creates debate often and creates questioning. That is also a good thing. Good public policy comes from bringing to the table a variety of different perspectives. As a country we have benefited from this perspective and I cannot imagine why we would want to put this in jeopardy. I think the chill that is being created right now is putting that in jeopardy. In fact, many of my colleagues around the world are envious of Canada and the strength, resiliency and vibrancy of its civil society organizations. Anything we do, we must do in terms of supporting the work that they are doing. They are working with governments. No legislation, no decision goes forward unless a government has decided to go forward. The last word is the government's word, not the word of the charitable organizations.

Who can argue against what governments and charities have achieved together? Smoke-free workplaces were seen as radical 25 years ago and unlikely for many Canadians. I think about measures to fight drinking and driving. We have seen the success of those. The National Child Benefit has made a real dent in child poverty in Canada. There is the Canada-U.S. acid rain treaty, which came from the environmental sector; and better access to medically necessary drugs that often governments were not interested in moving forward with but finally did decide to do so after hearing what charities had to say about it. The recent Disabilities Registered Savings Plan launched by this government has been a huge support to persons with disabilities and, more recently, the Maternal Infant Health Strategy that was put forward at the G8 and the G20 in Toronto and is now on the agenda of all countries. Canada has played a leadership role on that front.

What all of these achievements have in common is that none of them would have been possible without the leadership of so many charities and the millions of people that support them in one way or another, and none of this would have been possible without a strong relationship and partnership between charities and government. It is important not to jeopardize that.

My hope is that we can begin to celebrate the work of charities in a way that will make us all proud and that we start looking at how charities will resource themselves in times of austerity to support Canadians in the best possible way. For me that would be the most helpful conversation.

In closing, I will say that contrary to some statements that have been made, charities in Canada may not be perfect but they are committed to transparency and disclosure. Imagine Canada, the umbrella for charities across the country, just launched, with the support of the charitable sector, a new world leading standards program that exists in few countries around the world. This is an accreditation program for charities. We are encouraging charities to come through that program and there is a lot of support for it. That, I think, is a program to continue to build trust and confidence in our work because we need to do that.

Working with the Canada Revenue Agency, we launched CharityFocus, a citizen-focused, one-stop portal for all 85,000 charities in the country. We felt that the information that is on the charities' directorate website around the CRA information is public but it is difficult for Canadians to access all the information that they need. We created this new portal to make it easier so that all Canadians can have that information.

All of the data that is brought to the Canada Revenue Agency, including the foreign funding they receive, is on that portal. It is up and running now. It has been running for two months now. We are encouraging charities to add additional information to that because, in our view, it is really for Canadians to be able to make their own decision on who they want to support. To do that, they have to have the right information. There has to be transparency and disclosure. On this front, I think we are moving in the right direction. For me, that is the type of engagement and support that will benefit all Canadians.

Thank you.


The Chair: Thank you very much, Mr. Lauzière. We will now open it up to questions and comments from senators. We will begin with Senator Buth, from Manitoba.


Senator Buth: Ms. Krause, you talked about some of the charities using market strategies essentially in the same vein as political activities. You essentially indicated your support for the changes to this legislation in terms of greater transparency.

Have you had any feedback from the general public in terms of how they perceive these proposed changes to legislation? We know that an Angus Reid poll showed that 80 per cent of Canadians were supportive after Budget 2012 was announced, but is there any other information in terms of how Canadians are feeling about this legislation?

Ms. Krause: Specifically about the legislation? Yes. To be honest, I get a couple of emails every day from someone just out of the blue. Since I started my blog, which is called Fair Questions, I think about 80,000 people have read it, and about 15,000 of them have come back more than once, so there is obviously some interest. I have received hundreds of emails from people just appreciative of the information and saying that this should be available in Canada and we should not have to go to American tax returns to get answers to the questions I have been trying to raise.

Senator Buth: Mr. Lauzière, you made the comment that one part of the focus should be on how government can work with charities to figure out how they support themselves in times of austerity. I wonder about a little background before I ask another question of you. How have charities been surviving in terms of the last couple of years or the last four years since we saw the market issues in 2008?

Mr. Lauzière: It is difficult, no doubt. It is difficult for every segment of society. It is difficult for business and difficult for government and difficult for charities also. Essentially, charities have three sources of funding.

The first one, in no order of priority, is governments. That will be difficult in the years ahead because of deficit situations, and also because many governments are rethinking the role they want to play. That will be a challenge in the years ahead, and it already is.

The second one is philanthropy and donations. We are not in a crisis situation on that front, and Canadians are still extremely generous, but we are seeing a slow erosion of donors in Canada. We have been pushing something called the stretch tax credit that would actually encourage Canadians of all walks of life to give and continue to give more. We really feel that over the next 10, 15 or 20 years our charities will be in very difficult situations unless we do something to challenge Canadians to engage and give.

The third is what we generally call earned income, that is, fees, programs and products that you deliver.

There has been a lot of talk, and the government has put forward in this budget this year and the year before, of moving forward more boldly around looking at social finance and new ways to access new forms of capital for charities. We do have to move on that, and we have to move more quickly than we have. A variety of things need to happen.

It is difficult right now, not only for charities but for Canadians generally. We have to work on all of these fronts, but particularly on the philanthropic side of things and on the earned income, which is where we need to be putting a lot of our emphasis. It is not to support charities to support charities; it is to support charities so that they can, in turn, support Canadians and communities.

Senator Buth: The importance of charities is clear to all of us, and I appreciate your comments in terms of overall support of the proposed legislation because of the transparency. Do you think the charities under your umbrella group are aware of the 10 per cent rule?

Mr. Lauzière: Charities are well aware of the 10 per cent rule. A lot more education can be done, and there is no doubt. That being said, there is only a small minority of organizations that really get into political activity. That is the 10 per cent. Organizations can do education and advocacy and push ideas for it, and that is not part of the 10 per cent. They cannot do anything that is partisan or appears to be. That is for sure. The 10 per cent is around political activity, which is a call to action, to change legislation or to support legislation. Organizations do have to report that to the CRA, on the T3010 form.

What will happen following this budget will be more questions probing into that a bit more. That is what we are looking at with the Canada Revenue Agency, to ensure that those questions are the best possible questions and make sense and do not add too much burden on organizations.

Of course, there is education to be done in terms of that 10 per cent at all levels. Overall, it is a small percentage of organizations that actually get involved in that political activity piece. It has been important. The Canadian Cancer Society in the 1980s did a lot of that around tobacco. The examples I gave were all part at one point of a call either to change legislation or to bring in new legislation.

Senator Buth: Are you working closely with CRA now in terms of consultation?

Mr. Lauzière: We are. There is a very good relationship with the Charities Directorate at Canada Revenue Agency. They are a strong regulator, as they should be. We would not want to be working in an environment where there is not a strong regulator because if the regulator is not strong, then the rogue charities out there will paint the whole sector with a bad brush. We are very supportive of the work that the Canada Revenue Agency needs to do in terms of ensuring. CRA has and has always deregistered charities if they go over the line, and they will continue to do that. That is my sense, anyhow. You would need to speak to them, but it would be my sense that that will continue. If organizations go over the 10 per cent or over any other rule that is part of what regulates charities, then the CRA needs to come in.

Senator Ringuette: I had not realized that I had put my hand up, but I certainly have questions in relation to transparency and accountability and the issue of facts.


Mr. Lauzière, I very much appreciate your comments. Your member organizations must be very proud of the fact that you aim to ensure that the work of charities in Canada is transparent and based on a standard.

However, we also have to respect the fact that many charitable organizations have a social and economic mission. In order to make progress on certain issues, organizations have to engage in political action. So, I would like to express my sincere appreciation, Mr. Lauzière, for your comments. They certainly met our expectations.


Ms. Krause, you were talking very fast in your opening statement. I have tried to recapture what you were saying. You emphasized that facts should be easily accessible and that there should be transparency and accountability. Do you have the facts to give the clerk of this committee in order to sustain the examples that you have given us? I would like to read about that.

Ms. Krause: I would love to provide you whatever you would like to read. Some of what I have written is published in the Financial Post.

Senator Ringuette: I am saying that in your opening statement you put an emphasis on facts. You have given us a few examples. I would like to have the facts to back up the examples that you have been telling us about. Is that possible?

Ms. Krause: Yes.

Senator Ringuette: Could you direct that to the clerk so that every member of the committee will have access to that?

Ms. Krause: I am not sure which particular point you want me to provide further information about.

Senator Ringuette: Maybe you can reread your statement and provide us the background and facts about the issues you have put in front of us.

Ms. Krause: I would be glad to provide whatever further information I can.

Senator Ringuette: I am looking at facts versus anecdotes.

You seem also to put a lot of emphasis on U.S. influence in our charitable organizations in Canada. Are you also familiar with U.S. influence in regard to the lobbyist community in Canada?

Ms. Krause: I think I am well aware that certainly lobbying is part of business. I am glad you raise the point because I would like to say that as a director of a charity myself, I have been involved in the charitable sector for probably since I was a child fundraising. I think the concerns that I have been raising pertain to a very small segment of the overall Canadian charitable sector. I am concerned that the problems and the concerns over a small number of charities should not reflect on the entire charitable sector because, as has been said, so much good work is being done; I would not want that to be jeopardized.

Senator Ringuette: I am going back again to my specific question and looking for a specific answer. I am saying that there is probably U.S. finance lobbying being done in Canada for the business community. Would you know about that? Would you have facts about that? That would pretty much outweigh, to any extent — probably overwhelmingly — whatever little U.S. donation is given to a charity in Canada. Would you know the flip side of the argument here?

Ms. Krause: I think the fact that American influence or lobbyists are involved in some way in Canada not only from the United States but also from other countries in no way makes it correct for Canada to be receiving tens of millions of dollars of what is essentially foreign aid.

Senator Ringuette: It is okay, then, in your perspective, for lobbyists in the business community to have millions of dollars in order to lobby the Government of Canada on a specific issue or on specific issues or sector but it is not okay for charities to have some money to give facts to the Canadian population?

Ms. Krause: I think the difference is transparency.

Senator Ringuette: Yes, I certainly do agree with you because the lobbyist community are not transparent in regard to the salary of the CEO, the salary of the lobbyist and how much money they get from the U.S. There are many issues there in regard to transparency and accountability.

When we look at issues, I certainly would like to see the whole thing. If we want to discuss the U.S. influence in Canada through charitable organizations, we also must look at the U.S. influence in Canada in regard to the billions of dollars that lobbyists have on a yearly basis in Canada. We see them every day on Parliament Hill.

Ms. Krause: I see it as a bit of an apples versus oranges issue. The companies and the business sector do not have the same tax privileges that go along with —

Senator Ringuette: Oh, yes, they do.

Senator Mitchell: They write it off. They get tax deductions.

Ms. Krause: They also pay taxes.

The Chair: One at a time, please.

Ms. Krause: Right now American foundations are contributing roughly $50 million a year at least to Canadian charities. That puts us on track to receive half a billion dollars over the next 10 years of what is essentially American foreign aid from the philanthropic sector.

Having worked overseas myself and seen the real need around the world for expertise and resources, I believe that money should be spent in countries far more needy than Canada. Canada should fund our own charities and should be on the giving end of foreign aid and philanthropy, not on the receiving end.

Senator Ringuette: Chair, I believe in a balanced approach in just about everything, so I will put myself on the list for a second round of questions. Thank you.

The Chair: Thank you very much for that. I am trying to keep both questions and answers for each senator to around 10 minutes. That is what we have been doing.

Senator Eaton: Thank you, Mr. Lauzière and Ms. Krause. Picking up on where everyone has been going, transparency, which is what my inquiry is all about in the Senate, tell me how you both feel. I would very much like to see donors tagged. From the first donor to the last recipient, think of it as the fish. I want to follow that fish from the first donor to the last recipient. If the fish originates in the U.K., or the U.S., or France, or Switzerland, and ends up in northern Manitoba, we can follow that donation. How do you feel about that, Mr. Lauzière?

Mr. Lauzière: I think transparency, absolutely. I was pleased to hear you on As It Happens yesterday because you framed the issue around transparency and not on the 10 per cent political activity, which is good. We are trying to work towards that, so thank you for that.

Transparency, absolutely, in terms of how philanthropy works — and many people hand the table would know; it goes to the other question also — there are philanthropists in the U.S. and in many other country that give to Canada. I think it is good. They give for the arts and for health issues, sometimes for a particular health issue. I am coming to your question, in terms of how you tag that. It goes to organizations that are more left, more right, religious, et cetera. That is a good thing, because you want to ensure that the voices of all Canadians are heard in philanthropy. Philanthropy going to external countries is fine, but philanthropy is not just about the needy and helping those in developing countries, it is also about the arts, quality of life and research, et cetera.

In terms of philanthropy, there will always be individuals — maybe it is different for foundations; we could track that more easily, I think — and in terms of individual philanthropists who will always want to remain anonymous, in terms of the tagging, that would be difficult. In terms of better information on what foundations it is coming from and where it goes in Canada, there will be more information on the T3010.

Senator Eaton: I am hoping that Canadians would be able to go into someone's website and be able to see who gives to whom and where the money is coming from. I think that gives you a good indication of what the charity is all about.

I agree with you that we should be open to receiving money from everywhere, but I would like it to be tagged and for it to be up there, front and centre, the way a political donation is.

How do you feel about that, Ms. Krause? Is it doable?

Ms. Krause: I do not know whether it is doable, but I would like to share my perspective as a director of a federally registered charity. I think we have the more noble cause in our country. We are the Adoptive Families Association of British Columbia and we try to find families for children that need to be adopted and to support families in the process of adopting a child. We find it very difficult to raise money, yet we have such an important cause. Senator Larry Campbell here has been one of our ambassadors and will know very well the difficulty we have, even in raising a few tens of thousands of dollars.

Some of biggest and most important contributions have come from anonymous donors who want to remain anonymous. I am thinking of a particular $50,000 contribution that made a big impact on our programs.

I am aware that there is a segment of donors who want to remain anonymous. I wonder what the sort of tagging that you are suggesting would —

Senator Eaton: I am hoping that the tagging would reveal where the money came from.

Ms. Krause: Yes.

Senator Eaton: For instance, the Pembina gets money from the U.K. However, if you go on the Pembina Institute website, you should be able to see, if the donor's name is not there, where the money is coming from.

In other words, it cannot go through something like Tides Canada, be receipted and become a Canadian donation that is then given to the Pembina Institute. It remains always monies from the U.K., monies from the U.S. or monies from Saudi Arabia. I think it would be very interesting to know where the money is coming from.

Ms. Krause: I agree with you fully, but the point I would like to add is that I think not only the source of the money is important, but as important or even more important is the purpose. One thing that I think is important to highlight in this discussion is that the money is going for charitable purposes. In fact, based on the review that I have done of the nature of the grants that have been given, if it is to further a purpose that is truly charitable, then I think the source of the money becomes less of an issue. It is nonetheless an issue, but the emphasis needs to be on whether charities are doing charity. My concern is that for some of the activities that I see being funded, I do not see how they qualify as exclusively charitable.

Senator Eaton: Do you support the 10 per cent political activity or not?

Ms. Krause: As I understand it, it is not just 10 per cent. It is 10 per cent, but that is to further a charitable purpose. If the political activity is not to further a charitable purpose, then it is zero per cent. In the media, there has been a misunderstanding created that charities have the right to do 10 per cent political activity. That is not true. My understanding is that it is 10 per cent but that is to further a charitable purpose.

As a director of a charity, to be honest, sometimes I wish that we were unencumbered. As long as we are furthering a charitable purpose, we have basically free reign to accomplish that charitable objective. In that sense, I would almost like to see the limits off to the extent charities are allowed to do political activity, but the emphasis is on the fact that it must be charitable.

Mr. Lauzière: To add to that, the 10 per cent is for charitable purpose, so it has to be linked to the charitable purpose of that particular charity. That is very clear.

Going to your earlier question about how much organizations know about this, it is clearly identified in the Canada Revenue Agency guidelines that it is 10 per cent for charitable purpose, so not 10 per cent about anything but 10 per cent linked to your particular charitable purpose as an organization. That is well understood and clearly identified, both on the site of CRA and what they call their guidance on political activity.

Senator Callbeck: Ms. Krause, you have indicated that a number of environmental campaigns are really funded by foreign interests.

On CBC, on Sunday, did you hear Ms. Berman, who is a co-founder of Forest Ethics and an environmental activist for over two decades? She stated that 96 per cent of all financial support for environmental charities is provided by Canadians. I would like you to comment on that.

Ms. Krause: I would be glad to.

Senator Callbeck: Do you agree with that? Do you think it is less than that?

Ms. Krause: The issue is not the overall percentage but the fact that there are some charities that are receiving 80 or close to 100 per cent of their funds from foreign sources. There are other charities for which the per cent of foreign funding has dropped dramatically over the year. The David Suzuki Foundation, for example, I believe right now is only 5 per cent or 6 per cent, but 10 years ago half of the funding of the David Suzuki Foundation was from American foundations. Half of their budget was covered by American foundations. I think that giving a global figure like 96 per cent obscures the fact that you have some organizations that are heavily and in fact almost exclusively foreign funded.

I am glad that you raise the organization Forest Ethics, because if you read the U.S. tax returns of Forest Ethics, you find that Forest Ethics has told the IRS that they aim to stigmatize the Canadian oil industry. Forest Ethics aims to make the Canadian oil industry unacceptable. My question is, how can you be an honest broker at the same time that you are telling the IRS that you want to stigmatize an industry and make it unacceptable?

The Chair: Could we find that information?

Ms. Krause: Yes, I will be glad to provide it to the clerk.

The Chair: That would be helpful.

Senator Callbeck: You have no problem with that 96 per cent figure?

Ms. Krause: Did she say it was 96 per cent for all charitable organizations or for environmental groups?

Senator Callbeck: Support for environmental charities. The statement was 96 per cent of all financial support for environmental charities is provided by Canadians.

Ms. Krause: It depends on what you define as an environmental group. The Boy Scouts are picking up garbage and cleaning up the park. Does that make them an environmental group? I do not think so. It depends on how you define an environmental group. If you look at some of the largest environmental groups, for instance Ducks Unlimited or Tides Canada, roughly 30 per cent of their funding is from foreign sources. It is a difficult question to answer. As I said, I think the issue is that some small groups, but in fact some of the most vocal and most politically active, are receiving 30, 40 or more than half of their funding from American foundations. As I said, the David Suzuki Foundation is down around 5 or 6 per cent.

Senator Callbeck: Mr. Lauzière, you said your organization represents volunteer organizations and charities. How many members do you have, and what is the advantage of belonging to your organization?

Mr. Lauzière: Imagine Canada actually never says that we represent. We are not that type of organization. We have about 1,500 charities that are members of Imagine for two reasons essentially: They want to support our work, but they also provide credibility when we speak. Our charitable purpose actually is to support the whole charitable sector. We are connected with anywhere between 8,000 and 10,000 charities across the country. We never come to a parliamentary committee, for example, and say this is what our charities are saying and this is what we represent. We are not a trade organization in that sense.

In terms of services, our services are essentially open to pretty much every organization out there, around capacity building issues and around our standards and accreditation program. We have an online directorate to help organizations find funding, et cetera. That is the role that we try to play. We try to bring people together, because increasingly charities are realizing, whether in the arts or education or in health or social services or in the environment, that they are all essentially dealing with similar issues. The more we can come together to work together, the better that is. That includes philanthropy, volunteerism, how we govern ourselves, how we are transparent, et cetera.

Senator Callbeck: You say 1,500. Where do you get your funding? Do they pay a fee?

Mr. Lauzière: Absolutely. Over 12 per cent of our funding comes from members. We have a number of corporations that fund the organization. We have a great program at Imagine Canada that is called the Caring Company Program, which recognizes corporations in Canada that give at least 1 per cent of their pre-tax profit to charities, so we are very connected to corporate Canada also. We have a number of services that we provide. Our funding is quite diversified. We get a bit from government, but very little. When I talked about CharityFocus, which is the new portal that was just launched, that was launched with funding from the Canada Revenue Agency, but that was just to develop the platform and then we move on. We do fundraising, like other organizations.

Senator Callbeck: You mentioned a stretch tax credit. If I am correct, back in 2009, the Finance Committee in the other place recommended that. I would like you to explain that fully. Has there been any analysis done as to how much more money that would raise?

Mr. Lauzière: Yes. It is a new concept. It has never been tried, to our knowledge, anywhere in the world. Our governments, the latest governments in the last 10 or 15 years, have done a lot of work to help wealthy Canadians to become better philanthropists, and that has made a huge difference in terms of gifts of stocks and securities. That has been really good. A lot of those dollars have gone to universities, hospitals, big cultural institutions, United Way, and that is important.

Stretch is about talking to ordinary Canadians, people of all walks of life, the message being that everyone can make a difference. If you look at most health charities in the country, their average donation is about $35. They essentially do their incredible work with very small donations from Canadians. The idea of the stretch is to say that if you give and you give a bit more, even your small donation will make a big difference.

The way it works is that there is a 29 per cent tax credit now if you give anything over $200. Let us say you gave $400 last year. With the stretch tax credit, if a charity comes to you and asks you to stretch your giving to $500 this year because an extra $100 will make a difference for the charity, for that extra $100, you will get a 39 per cent tax credit, rather than 29 per cent. The tax credit is only for any new dollar that is given. If there is no change in behaviour, there is no new dollar, so it does not cost anything to the government in terms of foregone revenue. It is only to encourage people to constantly give more.

There are two messages: First, small donations make a difference, and the more you can stretch the better; and second, you do not have to be rich and wealthy to be a philanthropist. Anyone can be a philanthropist.

There has been a lot of interest, as you probably know. The Finance Committee in the House of Commons has been undertaking this review of charitable giving, and we have been pushing this forward with a number of organizations. I think now about 70 per cent of the witnesses that appeared before the committee said that the stretch was a good idea. Ipsos Reid did a poll showing that 84 per cent of Canadians think it is a good idea. We hope it will go forward. We see it as positive and a great tool for charities to be able to go to their donors and say start giving. For those who do not give, then the year they give, it is a great advantage for them, and we hope that will help bring people in. I was saying earlier we are seeing the base of donors slowly start to erode, and the idea is to pick that up and build it for the next 10, 15 or 20 years.

Senator Callbeck: It seems like a very positive step.

You also mentioned that you feel there will be more questions asked by the Canada Revenue Agency regarding political activity. Charities will probably have to report differently. I think you said you felt there would be additional intermediate sanctions for inaccurate reporting. Would you comment on both of those things? What do you anticipate in the change in reporting, and what do you mean by intermediate sanctions?

Mr. Lauzière: The questions will probably be linked to probing down a bit more. If you have identified a particular amount for political activity, there will probably be some questions: How did you do that? Was it through conferences? Was it through meetings with MPs? Was it through a leaflet in the paper? It will be to get more information on how that political activity has taken part.

There will also be some questions linked to foreign funding. For example, of your foreign funding, how much of that foreign funding would have gone to political activity. It is those types of questions. I know that is still in the works, but that, I think, is the direction that they want to go to.

We have no concern about more questions. The only concern is that the burden not be too high in the way of responding, so that it does not overly increase the reporting burden of charities. As you know, charities are already highly regulated, not only by the CRA but by all of the funders that provide dollars to them. They have to report back. It is a big part of what they do.

The intermediate sanctions are not just for political activities; they are around the information that you provide on the T3010 form, which is that annual form, if there are mistakes, and I would expect serious mistakes, not a small arithmetic mistake. However, if there are mistakes and they are seen as inaccurate, then the Canada Revenue Agency could put forward what they call an  "intermediate sanction, " which could be that for a certain period of time, the charity would no longer be able to receipt its donations, for example. I imagine it would be rarely used, but it is a tool at their disposal if there is inaccurate reporting.

Senator Callbeck: Did you say that is not just for charities?

Mr. Lauzière: It is only for charities, but it is not only for political activity. It could be around what you report for fundraising. On this T3010 form, there is much more information — not as far as the IRS goes, I agree — on compensation. The 10 highest paid in any charity now have to identify the 10 highest categories in which they are paid. If that was inaccurate, that could be another example. It is not linked just to political activity.

Senator Runciman: Ms. Krause, you were talking about Forest Ethics and something they had declared in the U.S. but did not declare in Canada. I was looking at one of your columns where you said American charitable foundations are not allowed to mobilize voters in a foreign country. I think you have drawn attention to the fact that has been occurring. I think you linked it as well to the civic politics in Vancouver. Are American authorities looking at this issue as well? Are they doing anything to address this issue from their perspective?

Ms. Krause: I am not aware of anything, no. I would like to say that the group that was funded to mobilize urban voters for a federal ban on tanker traffic was not Forest Ethics. That was the Dogwood Initiative, and it was funding that came through the Tides Foundation.

Senator Runciman: In terms of the need for the changes outlined in the budget bill, both of you can speak to this.

Ms. Krause, you have taken a long, hard look the lack of enthusiasm in certain organizations in terms of transparency. I am referring to some of your columns about the Suzuki Foundation, and this is going back a few years when they were under-reporting, if you will, in terms of the numbers they were receiving from U.S. donors. Apparently, that has changed under the new rules.

You also made a reference that once the Minister of Finance announced these changes with the budget, quite a number of organizations suddenly rewrote the stated purpose of their grants.

Could you speak to how significant and extensive those issues are?

Ms. Krause: I have been tracing the American funding of Canadian environmental groups now for about five years. I started with a submission that I made to a special committee of the Legislative Assembly of British Columbia. In the five years that I have been following this issue, there have been 15 foundations and environmental groups that have either rewritten their grants or removed web pages that I had raised concern about. Most recently, for example, the Oak Foundation removed the sentences that said things like the purpose of this project is to stop or to block the Enbridge Northern Gateway pipeline. That happened days after the federal budget was announced this spring. I wrote about that in the Financial Post in a piece called  "Damage Control. "

Another thing I see happening is less transparency on the part of certain environmental groups. I was not going to name names, but I guess I will in this case. One of the organizations I will mention is Tides Canada. The reason I mention it is Tides Canada now has 250 employees and has a payroll of $10 million. To put those numbers in perspective, in Vancouver, and, of course, Tides Canada is based in Vancouver, two leading, large influential organizations, the Vancouver Foundation and the Fraser Institute combined, have half as many employees as Tides Canada reported in its Canadian tax returns for 2010. That is just to give you the size of things.

I think whenever an organization becomes large and influential, it is fair to ask questions about its funding and its operations.

What concerns me is that, for instance, in Tides Canada's American tax returns for 2009, it listed 25 internal projects for a total of $5.3 million. We could see that Tides Canada had paid Forest Ethics, which is not actually a separate organization and never was and has been part of Tides Canada, $780,000 for Forest Ethics Canada. However, last year, they did not itemize these projects. They just reported $7.7 million spent on internal projects. That is a big step backwards in terms of transparency.

I have asked Tides Canada, for example, to please post its American tax returns on its website so Canadians can see for themselves what it is funding. The CEO of Tides Canada called for an honest debate earlier this year about energy- related issues, so I think as part of that honest debate, if it could post its American tax returns, it would be more transparent.

I think the environmental movement is coming of age. It had no money 20 years ago, far less than it had 10 years ago, so with more money comes more responsibility. My hope is that environmental organizations would just sort of say,  "Point taken. Here is how we are funded, and here is what we are doing. "

Senator Runciman: Did you want to comment?

Mr. Lauzière: I guess where I would disagree is that I do not think there is a difference between large and small organizations. The message at Imagine Canada is that transparency is transparency. Organizations, large or small, should provide adequate information to Canadians and be able to respond to questions, but we also have to realize that people are asking different questions and want different ways of reporting on information. You also have to find the balance between that reporting burden — responding to every new request in terms of what is done — and the fulfillment of your mission. I would not say that only the large organizations need to be transparent; on the contrary. We have very large organizations in Canada that are very transparent. It is part of our culture now. The trend I am seeing is the opposite trend; there is a very strong recognition of the need for good governance and transparency. People realize that that is going to be important if they are going to keep the trust of the donors and the volunteers. Everything I am seeing is going in the opposite direction, providing better information. I think that that is one of the reasons for the success of CharityFocus, a new portal that we just launched.

Senator Runciman: This is a follow-up to what Senator Eaton was referencing earlier. The new rules require a donor to include, in terms of the political activities portion of the money that they are giving to another charity,  "can reasonably be considered to be intended for political activity. " How do you think that this will work? There have to be real challenges in tracking what money is eventually used for. Do you see that as an administrative headache or more of a problem for the folks who come in and occasionally conduct an audit? How do you do this in a practical way?

Mr. Lauzière: It is complex; there is no doubt about that. I would go back what Ms. Krause was saying earlier. It is more around how the dollars are spent, rather than just around the sources of funding, that we need really good information. There are a variety of ways of doing that, depending on who the funder is, whether it is a foundation, the United Way or an international foundation. There is no one magic bullet, but information on how those dollars are being spent needs to be there. If they are being spent for political activity based on a charity's purpose, that needs to be said. However, is there one way of doing it? That really depends.

There are 85,000 charities in Canada, ranging from big hospitals and universities to very small, volunteer-led organizations. A response for one will not fit for others, but the general principle of reporting on what you are spending on and why you are spending on that is very important.

Senator Runciman: Thank you.


Senator Chaput: My question is for Mr. Lauzière. Very few Canadians, if any, are against integrity and transparency. I think it is fair to say that we desire and demand integrity and transparency from any group or organization, and not only charities.

My question is more philosophical in nature. With the changes proposed under Bill C-38, will we be politicizing the charitable process by questioning, as I understand it, the mandate or mission of a foundation, as evidenced by its political activities and donations?

If a foundation is fighting for a cause in which it truly believes and demonstrates integrity and transparency, although that cause may differ from our ideology, does that mean it is less credible because it has a different perspective?

Mr. Lauzière: No, not quite. What I stated in my presentation is that, if public policy development is to be based on a healthy process in Canada, there must be a diversity of views around the table — people who are in favour, others who are against, people from different backgrounds; all of that must be encouraged. That is the reason why the 10 per cent rule is important, and it is important that the Canada Revenue Agency be independent and ensure that, if something is being done or if information is verified, there is a valid reason for it, as opposed to a political reason. Everyone would agree on that.

Senator Chaput: And would the definition of political activity — for example, by a foundation — be developed by the foundation?

Mr. Lauzière: What is meant by  "political activity " is clearly defined by the Canada Revenue Agency.

Senator Chaput: Very good.

Mr. Lauzière: The 10 per cent must be connected to the mandate and mission of the charitable organization, as defined by that organization, but also as recognized by the Canada Revenue Agency when the organization registered as a charity. The organization does have control over that, but its mission must be one that is acceptable to the Canada Revenue Agency, in relation to four general categories. I believe that process is working well.

Senator Chaput: Very good. What will the changes proposed under Bill C-38 contribute, compared with what already exists?

Mr. Lauzière: More detail, for those seeking that information, regarding the way in which the political activity is carried out and the amount of foreign money used to fund that activity. As I said at the outset, it is all right for questions to be asked, as long as the process is reasonable and does not place too heavy a burden on charities by forcing them to spend their time preparing reports, instead of doing their work. We will have to wait to see the final questions developed by the Canada Revenue Agency.

Senator Chaput: Thank you very much.


Senator Duffy: Thank you to the witnesses for coming today. This is an important topic because, as you pointed out, Mr. Lauzière, the charitable sector covers the entire country, and people from the $35 donors all the way up are involved.

To get some idea of the magnitude of money, Ms. Krause, if the average Canadian health charity gets a donation of $35, what kind of offshore money are we talking about coming into these other charities? Are these grannies with $35, or are we talking about much different kinds of offshore donations? How many bucks are involved?

Ms. Krause: Big bucks. That is the heart of the issue. If we were talking about $35 coming from thousands of Alaskan families who were worried about an oil spill, I think that would be fair. It would be foreign funding, but I think it would be fair for Alaskans to fund, say, environmental organizations in British Columbia. That would be very small amounts of money coming from a large number of people. We are seeing the exact opposite of that — very large grants coming from a handful of very large foundations.

I think the size of the average grant has probably gone from maybe $20,000 or $30,000 to hundreds of thousands of dollars. It is now not uncommon for a grant of $1 million. The foundations funding this are billion dollar foundations. Four of them alone have $20 billion in assets. They give away a billion dollars a year.

Senator Duffy: I read your column in which you said that Tides U.S.A. moved $100 million into Canada just before the budget.

Ms. Krause: No. According to my analysis, Tides Canada has had $62 million since 2000.

Senator Duffy: There was one big movement of money.

Ms. Krause: The $100 million was one grant from the Hewlett Foundation to a foundation called Climate Works. I mentioned, of course, that in the Rockefeller tar sands campaign —

Senator Duffy: I want to get to them in a minute. Tell me about this $100 million. This is not penny-ante change. Was it done to get it in before the budget out of fear — this is my suspicious journalist mind — because they wanted to beat the deadline? I guess you do not know the answer to that, but $100 million is a lot of money.

Ms. Krause: That money did not come targeted for Canadian campaigns. It was for the Climate Works Foundation, which funds the Energy Foundation, which funds a large array of environmental groups, some of which are tackling the Canadian energy sector. You are also tackling, for example, coal producers in the United States and other projects.

Senator Duffy: You have written about money laundering as well, about how Tides in the United States flushes money from their foundation into Tides in Canada who then spread it out. I think that word was used, was it, in your column or in your blog?

Ms. Krause: This is an important point I want to clarify. Actually Terence Corcoran, the editor of the Financial Post, wrote a column, if I am not mistaken, in which he spoke about money laundering not necessarily as a use of the term, I am not sure, but of referring to obscuring the origin of money.

Senator Duffy: We will not call it money laundering. We will call it flushing through the system to avoid public scrutiny.

Before my time runs out, let us turn to the Rockefeller brothers. A PowerPoint deck about the Rockefeller brothers has come into the public record. Mr. Lauzière told us earlier that charities can spend up to 10 per cent for charitable causes. Do I understand from what I have read in your blog and the newspaper columns that in fact in the Rockefeller deck is a straight-out statement that they want to block these pipelines?

Ms. Krause: Yes, they say they want to stop and slow down infrastructure development related to the Canadian oil sands.

I want to clarify one thing, Senator Duffy, I have never seen anything that I believe to be illegal, let alone criminal, but I am not an expert in that area.

Senator Duffy: I am not alleging criminal activity.

Ms. Krause: Exactly.

Senator Duffy: I am just asking why would the rules in Canada not be identical to the rules of transparency that exist in the United States? Why did you have to go to Washington to find out who is pulling the strings in British Columbia?

Ms. Krause: I certainly hope I am the last Canadian who ever needs to do the kind of work I have done. As Canadians, we need access to information to find out who is funding who in our own country. I hope that the CRA will collect and make available roughly the same information as the IRS with regard to the compensation and also payments to consulting companies. We are seeing millions of dollars being spent by charities funding consulting companies. I am concerned that those consulting companies and investment firms sometimes make large political contributions to campaign finance.

Senator Duffy: Do you fear that money destined for charities may be finding its way into Canada's political process?

Ms. Krause: Yes, lots of it.

Senator Duffy: I want to ask Mr. Lauzière about the whole question of how we Canadians are doing in comparison to the rest of the world when it comes to charitable giving. I think many Canadians think we are such good people and are at the top of the list. Where do we rank compared to our neighbours to the south in individual charitable giving?

The Chair: You can also comment on the last matter if you wish, Mr. Lauzière. You had indicated you wanted to.

Mr. Lauzière: On the latter one, the metrics are always difficult, but Canada is a very generous country. It depends on what you are looking at. Is it the amount of dollars? Is it the number of people giving? The Canada Survey on Giving, Volunteering and Participating that Statistics Canada does every three years shows about 84 per cent of Canadians give in one way or another, so we are very generous. In terms of size of the donations, they are probably a bit smaller than they are in the U.S., but we are a very generous country. There is no doubt about that.

I would like to go to your comment, Senator Duffy, about money laundering. That was a term used by Minister Kent. I did write Minister Kent about this, asking him if he had information on charities actually doing money laundering. If he did, then those names needed to go to the proper authorities. If he did not have any information, we would like Minister Kent to retract those words.

The reason I say that is because it goes to the trust and confidence that Canadians have about charities. What we are trying to do with the stretch tax credit is send a message to Canadians that people need to give and engage. That is an important message. On the other hand, we have a comment like that about money laundering which will start Canadians asking what is happening here.

Senator Duffy: Is it not the responsibility on the charities to be more transparent?

Mr. Lauzière: We talked about the need for transparency.

Senator Duffy: You should be putting pressure on your members to ensure they fill in the forms. Documentaries have been done about Canadian charities with staff and the forms were left blank. I think the responsibility is on the good charities to make sure that the less good or the more evasive kinds of charities do not ruin the sector for everybody. Do not blame the government.

Mr. Lauzière: There is a question of mutual accountability here. On the first one, you are absolutely right about the data and the forms, the T3010. Part of our new portal CharityFocus has a tool we have developed called the T3010 QuickPrep. This will help charities fill out their T3010 form in the best possible way. It is bit like you do with income tax. It stops you if you have made a mistake. If you have not answered a question, you cannot go any further. This is all in the hope that charities would do a better job — not because they do not want to but because it is a complex form to fill out.

However, at the same time, when a minister like Minister Kent says something like that, that has an impact also. It is on both sides. There has to be a mutual accountability about how we support the charitable sector. That comment made a lot of noise, and many Canadians may wonder, if they hear this again, if there is something terribly awry within the charitable sector and maybe they would not give any longer, and that would be the most disastrous of conclusions.

Senator Duffy: Ms. Krause, there have been a number of people both in this chamber and in the other place who have may have verbally assaulted you about your credibility, that you must have a hidden agenda, what is going on. Would you like to leave us with a brief résumé of why you are doing this, what motivated you, and why you think Canadians should know the truth about how some people are trying to manipulate them? Are you being paid by anyone?

Ms. Krause: No, I am not paid by anyone. In fact, I have been able to support myself because I sold my house. I am doing this because I love my country. I worked overseas for 10 years in places where there are no proper environmental laws, and the evidence is heartbreaking.

I came back having been away from British Columbia for 15 years. I wanted to work in the poorest parts of my own country. I worked with the Algonquin people in Quebec before I left Canada in the late 1980s, and I talked to the chiefs in the First Nations communities in northern B.C., and they told me they believed in salmon farming because they wanted at least one person to get up in the morning and send the kids off to school and have a job. They wanted jobs, not just the jobs in the band office. That is why I got into salmon farming, and then I saw how the campaign against salmon farming has been devastating to the dignity of hard-working people. There have been brawls in bars and children have been teased and ridiculed at school because one of their parents is a fish farmer. Hundreds of people have lost their jobs because the industry has been brought to its knees by a campaign that is largely based on claims that are faulty and flawed, some of them are false.

The reason I have done this is because I feel too many people are being hurt by these environmental campaigns. Meanwhile, I see that some of the directors are earning salaries approaching $200,000 themselves. I see purchases of million dollar properties right next door to the private properties of directors and things like that, so I can see how in some cases the directors of the charities are not hurt by their own actions but the public is.

I took it upon myself to do this because when I came back to Canada I wanted to do something for my own country. I thought I would do this by working within the salmon farming industry. I would never have guessed that I would have ended up spending several years pouring over American tax returns.

The reason I am doing this is because I care profoundly about the environment. I believe we do need a fiercely strong, financially autonomous environmental movement. Obviously the environmental movement is not appreciating the calls for greater transparency, but at the end of the day, I think it will make them stronger and that we will have a stronger environmental movement, and I hope we will have a stronger charitable sector as a whole.

Senator Campbell: Thank you for coming today. I feel like I am in an editorial meeting for the National Enquirer.

I invite Minister Kent to make those allegations outside the other place to see how that goes, and to actually attach something to it.

The first thing I have a problem with is this idea that somehow when someone gives anonymously to a charity there is something wrong with that. There are people sitting at this table who sit on charitable boards and who know that often anonymous donations are given because the person simply does not want to be out there. There is nothing nefarious about it. For some reason, we seem to be getting into that. What do you stay about that Mr. Lauzière?

Mr. Lauzière: Anonymity for some people is important for all kinds of reasons. For others, the reason is religious and moral. For others, it is because they do not want to be linked to a certain cause for all kinds of reasons. More important in terms of information, although the dollars should be there, is how organizations spend the dollars. That is what we are talking about, but anonymity is very important for some. I fear that we would put that in jeopardy. It would be difficult for a number of charities that have been the beneficiaries of some very good dollars for very special causes from people who want to remain anonymous. That needs to be protected.

Ms. Krause: I agree. I have nothing to add.

Senator Campbell: Tides Canada seems to have risen to the top here. Are you aware that Tides Canada has been audited by the CRA?

Ms. Krause: Yes. I read it in the news.

Senator Campbell: What was the result, do you know?

Ms. Krause: I believe the audit is ongoing. I have not heard any result.

Senator Campbell: Do you have any knowledge that they may have been audited two or three times over the last five years?

Ms. Krause: I read that in the news as well.

Senator Campbell: Do you assume that the audits would be complete over a five-year period? Tides Canada has been gathering a lot of lightening. I would assume, if Tides is being audited virtually every year or every other year by the CRA, that if there was wrongdoing in respect of 10 per cent, or whatever, it would be found by the CRA.

Ms. Krause: Having spoken with the CRA, I know that they did not have the information that I provided, which I got from the American tax returns. My understanding is that whatever they may be doing now, they have information that they did not have previously.

The Chair: Are you saying that you were required to go to the United States to do the work that the CRA would normally have done when talking to the IRS?

Ms. Krause: I am saying that the first time I spoke to the folks at the CRA, I was asked to do so because they contacted me. I gave them information that they did not have. I know they did not have it and that is part of the reason I created part of my blog so I could talk to folks in Ottawa and we would be looking at the same thing. They did not have the information in the U.S. tax returns, which brought about my questions in the first place. If I had looked only at Canadian tax returns, I never would have had the questions that bring me here today.

The Chair: That is what I understood.

Senator Campbell: Senator Duffy asked why the rules are not the same in Canada and the United States. It is probably because we are Canadian and they are American. This is how we have progressed and they have progressed.

A lot of rhetoric is happening here in many of the statements. I do not think that any statements by Ms. Krause are meant in a threatening manner. I do not see them as threatening any more than I see the statements from Mr. Lauzière as some sort of cover-up for charities. I am simply saying that there is an assumption that someone is right and someone is wrong. I am not making any comment on that; I am simply asking questions about how things are being done.

The rhetoric has overtaken the common sense. I have the same sense as Mr. Lauzière. I am on the board of a few charities, and we are feeling a chill from this because there is a lack of trust, perhaps coming from this. Certainly, I hope that from this we get some illumination on where we should be going. I thank you both for coming today.

Senator Mitchell: When I hear the arguments that Ms. Krause is making, I am heartsick. I find them disturbing and I think many Canadians find them disturbing, particularly when you have a government that picks it up and institutionalizes these arguments. This is about freedom of speech. We send people to Afghanistan to fight for those values. Then, when someone in our country wants to speak about something the government disagrees with, they are intimidated and bullied. Largely, that is an extension of this kind of argument. I am deeply disturbed by it. This is not a game. This is about freedom of speech and about someone trying to rank values and rank what is a more important democratic value. It is an important democratic value that someone can fight for development and it is an equally important democratic value that someone can fight to preserve the environment.

It is ironic in the extreme that you picked the salmon fishery issue. Why is it that when people want wild salmon in Canada, they have to go to Alaska? It is because climate change has been killing our fisheries, and we do not have the same wild salmon reserves that we could have so we would be free to buy those things. When you talk about what is good for the economy, I say that defending the environment is good for the economy. How many jobs have we lost in the east and west coast fisheries? How many jobs have we lost in the forest industry? My point is that you are not really saying you are opposed to charities having input to the public policy debate, such as the Fraser Institute which does only that, but that you are opposed to charities you do not agree with. Who gets to decide that?

Ms. Krause: May I respond?

The Chair: Yes, please.

Ms. Krause: As I said in my opening remarks, I am all for environmental activism. We need environmental activists to prompt reform in industry and to keep government and industry on their toes. However, if Canadian environmental organizations are participating in the Rockefeller Brothers Fund Inc. campaign to thwart major projects in our country, the least they can do is be out in the open and say that they are part of that campaign. We should not have to find out about it years after the fact.

The Chair: Do you have a comment Mr. Lauzière?

Mr. Lauzière: No.

Senator Mitchell: Speaking about big family foundations, let us talk about the Koch brothers. They had been declared one of the top 10 polluters in the U.S. They are directed with two fundamental objectives for their foundational funding: one is to oppose any government regulation that limits the unrestricted operations of the oil industry; and the second is to discredit climate change and clean energy while denying global warming. The Koch brothers gave $500,000 to the Fraser Institute between 2007-10. Are you saying that fair is fair and that the Koch brothers should not be allowed to fund that or that the Fraser Institute should have told everybody they were funding that? Are we picking sides?

Ms. Krause: It should be out in the open. Last fall, long before this became a broader discussion, I asked them about that. Someone asked me on twitter about the Koch brothers' funding to the Fraser Institute. I asked them publicly on twitter, as public as that is. They replied right away and it was out in the open. That was at least six to eight months ago. I agree with you if you are saying that money from the Koch brothers in Canada should be out in the open.

Senator Mitchell: Are you saying that it should be out in the open or stopped? On the one hand, you are saying it should be open but, on the other hand, you are saying it should be stopped.

Ms. Krause: Let me answer that.

The Chair: Senator Mockler, I will try to chair this meeting the best I can. Please do not give directions to the witnesses or to anybody else at this table. If we follow the normal rules, we will get through this quite nicely. Thank you.

Ms. Krause: My humble view is that money that goes to charities should be used for charitable purposes. If it is coming from the Koch brothers or elsewhere and is for charitable purposes, that is fine as long as it is out in the open, especially when it comes from sources as big as the Koch brothers or some of the other American foundations.

Senator Mitchell: Certainly many Canadians believe that defending the environment is a charitable purpose.

You mentioned Ducks Unlimited and said that they get 30 per cent of their funding unintentionally. I am quite surprised that from your perspective you would pick on a group like that. I want to establish that you are noting that that is a problem group and that it would come under the rubric of the government's policy on limiting funding to groups like that. Is that what you are saying, that Ducks Unlimited would fall in with Pembina and, in your lexicon and structure, would fall in with Tides Canada and those kinds of organizations as you depict them?

Ms. Krause: No. My understanding is Ducks Unlimited is essentially an environmental construction company. They do a lot of great work, but I have been surprised to see some of the projects for which they have been funded. For example, they were funded for something called the Prosperity Project, which is to fight a particular mine in British Columbia.

I think Canada is a very rich country, and we should be able to fund our own environmental movements. It concerns me that Ducks Unlimited has received $57 million from a few charitable trusts. I think we should be funding our own environmental movements.


Senator Hervieux-Payette: Because Mr. Lauzière speaks French, the opportunity for us to speak French together will give me a little rest. I would like to establish one thing. First of all, the term  "charity " is a word that, based on my Judeo- Christian culture, refers to a positive religious sentiment and so on; in French, the term we use is  "bienfaisance ", as opposed to  "charité ".

Second, I would like to remind colleagues that part of the charity in Quebec is carried out through taxes. We pay 10 per cent more taxes than people in the rest of Canada, in large part because that money goes to causes such as education, daycare or health research.

The reason I say that is, when we talk about charitable organizations, we are referring to those activities that the government does not take responsibility for. Some time ago, I was a member of the Standing Senate Committee on Legal and Constitutional Affairs, and I was aware of the fact that an American organization, the National Rifle Association, collects some $200 million every year and that 50 gun manufacturers provide funding to the National Rifle Association, which has enormous influence and funds research here in Canada.

We cannot start compartmentalizing. Either everything is open and transparent, as you say, or we prohibit it altogether, and you can tell me how we would go about doing that.

Personally, I would prefer for everything to be open and to know where the money is going. More than $100 million a year is collected in order to fight the seal hunt: the International Fund, $21 million; the Humane Society, $1 million; $25 million for People for the Ethical Treatment of Animals; the Humane Society of the United States, $99 million. They go around the world, to Europe and elsewhere, to wage a battle against a group of workers in Canada.

I sympathize with your issues about fish farming — except that my sense is that we eat a lot of salmon; I had it twice yesterday; at the same time, we must arrive at something real and enforceable.

Mr. Lauzière, does transparency trump relevance? In reality, the word  "charity " is much broader, as it relates to income tax, than the charitable and religious sentiments we are all familiar with. It is important that people watching this today know that the word  "charity " has a much broader interpretation and covers much more than just looking after your neighbour to ensure that his basic needs are met.

Would you reduce the scope of the term  "charity "? Would you provide for an obligation to produce financial statements?

On the matter of anonymity, I believe that we all agree here that, if we were to publish a list of every donor tomorrow — and I know what of I speak since I am involved with a number of organizations — those individuals would be constantly harassed. They would take the donor lists from another association and chase after them. I understand why they do not want to publish the list, and lists are also sometimes sold. For example, people purchase company lists: Maclean's sells its lists, as do Reader's Digest and many other large corporations, for the purposes of solicitation.

The frame of reference is what I am interested in — as a means of determining where we stop, where we begin and what we put out to the public. I would like you to explain the parameters your organization would be prepared to support.

Mr. Lauzière: With respect to your question about the charitable sector, you are absolutely right: it is very broad and covers much more than simply feeding the poor — something that is an essential activity in our sector, no doubt about that.

But it also includes museums, hospitals, universities, sports clubs that allow young people to get involved, become athletes and everything else; it is also arts and religion. It is very broad.

The charitable sector in Canada is not just a bunch of nice people doing nice things; they are people tackling the most fundamental issues within our society, our economy and our environment. I believe we need to rethink the way we talk about the charitable sector; I fully agree on that point.

Regarding your other question as to whether the 10 per cent should be prohibited, I think that would be disastrous. It has been demonstrated—and I think everyone here would agree — that charitable services act as partners to every level of government. In Canada, there are so many of our public policies that have come about thanks to the work of charitable organizations. In my opinion, this is about much more than just good information and transparency; it is about balance.

We cannot focus only on transparency, because that could paralyze these organizations. They would spend their time preparing reports rather than serving Canadians. In my opinion, it is about finding the proper balance; we are getting there. I believe we are moving in the right direction. Canadians have a right to access proper information in order to make their own decisions, but there must also be a proper balance between the information that is sought from organizations and, as I was saying earlier, the burden placed on them. They are already highly regulated and subject to significant reporting requirements in relation to their funders.

Senator Hervieux-Payette: I found out recently, for example, that McGill was establishing a chair of Islamic studies with Yemen. This could have been funded by Canadians but, in this case, it was funded by people outside our country. In any case, they will not be benefiting from many tax credits. At the same time, if we are saying that we want to put a stop to foreign charitable donations, that will have to apply to every sector, and not just the environment — in other words, education, health, arts, and so. There are some substantial donations made to the arts from U.S. foundations, for museums and the like, which we are very happy to receive.

Should we be taking a comprehensive approach to this, as opposed to making a distinction between sectors where it will be allowed and others where it will not?

Mr. Lauzière: We cannot do that. If there is that transparency and everything is clear, you are right: international cooperation agencies are the greatest beneficiaries of outside funding, followed by universities, hospitals and research organizations. Government organizations are very far down on the list of those receiving foreign funding. If we started interfering with that, the impact would be enormous. Closing our borders to international philanthropy is not either feasible or advisable, in my opinion.

Senator Hervieux-Payette: What kind of practices or procedures are you recommending with respect to transparency, given your experience on the ground? For example, if a New York foundation wants to donate $1 million, is it just the organization that will have to report that in its annual report — in other words, we received this amount of money from Canadians and these amounts of money from other countries? What kind of mechanisms would you recommend to enhance transparency?

Mr. Lauzière: The first would be to properly complete the Canada Revenue Agency's T 3010 form, which is going to include additional questions. As we discussed earlier, it is important to provide accurate information. However, as I was explaining earlier, because of the great diversity — organizations range from universities to food banks to the Cancer Society — and the fact that there are organizations out there that work in very different spheres of activity, it would be difficult to say: You must do things this way. At the same time, every organization has to recognize that Canadians want accurate information. We must find some way of achieving that, while still striking the right balance.

The organization's job, first and foremost, is to develop its mission and serve Canadians, while at the same time finding a balanced way of providing proper information to Canadians seeking it.

Senator Hervieux-Payette: If we assume that charitable organizations make at least $1 million a year, is it your view that the salaries of executives and the percentage of funding that went to the cause should be published, so that organizations are not spending 50 per cent on administration and 50 per cent on the cause. Are you looking at these kinds of parameters?

Mr. Lauzière: In terms of compensation, that is already part of the Canada Revenue Agency's form. You have to state how much is being spent on salaries in general, and then indicate, for each of the 10 highest paid employees, which category they are in — for example, $200,000 to $250,000, $250,000 to $300,000, and so on, without naming individuals. It is a matter of confidentiality. That is something that can be discussed.

But it goes much further than that. Up until 2008, the only requirement was to indicate whether people were making more than $120,000. The Canada Revenue Agency has gone much further. Now there is a whole series of categories and you have to provide information for the 10 highest paid employees.


Senator Lang: I want to welcome our guests, specifically Ms. Krause. I appreciate all the time and effort you have put into this particular file. I think the Canadian public is better off for the hard work that you have done over the past number of years.

I think an issue here is the magnitude of the dollars that we are talking about. We are no longer speaking in the context of funding various environmental movements by virtue of my grandma writing a $10 cheque to support either the construction or not support the construction of the reservoir. This there is a huge amount of money coming into our country that I think most Canadians did not know was coming in. There was in the neighbourhood — if my understanding is correct — of well over $300 million that has come in over the last number of years to support organizations that are trying and that are making every effort to direct public policy.

My question to Mr. Lauzière is: Did you know, prior to the work that Ms. Krause did, that over $300 million had come into this country from beyond our borders for the purposes of funding environmental organizations?

Mr. Lauzière: The numbers we have come from the Canada Revenue Agency, so we have the numbers on all foreign dollars coming on board. I can give you a few of those numbers, if you would like. For example, 2.4 per cent of charities report receiving some type of foreign funding. That was $880,032,000 in 2010, for all organizations: universities, international development, et cetera.

In terms of the environment, 4 per cent of the revenue environmental organizations receive come from foreign sources. It is 14 per cent for the whole sector.

That gives you some of the numbers. What particular foundation gave to what particular organization to do what particular thing is the kind of information that is not available.

Senator Lang: I will go back to my comment earlier. I know I and many of the people in my area had no idea that this volume of money was coming into the country.

The Chair: I am sorry. You cannot assume that is the case when you have just heard what the Canada Revenue Agency's figures are.

Senator Lang: I am talking about the public, Mr. Chair, because I have phoned the Canada Revenue Agency.

The Chair: You just heard from Mr. Lauzière regarding what the Canada Revenue Agency's figures are, so we cannot assume one is right or the other is right. However, we know what the Canada Revenue Agency's figures are.

Senator Lang: I would just like to move on to one other point. I think Senator Campbell alluded to the fact that Canada has different rules than the United States as far as disclosure is concerned. There is more disclosure on the United States side in respect to the financing of our charitable organizations as compared to Canada.

Do you feel we should be looking at our rules comparable to the United States, and perhaps other jurisdictions, to ensure that the same sort of full transparency is there, so you can meet all the responsibilities that you talked about earlier?

Mr. Lauzière: I think we should always be looking at how we report on that in other jurisdictions, not only the U.S. It is hard to say the U.S. is doing better than we are — probably not. They have a different set of criteria. Some of it might be more precise than others. On the other side, when you look at what is happening in the charitable sector in Canada, we have just launched the accreditation standards program that does not exist in the U.S. This new portal does not, either.

Therefore, all the information you are talking about in terms of the dollars coming into Canada will be made much more public than before. That something we are doing here in Canada that they are not doing elsewhere.

I think we can learn from each other, sure, but I am not sure the U.S. model is the one to follow. There may be some aspects of it — we need to look at that — but we should constantly be looking at how to do things better.

Ms. Krause: I agree. I do not think I have much to add. I think there are things we can learn from the American model.

To go back to something that was said earlier, we have all of our not-for-profit organizations essentially in one category. In the States, there are several categories according to the amount of lobbying that is done by the organization. Perhaps if we had that type of a structure — if we had more of a breakdown within the charitable sector — it might be easier for the CRA to hone in on those who are self-declaring lobbying activities. That is perhaps one way that we could take a look at their model.

Mr. Lauzière: In terms of the regulation, charities that do lobby also have to be part of the Lobby Registration Act. They have to register at the federal level, and in most provinces, also. That goes back to what I was saying: There is a lot of regulation; there are many sources of information. However, charities do have to register as lobbyists, so there is that information, also.

Senator Mockler: Mr. Chair, I did not want to give any impression that I was questioning the way you chaired this meeting earlier, so I want to apologize.

I want to link a bit with what Senator Campbell has said in that I think we have a common denominator, and the one we all have is that we want more transparency, integrity and accountability. Do you agree with that?

Mr. Lauzière: More transparency, if it is well balanced. I would not say that about more integrity. There is a very high level of integrity, so I would not say we need more integrity. That we need more measures so information is more available to Canadians — I agree we need to look at that.

Senator Mockler: Do you agree with more accountability?

Mr. Lauzière: I would say the charitable sector is probably the most accountable of the sectors. It is accountable to the Canada Revenue Agency, to its members, to its donors and all of the foundations that fund it. They are hugely accountable. I think it is more looking at how we present the information to Canadians so that it makes sense and it is understandable.

Ms. Krause: The concerns I have tried to raise are about a couple of dozen organizations, so a very small number. There are tens of thousands of them in the charitable sector. Therefore, the concerns I have tried to raise are really about a very small group, and these concerns should not be over-generalized to the whole sector.

Senator Mockler: Since the debate has been undertaken, people have come up to me. I was in the Halifax airport yesterday morning and I want to tell you I had two people coming over and saying to me,  "I want to share with you that I think we are all on the right track when we want to ask those charities, " especially when you look that we have approximately 85,000 charities across Canada, Mr. Chair. In the U.S., there are a little over 1.1 million charities. I think we can all learn from ourselves.

Senator Buth: My question has been answered. Thank you.

The Chair: That sometimes happens when we have 12 interveners.

Senator Ringuette: There was a red tape commission that was looking at reducing the amount of red tape that the federal government was requesting. Was Imagine Canada part of the consulting process, Mr. Lauzière?

Mr. Lauzière: Was this the red tape commission launched last year around SMEs?

Senator Ringuette: Yes.

Mr. Lauzière: No, we were not part of that.

Senator Ringuette: Thank you.

The Chair: Thank you very much.

I will continue by thanking each of you for being here. You have helped us a lot in this particular area. We have two things happening with respect to charities. We have an inquiry ongoing that was started by Senator Eaton in the Senate, and that is a broader discussion. Our purpose today is to focus on the amendments in Bill C-38, with respect to charities. That is our most immediate challenge.

Mr. Lauzière: As I said earlier, to add in where we are comfortable with the intent in where this is going in terms of the budget bill, and in terms of how foundations and all charities that transfer dollars to another charity, there will be a new way to report on that. On the wording, we may have some wording that we want to provide to the financing. We are working on that now. It does not go to the intent, but into the clarification of what is in the bill now. That will follow to you as a committee.

The Chair: Thank you very much. Keep up the good work in this area. We have some other business that we will deal with. If you could fold up your documents, you are welcome to go at your leisure.

I understand Senator Ringuette has an issue.

Senator Ringuette: I do not know where the steering committee is in its discussion in regard to witnesses. I would certainly like to reiterate the fact that this committee should be hearing from the Parliamentary Budget Officer.

You will remember that a few years ago that, upon the recommendation of this committee, the Parliament of Canada would have a Parliamentary Budget Officer. I wish for us to hear the Parliamentary Budget Officer in regard to Bill C-38 and the $5.2 billion reduction plan in order to have perspective in regard to the bill. I believe this committee — which was instrumental in having this parliamentary position put in place for all parliamentarians — would at least have the courtesy to invite the Parliamentary Budget Officer before our committee in regard to Bill C-38, which is the budget bill and is the main issue of research right now.

The Chair: Anyone else wish to make any comments? The steering committee will of course take that under consideration.

Senator Buth: I will make the comment that I think the Parliamentary Budget Officer's reports are all available. He has reported on this, and so his comments are already a matter of public record. I will leave that with the steering committee.

The Chair: Is there anything further?

Senator Ringuette: All parliamentary officers report, just like the Auditor General. When the Auditor General reports, we have him before our committee. When the Public Service Commission reports, we have her before our committee. There is no reason we should not have the Parliamentary Budget Officer before us.

The Chair: Let me comment on that. There are really two things. One is having an officer of Parliament or the Parliamentary Budget Officer, who is not quite in that category, come to our group after a report is different from bringing that person in as a witness in relation to a bill that we are studying.

That is the only comment I would make at this time. I think that has to be considered by steering committee, and that is what we will do.

(The committee adjourned.)

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