Proceedings of the Special Senate Committee on the
Issue No. 3 - Evidence - May 7, 2018
OTTAWA, Monday, May 7, 2018
The Special Senate Committee on the Charitable Sector met this day at 6:35 p.m. to examine the impact of federal and provincial laws and policies governing charities, nonprofit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada.
Senator Terry M. Mercer (Chair) in the chair.
The Chair: Welcome to this meeting of the Special Senate Committee on the Charitable Sector.
I am Senator Terry Mercer from Nova Scotia and chair of the committee. I would like to start by asking my colleagues to introduce themselves, beginning with the deputy chair.
Senator Omidvar: Ratna Omidvar from Ontario.
Senator Raine: Nancy Greene Raine from B.C.
The Chair: Today the committee will continue its study to examine the impact of federal-provincial law and policies governing charity, non-profit organizations, foundations and other similar groups, and to examine the impact of the volunteer sector in Canada.
For this evening’s meeting we will focus on the economic contribution of the sector.
On our first panel this evening we have witnesses from Statistic Canada, Catherine Van Rompaey, Director, National Economic Accounts Division, and Matthew MacDonald, Assistant Director, National Economic Accounts Division.
Thank you for accepting our invitation. Prior to the start of the meeting, one thing I learned was that they are both from Atlantic Canada, which makes me happy.
I would like to invite the witnesses to make their presentation, but I would also like to remind them, as per previous instructions they have been given, that presentations should not exceed 10 minutes in length. Following the presentation made by the witnesses a question and answer session will take place and each senator will be given five minutes to ask questions before the chair recognizes another senator. There will be as many rounds of questions as time will allow. Senators do not need to feel required to ask all their questions at once. During the questions and answers session, I would ask senators be succinct in their questions.
Prior to us starting, I should indicate that there is a photographer in the room this evening representing Senate Communications, so don’t feel intimidated. He is a friendly photographer.
On behalf of the committee I sincerely thank you and ask you to commence your presentation.
Catherine Van Rompaey, Director, National Economic Accounts Division, Statistics Canada: It’s my pleasure to be here this evening to address this group regarding information on the size and scope of Canada’s charitable and non-profit sector.
These statistics are housed within Statistics Canada’s system of macroeconomic accounts. This is really an integrated suite of economic accounts based on international standards. From this set of accounts we get important indicators like the gross domestic product, labour productivity and national wealth.
I think all of you have received copies of the presentation, so perhaps I can take you through it, starting with the second slide. In terms of the non-profit sector’s broad economic contribution in Canada, it accounts for roughly 7 per cent of Canada’s gross domestic product.
You can look at this activity as being broken down into three distinct parts. The majority of the non-profit sector is concentrated in what we might think of as quasi-government organizations. We refer to them in the slide as government-based organizations. These are things like hospitals, universities, nursing and residential care facilities. That accounts for about two-thirds of the economic activity of the non-profit sector.
One might think of community-based organizations, but don’t get hung up on those terms because they are not official terms. They are just a little more intuitive than the technical terms we have in macroeconomics. They represent about 22 per cent of that amount. These are things like child and youth services, social assistance organizations, and what a lot of people would think associate with the non-profit sector or with the charitable sector.
Then the remainder of the sector is composed of business-based organizations. You can think of these non-profit organizations as those that serve business: things like business associations and chambers of commerce. Even other organizations like condo associations and organizations supporting employees fall within that category.
On this last group, I guess I will talk to you a bit about the measurement. We don’t have a lot of statistics in our current suite of statistics that cover them. The business-based organizations are not right now well represented in the suite of statistics that we produce. I will take you through the statistics that we currently have available. I’ll come back to this point at the end of the presentation.
If you go to slide 3, we will talk briefly about the first segment, which is really the government-based organizations. As I mentioned before, they are represented by hospitals, residential care facilities, universities and colleges. They really dominate the economic landscape when it comes to the overall economic value in the non-profit sector. If you look at the chart on the right, it really shows employment in that piece of the sector. Employment in that piece of the sector is about 1.4 million jobs, which represents 7.3 per cent of total employment in Canada. Over half of that, 55 per cent, is in hospitals and just over 20 per cent in universities. For the health piece of that sector, they actually get the large majority of their funding, over 80 per cent, from provincial government transfers. Sales of goods and services are also an important source of funding that follows at 13 per cent. These ratios have been fairly stable over the 2000s. For universities and colleges, you see both transfers from provincial governments and the sale of goods and services, which really represents tuition fees for universities, are important sources of funding at around 40 per cent.
On slide 4, if we look more at the community-based organizations, we see that they have much more diverse sources of funding. I will focus the remainder of my presentation on these organizations. Then I’ll come back to broader measurement issues at the end. A large portion of their funding, amounting to about $17 billion, comes from donations or transfers from individuals. This line actually also includes membership fees. Corporations provide about $3 billion in funding and a substantial amount comes from governments, about $19 billion, with the majority of that, about $12.7 billion coming from provincial governemnts. If you look at the little breakout there, it gives you the breakout of the 40 per cent of the amount coming from governments.
We don’t show sales of goods and services in this chart. This is a little peculiarity of measurement in macroeconomic statistics. They are not shown statistically. If we did show them, they are a large amount for this group of non-profit organizations. They actually amounted to $18 billion in 2017. If we were to calculate that as a percentage, over a quarter of their funding comes from this source. It has actually been growing fairly steadily in recent years, both in terms of value and in terms of proportion.
Turning to slide 5, perhaps we could look at the share of economic activity. I am talking about the percentage of GDP, just that portion of what we’re calling community-based organizations. The share was about $1.4 per cent of GDP in 2014. The lion’s share of that came from two industries that we have identifiable within our statistics: The grant-making civic and similar organizations, which include foundations, and the non-profit wealth organizations, which is really the social assistance piece. Those account for over half of that activity.
On slide 6, if we look at employment in this domain, this particular piece of the non-profit sector accounts for 615,000 jobs, which represents about 3.3 per cent of total employment in Canada. The two categories that I mentioned before, the wealth organizations or social assistance and those grant-making civic and professional organizations, account for over half of that amount in terms of employment.
Turning to slide 7, if we look at average compensations by types of non-profit organizations, we see that the community-based group I am focusing on now are kind of below the economy-wide average in terms of average wage. If you look that slide, you see that as a baseline I have given you the average compensation for all business sector industries. Then, at the top part you will see those components of the community-based organizations relative to the pieces of the government sector, the hospitals, the universities, et cetera. The community-based organizations actually have wages below the economy-wide average. The hospitals and government-based piece are actually above the economy-wide average.
Slide 8 is where I come to what I would like to talk to you about: some of the history of measurement in terms of measuring the economic contribution of the non-profit sector in Canada. I mentioned to you that we have a piece of a non-profit sector that is not currently identifiable in the suite of statistics we produced. That is the piece of NPIs, or non-profit institutions, that serves the business community. The last time we measured it, they accounted for about 13 per cent of overall activity within the non-profit sector.
To step back for a minute and give you a bit of background, we at Statistics Canada started developing comprehensive economic accounts in the non-profit sector back in the early 2000s. At that time, the thrust was to inform the voluntary sector initiative. We developed a product that was called the satellite account of non-profit institutions and volunteering, which covered the entire non-profit sector in all the pieces I was telling you about. It was aligned with international standards from the United Nations that were actually based in research done by Johns Hopkins University at the time. We were one of the pioneers to describe the size and scope of the third sector within a national economy, within the concepts that macroeconomics statistics are based. We produced data from the period 1997 to 2008 to give a comprehensive picture of the non-profit sector in Canada.
We identified all those three pieces. If you look at that little chart on the final slide, the business-based organizations are highlighted in red. That is the piece we don’t have right now but used to have when we published the satellite account. We discontinued the satellite account in 2010. At that time, the decision was to have more timely quarterly statistics on the piece I described to you: those community-based organizations for which we have a different term in macroeconomics. We call them non-profit institutions serving households. We have very timely statistics on that piece. The other pieces, the universities, hospitals, et cetera, are identifiable within our published statistics; but the business sector is no longer identifiable, as I mentioned before. We have more timely statistics, but we don’t have as comprehensive statistics. We also no longer publish a whole sector on the contribution to the economy and how it’s described.
We have had some very recent requests to reinstate a similar product that looks like the former satellite account from organizations like Imagine Canada, from whom I know you will be hearing, as well as from the Canadian Council on Social Development and a number of provincial policy partners. As well, Employment and Social Development Canada is very interested in understanding social entrepreneurship, which overlaps with the non-profit sector. We are in active dialogue with all these partners. We are looking for a mechanism to reinstate this product. We don’t have an ongoing funding source at this particular point in time, but it’s something that we are pursuing. If it’s a priority, we’ll certainly pursue it internally at Statistics Canada.
That concludes the formal part of my presentation, but I would be happy to answer any questions you might have.
The Chair: Thank you for your very informative presentation. You have raised a number of questions.
Senator Omidvar: I have a question that is particular to gaining some clarity in language and definitions that you probably understand really well at Statistics Canada. In our first few meetings, we have sort of concluded that the not-for-profit sector and charities are not the same. They have different regimes, transparency and accountability mechanisms. Therefore, donations and contributions are not the same either. In your deck, you call this Canada’s not-for-profit sector.
Am I right or wrong in thinking you should call it Canada’s charities and not-for-profit sector?
Ms. Van Rompaey: You are right.
Senator Omidvar: That helps me a little. Just for our purposes, colleagues, we need to be really clear. It sort of gets conflated and becomes confusing for us.
At this point, are you able to provide the information on the not-for-profit sector separately from charities because they are not the same? Are you able to do that?
Ms. Van Rompaey: That’s a question with a bit of a long answer. Maybe I can give you a bit of context. When we built these statistics, as I mentioned before, we were operationalizing an international definition, which is for the non-profit sector, not for the non-profit sector versus the charitable sector. When we built this set of accounts, it includes both charities and non-profit organizations. It doesn’t distinguish one or the other. The idea within macroeconomic statistics was to define the sector broadly. It wasn’t necessarily based on a legal definition but more an operational definition that would be comparable across countries.
In our statistics we formally produced and in the statistics we currently produce, we don’t identify charities separate from non-profit organizations. They are built from all those different legal files, so I suppose it could be done because we’re integrating, for example, all the files on registered charities from CRA with non-profit institutions and non-profit corporations. It’s something that could be done in the future, but in our current suite of statistics it’s not available.
Senator Omidvar: As you are considering reinstating the satellite account, this would be an opportune moment for a committee of the Senate to make a recommendation that in fact the Canadian Automobile Association is very different from the Boys and Girls Club.
Ms. Van Rompaey: Right. The satellite account identified different types of organizations according to a classification called the international classification of non-profit organizations. You would be able to identify philanthropic organizations separate from business and professional. It had a classification within it that allowed you to delineate the parts, but that classification was not based on a legal definition of charity versus non-profit.
Senator Raine: I am not clear on what you mean by the satellite account system. I wonder if you could describe that. I am sure it has something to do with statistics that I don’t know about, but I would like to understand the term satellite account.
Also, if you wouldn’t mind clarifying, am I to understand that our adventure with Statistics Canada was driven by wanting to be able to measure what is happening in Canada versus all the other countries in the world, as opposed to needs that we might look for in the statistics from the internal value inside of Canada?
Ms. Van Rompaey: I’ll start with your question about satellite account. I know it’s a strange term. It is a technical term that goes back to macroeconomics and international guidelines. It’s simply a set of specialized economic accounts that allows to you bring out things that are not in the regular normal economic statistics. You can introduce new classifications. You can introduce broader concepts.
I will give an example. When we did the satellite account, it also had a non-market extension to put an economic value on volunteer activity. That would not be within the production boundary and standard economic statistics, but it was something we could do in the specialized economic account. This is a mechanism used to develop statistics that are comparable to indicators. If I develop a statistic within a satellite account and within the same conventions that are used for a standard economic statistics like the GDP, they will be comparable to the GDP so that I can, then, for example, have a share of GDP.
In terms of the balance between international comparability and meeting local information needs, the short answer is that we try to do both. Way back in the early 2000s, we had an advisory committee associated with the voluntary sector initiative. We took direction from them. Of course, there is always the bounds of feasibility too. It is depending on what data sources and what information you have at your disposal. There may be some things that are more feasible to measure than others. I don’t know if that answers your question.
Senator Raine: For now. I’ll listen to the other questions, but I have a few more for later.
Senator Frum: First of all, my apologies for being late. I missed part of your presentation. You may have already covered this or touched on this, but do you keep any statistics about the demographics of who in Canada contributes in terms of age groups or differences in different parts of the country?
Ms. Van Rompaey: We do but not within the statistics that I am responsible for, so not within the set of economic statistics. There is a regular survey that is part of the general social survey on giving, volunteering and participating. That survey measures volunteering and giving. It would have a demographic component so you can see who is contributing, which age groups, how much, and all that kind of thing.
That is conducted right now on a five-year cycle. The last one available was for 2013. There is one in the field right now for 2018.
Senator Frum: Similarly, do you keep statistics about Canada vis-à-vis other countries in terms of the contribution to charitable and non-profit?
Ms. Van Rompaey: I am not sure how many countries have actually compiled accounts on the non-profit sector. Way back in the day in the early 2000s when we were doing this, we were part of a test group of countries that were all interested in doing statistics.
I know certain university researchers in the United States have produced these kinds of statistics. Johns Hopkins was a big one. I can check up on that, but I couldn’t tell you offhand who is currently doing it. A handbook released by the UN was recently updated. It sets out the guidelines for how to do this, so it’s available to any country that wants to undertake this kind of thing.
Senator Frum: But you are saying that many countries don’t produce files.
Ms. Van Rompaey: It’s not a standard requirement to produce them. It depends on if there is a policy interest in that country whether they would do it. I can get back to you on who might be undertaking that right now.
The Chair: If you do come up with that information, you can get it back to us through the clerk, and the clerk will circulate it for us.
Senator Omidvar: I will dig a little deeper on the difference between charities and the not-for-profit sector. Based on your work in international jurisdictions and comparative analysis with other countries, is the different context in Canada unique from other jurisdictions? I am referring to the separation in law, in accountability and in transparency between charities and the not-for-profit sector? Or, is it quite common in similar type jurisdictions that is there is a separation and some confusion, if I may say, between the two?
Ms. Van Rompaey: I have to be honest. That hasn’t been the focus of my research, so I am not sure I can answer that question. If I had to guess, I would say that it is similar in many other countries, but that hasn’t been the focus of our work at Statistics Canada.
Senator Omidvar: I think I heard you say that Statistics Canada may be going deeper into information and evidence on the sector. I think I heard you say that, based on what happens in other rooms. What is the process by which you can actually dig deeper on questions that are of interest?
For example, if the country were interested in examining the representation of diversity and gender equity in the not-for-profit charitable sector, would that have to come from another ministry like Status of Women Canada or the Ministry of Innovation, Science and Economic Development? Is that how you get funded?
Ms. Van Rompaey: That is one mechanism for funding. I don’t think there is any clear answer to that question. We try to be as responsive as possible to any policy needs at the time. We are always juggling a whole lot of competing priorities within a given budget. That’s really the short answer.
If there is a clear policy requirement for us to produce statistics, we certainly try to respond to it.
Senator Omidvar: If Status of Women Canada were to require it and to provide you with funding to do more research on gender representation in charities, on their boards and in the not-for-profit sector, et cetera, you would have the capacity to do so.
Ms. Van Rompaey: If it were a priority and we were able to identify a source of funding, yes.
Senator Omidvar: If it were a priority and you weren’t able to identify a source of funding, then what happens?
Ms. Van Rompaey: We have internal processes to look at various priorities across all of the different things that we have. We could raise it in those processes.
The Chair: An interesting question for our viewers is: How often are you in the field? We’re all familiar with the Statistics Canada survey, but how often are you in the field to ask questions on various subjects? How often do you go out in the field?
Ms. Van Rompaey: I am not sure I quite understand your question. Are we in touch with our users?
The Chair: Yes.
Ms. Van Rompaey: I think we try to stay in touch with all of our key users as much as possible.
The Chair: I guess my question is: How often are you collecting data? That may be the better way for me to phrase it.
Ms. Van Rompaey: We have a whole variety of surveys. We are collecting continuously.
The Chair: You mentioned in your presentation that there were some thoughts of reinstating an older product that had been used. Can you tell us what that process would be? How would you get to the point where you would reintroduce that product?
Ms. Van Rompaey: Coming back to your point from before, if we had a policy funder that would clearly be a very simple way for us to have the capacity to reintroduce that product. We would be considering doing a one-time update because the information we had from the satellite account is getting fairly dated now. As I mentioned, I think the last year we produced it was for 2008.
We wouldn’t be able to sustain an ongoing product if we didn’t have a permanent funding mechanism.
The Chair: Nothing is driven by academic interest in studying the attitudes of Canadians.
Ms. Van Rompaey: That’s a consideration as well, yes.
The Chair: That’s not what drives Statistics Canada. It may be how you would respond to a need of a client or a government agency. You would respond by providing that service, right?
Have I phrased this wrong? I apologize if I have. Let me rethink my question, and I’ll move on to Senator Raine, in the meantime.
Senator Raine: I have a few questions that your graphs have raised for me. When you say other non-profit institutions serving households, what do you mean by serving households?
Ms. Van Rompaey: That’s a technical term we use in macroeconomic statistics. It’s really the organizations I was talking to you about before that are the community-based organizations. Actually, it’s a bit of a misnomer because some of the organizations primarily financed and controlled by government, like the universities and hospitals, obviously serve households as well; but that is the term we use to describe the sector we identify within core macroeconomic statistics.
Senator Raine: That didn’t clarify it for me at all.
Ms. Van Rompaey: Yes, I am sorry.
Senator Raine: On the map I am looking at it says, “grant-making organizations.”
Ms. Van Rompaey: It’s the same as what we’re referring to as the community-based organizations. If you look at the first slide, it gives you examples of what’s in slide 2.
Senator Raine: Arts and recreation groups are part of that, and yet you’ve broken them out in this other one. This breakdown that you have on slide 5 is a breakdown of the centre one in community based at 22 per cent.
Ms. Van Rompaey: That’s right.
Senator Raine: I have a pretty good idea of what a club is, but sport is not organized completely by clubs. There are national sports organizations, and there’s a huge amount of ongoing financing through national sports organizations. Is that all included in that?
Ms. Van Rompaey: Yes, that’s all included in that category.
Senator Raine: I might have some more.
The Chair: To go back to my question, I am trying to get the wording.
Is everything user driven?
Ms. Van Rompaey: Yes.
The Chair: That’s maybe where I was trying to go. It is user driven, meaning either a government department or an industry that is interested in getting to know the answers.
Does that put you in competition with independent polling agencies in the country that are gathering data for other purposes?
Ms. Van Rompaey: We don’t generally do opinion polling. That’s not the role of Statistics Canada. We undertake statistical surveys on a whole variety of topics, and we’re mandated to do that.
The Chair: Would polling agencies use your data as, perhaps, a basis for their going forward?
Ms. Van Rompaey: Yes, I imagine they would.
Senator Omidvar: I have a question on which I hope you can give me a quick answer.
I understand this is high level. There is lots of stuff underneath what you’ve presented to us. Is it possible for you to let us know how much foreign funding charities get?
Ms. Van Rompaey: I think you could probably get that information from the charities information return.
Senator Omidvar: You don’t collect source of funding for charities. You don’t collect that.
Ms. Van Rompaey: We don’t compile that or publish that information, no.
Senator Omidvar: I know you publish these findings. I think I heard you say that the last time you published the findings was for 2009. There is some effort to be more frequent. What does frequent mean? Why wouldn’t you publish these annually, given, as you have stated, the size, the depth and the scale of the sector?
Ms. Van Rompaey: I’ll just clarify that a bit. We haven’t published the full satellite account which covers the entire non-profit sector and includes the business portion. The last year we published was for 2009. However, we publish regular statistics, some of them even quarterly, for the pieces of the sector that we can identify.
For that community-based piece, for which our technical term is non-profit institutions serving households, we have quarterly information that we release on a regular basis. The government-based NPIs, or the hospitals, the universities, et cetera, are identifiable within our current statistics as well. For those, we have statistics that go right up to the current year of 2017 annually. For the community-based piece, we have certain segments that are even quarterly.
We don’t put the whole picture together. We haven’t put the whole picture together since we had the satellite account. The last year we published was for 2008, I believe.
Senator Omidvar: How does the data you collect compare with the data you collect on small businesses? Does it go far enough? Is its reach wide enough, or could you improve and expand the data you collect?
Ms. Van Rompaey: Non-profit organizations would be covered in many of our economic surveys. For example, when we go out to survey different types of organizations, let’s say on their investment spending or let’s say on their current activities, sometimes they would be picked up on many of our surveys. If I take the example of culture surveys, they probably cross a number of sectors. We could be surveying business type organizations, government type organizations and non-profit organizations, but we don’t necessarily identify them as a group within each of those survey outputs.
We also have the Statistics Canada Business Register, which is basically the frame we use for sampling all economic surveys. We’re doing a lot of work to try to identify non-profit institutions within that sector and flag them. If we are successful in doing this, which we’re currently working on very intensively, then we would be able to find them in any economic survey we undertake.
The Chair: You talked about non-profit institutions serving households. What is that data called, and where would one find it?
Ms. Van Rompaey: If you look at our quarterly income and expenditure accounts within the Statistic Canada Macroeconomics Accounts Program, it is the same set of statistics we release every quarter when we release the gross domestic product. You’ll find a set of sector accounts on non-profit institutions serving households that show their incomes and outlays, their investment and their savings. That’s published every single quarter for that segment. You’ll also find the same types of accounts buried in our government sector for the government NPIs.
Senator Raine: When you say NPIs, do you mean any non-profit institution?
Ms. Van Rompaey: Yes.
Senator Raine: Your deck has two different measurements in terms of the per cent share of GDP and in the compensation per hours worked, or the value of the wages in that sector. When you look at the compensation for a sector, do you take into account the voluntary portion of the work being done and plug in a number? Maybe it could be the average hourly cost of the employed person in that institution. Is there any way to measure that?
Ms. Van Rompaey: That’s a really good question. In standard macroeconomic statistics, volunteer work is not in the production boundaries. It wouldn’t be accounted for in the regular GDP figures. It’s sort of outside the boundary of GDP.
However, when we did the satellite account, we did an extension where we put an economic value on volunteer work. We looked at how the value of labour compensation would change if we did that. We also looked at how the share of GDP would change when we did that. It’s been quite a while since we undertook that. We were using the survey on giving, volunteering and participating. The last year we actually estimated this was for the year 2000. When we did that it actually added 20 per cent to labour compensation for the overall non-profit sector, so at that time it added $14 billion. It was worth $14 billion back in the year 2000 in addition to $56 billion for paid labour compensation.
It actually added about 1.5 per cent in terms of contribution to GDP. Rather than it being 7 per cent, it would be 8.5, let’s say, if we had added the value of volunteer work. When we undertook that work, we need to know the number of hours that people are volunteering, which we can get from that survey that I was telling you about before on volunteering, giving and participating. Then you need to apply an average wage. The average wage that we chose was in social service occupations. That was aligned with what other folks were doing around this area and in previous studies of unpaid household work which we’ve also undertaken at Statistics Canada.
We also found that it was very important for particular types of organizations. For example, in culture and recreation, it was probably equivalent to the value of paid labour compensation. It was also very important in social services and in religious organizations. Those data are still available, as I mentioned before, from the surveys. If we were to undertake an update, we could produce those estimates again for the year 2013, currently, and when the information is available for 2018 we could do it for that year as well. They are available on a five-year cycle.
The Chair: You indicated that you can’t tell us funding from foreign sources, but on your slide 4, interestingly enough, though it is small, you talk about funding from non-residents. I would assume a non-resident is a foreign source.
Ms. Van Rompaey: That’s right. It’s from outside Canada. It was worth about $386 million in 2017 going to the community-based organizations.
The Chair: Good, because that was an inconsistency.
Senator Frum: This is not in your presentation and maybe you don’t have this at your fingertips, but I am interested in the growth trends of the GDP. If you look at over the last 50 years, let’s say, was there any particular decade or period when you saw a tremendous amount of growth, like an unusual peak in it or decline? If so, if you know that, do you have any sense of what are the triggers when you see periods of growth?
Ms. Van Rompaey: In terms of the GDP in the non-profit sector, I don’t have those figures at my fingertips.
When we did the full satellite account including the business portion, we did it back to 1997. We could look at it for that period, but we have statistics for the piece that’s non-profit institutions. Sorry, I am using my technical language again. For the community-based organizations serving households we have that going back to 1961. We could look at that over time in relation to GDP. We could get back to you on that as well.
Senator Frum: Let me pick up on the question that was asked before about the foreign contribution of $386 million.
Ms. Van Rompaey: Yes, $386 million.
Senator Frum: You said it was mostly going to community organizations.
Ms. Van Rompaey: That’s what we’ve measured it for here, yes.
Senator Frum: What would be examples of the types of organizations?
Ms. Van Rompaey: I don’t have that information readily available.
Senator Frum: It was always my understanding that you didn’t see a lot of foreign contributions because there was no particular tax benefit for foreign entities to contribute to Canadian charities, right?
Ms. Van Rompaey: Yes.
Senator Frum: That’s a lot of money. Is there no tax benefit on the $386 million to the donors?
Ms. Van Rompaey: This would be any contribution that’s coming from outside Canada. It could be the recent donations for Humboldt or something like that. It could be that even individual contributions coming from outside Canada would be included in that amount. They are not necessarily from organizations or from corporations.
Senator Frum: Even if it were from a corporation, that would be $386 million worth of contributions in which the donors were not expecting any kind of tax credit.
Ms. Van Rompaey: I guess so, yes.
Senator Frum: That’s a lot.
Senator Omidvar: May I clarify that question or go a little deeper on the $386 million contributions to not-for-profit institutions? Is it not fair to say that a large portion of this is actually membership fees?
Ms. Van Rompaey: Yes, actually, it could be.
Senator Omidvar: Or services rendered?
Ms. Van Rompaey: It’s any funding. It’s not necessarily donations. You’re right.
Senator Omidvar: It’s not just donations. It’s also membership fees.
Ms. Van Rompaey: That’s right. Things like that.
Senator Frum: What do you mean? I don’t understand that.
Ms. Van Rompaey: If someone from outside Canada was a member of a Canadian non-profit organization, that membership fee would be counted in that number as well.
Senator Frum: What do you mean?
Senator Omidvar: Greenpeace.
Senator Frum: Why would a non-Canadian be a member of the Canadian Greenpeace and not the American arm?
Senator Omidvar: I am not a witness here but I think it’s something we can explore. I think it’s important to clarify contributions, membership fees, fees for services and donations. Is it possible for us to get a breakdown of that $386 million?
Ms. Van Rompaey: I can look into it.
The Chair: Another thing you said in your presentation was that sales of goods and services were $18 billion.
Ms. Van Rompaey: That’s right.
The Chair: That’s a significant number. It would be interesting to know how that $18 billion was broken down. Some of that would be fees for services. Having worked in the sector a long time myself, one of the confusing parts is that on occasion you end up being in the commercial business.
For example, you might offer in the YMCA a place for people to buy certain equipment, T-shirts, running gear and things like that. That becomes an enterprise. I suspect they don’t do it at a loss, so there’s probably a profit motive in there. Do you split that out of that $18 billion? Do you break the $18 billion down into pieces that we could see?
Ms. Van Rompaey: Maybe I’ll just clarify. The $18 billion is just like what you say if you have non-profit institutions or organizations that have market activity. Your example of the YMCA is a good one. If it has a store or if it has a commercial business that’s part of the YMCA which it charges for, that would be included in sales of goods and services. You also have, for example, a lot of churches that rent out parking lots and hold various market activities to support their organizations. All of that would be included.
We could break that down by type of organization, but I don’t know if we could break it down into the specific types of services being provided because we would only have a number that comes from those administrative files, which would be everything that is included in that amount.
The Chair: It would vary from charity to charity. Having been an executive director to the Diabetes Association at one time, we operated a store that supplied diabetic supplies to people with diabetes. Obviously it was an enterprise as opposed to being the charitable side of what we did.
Senator Raine: That includes tuition, which would be a massive amount of the $18 billion. The bulk of it.
Ms. Van Rompaey: Actually, the $18 billion is only for community-based organizations. That’s only for the organizations that excludes universities. Any non-profit educational institutions that are not universities or colleges could be there, but that excludes the big players like the universities and the colleges. That’s only coming to the community-based organizations.
Senator Raine: On slide 3, it shows sales of goods and services, tuitions, hospitals, universities and colleges.
Ms. Van Rompaey: That’s not the $18 billion that I was referring to on the next slide.
Senator Raine: How much would that be then?
Ms. Van Rompaey: It would be considerably more. I don’t have the figure here, but considerably more.
Senator Omidvar: Going further on the questions we’re exploring, does the funding from non-residents it include tuition from foreign students? That’s a big market.
Ms. Van Rompaey: I think it does. I need to confirm that because I think foreign students are not considered residents.
The Chair: If there’s a way, could you do that?
Ms. Van Rompaey: Let me confirm that.
The Chair: I know many of the universities in my province spend an awful lot of time marketing to foreign students. The big advantage to that is that foreign students pay the full price as opposed to any fees that may be subsidized by any other source.
Senator Omidvar: And they take away spots from our students.
The Chair: It’s very profitable for universities. It helps keep the doors open.
On your slide you talked about community-based non-profits institutions, but would the funding to private schools from non-residents be included?
Ms. Van Rompaey: If they’re non-profit private education, yes, they would be included there.
The Chair: Are there any other questions, colleagues?
Senator Raine: Could you clarify for me what the ambulatory health care service includes on slide 5 and again on slide 7? I just don’t understand ambulatory.
Ms. Van Rompaey: That’s an industry classification included within our regular set of industry accounts. It’s based on the North American industry classification. I think it includes all the different kinds of health services offered by non-profit institutions.
Matthew MacDonald, Assistant Director, National Economic Accounts Division, Statistics Canada: It could be paramedics, emergency response teams and things like that.
The Chair: Senator Omidvar, I’ll give you the opportunity for the last question.
Senator Omidvar: I am trying to pull myself out of the trenches and look at the big picture.
I know this deck tells a story. There’s a trend line somewhere there in terms of economic contributions. If you were writing the headline of the story, what would it be?
Ms. Van Rompaey: Is that the headline of the story on the non-profit sector?
Senator Omidvar: On this evidence, or do you not write stories?
Ms. Van Rompaey: Within the presentation we tried to give the broad lines of the economic contributions.
Senator Omidvar: That’s the trend.
Ms. Van Rompaey: In terms of contribution to GDP, if you look at it over time it is quite stable in fact. We don’t see a lot of change within the contribution to GDP. If we look at it back to the year 2000, for example, it doesn’t change a whole lot from year to year.
Within the components of the non-profit sector, whether it be community based, government or business, and even though we don’t publish explicitly, those components also seem to be relatively stable overall as far as we can tell with the evidence we have.
There are dynamics within the sector, so you see, for example, different sources of funding or trends in sources of funding. For example, I mentioned the sales of goods and services is increasing. It has been growing steadily, whereas private donations are up and down and a bit less stable. Those kinds of stories come out in the data.
The Chair: You may not write the headlines but you sure collect the data that makes some headlines.
On behalf of my colleagues, I would like to thank you both for being here this evening and giving your presentations. Sometimes when we sit down to talk about statistics, people start to yawn right away; but you’ve made it interesting and you’ve kept us informed.
Several questions have come up throughout the evening on which you’ve indicated you may have more information. We’d appreciate it if you could get back to us with that via the clerk. I, for one, am a big fan of StatsCan. Thank you so much for what you do.
We’re continuing now with our next witness from Imagine Canada, Brian Emmett, Chief Economist for Canada’s Charitable and Nonprofit Sector. I thank you for accepting our invitation to appear. I would invite to you make your presentation and remind you that we have asked you to keep it to about 10 minutes. Following the presentation, you will have questions from my colleagues, and I have asked them to be succinct as well. We’ll have as many rounds as possible. We are fairly cooperative in sharing our time.
Please go ahead, Mr. Emmett.
Brian Emmett, Chief Economist for Canada’s Charitable and Nonprofit Sector, Imagine Canada: I am Imagine Canada’s chief and only economist, and I have a very small staff. I came to Imagine Canada after a fairly lengthy career in government as a policy guy, a strategic analysis, and that sort of thing. That inclines me to look at some of the numbers our colleagues from Statistics Canada presented today and dwell not so much on the numbers but try to tell the story those numbers tell. I want to focus on the story that comes out of those numbers and what it means about the role Imagine Canada and the charitable sector can play in helping to meet the economic and social challenges of Canada.
We have seen from the Statistics Canada numbers that charities play a significant role in economic terms. There’s sometimes a bit of discrepancy at the margin with what Statistics Canada is telling us, but it’s 13 per cent or 14 per cent of Canadian jobs and 8 per cent of GDP, according to a broad definition. By any calculus, the charity sector is a big employer. It makes a big contribution to GDP. One of the points I try to make is that such a contribution has not been fully appreciated by government.
The second part of this story is that the charitable sector is only able to make a big contribution because it is funded. In one way the sources of funding are diverse. Statistics Canada talked about sales of memberships, goods and services, support from governments, transfers from households in the form of donations, transfers from business and that sort of thing. All these things have something in common: The revenue has first to be generated by the economy.
There is another part of this unappreciation story, and that is that charities don’t generally appreciate the role the economy plays in their lives. We have what I think of as charities contributing to the economy and the economy being fundamental to charities. It’s a synergistic relationship that charities and governments have not really made the maximum use of. Further, I would say, one of the reasons charities and governments have not made more use of it is that governments in particular have been operating on the basis of the wrong answer to some technical economic questions.
On freedom from corporate income tax allows charities to compete unfairly with the private sector, we are in the process of producing a study that says that is definitively not true. In fact, in markets that are contested by both charities and for-profit service providers, profit-makers are generally squeezing out charities.
On charities do not pay taxes and are insignificant in macroeconomic policy, I think 13 per cent of employment and 8 per cent of GDP answers that question.
On tax incentives to donate are costly and inefficient, we have produced studies that say that is not true. They are an important instrument of public policy.
On dealing with government and the impression that the needed policy changes to maximize the contribution charities can make are costly and difficult, we feel that many of the measures we’re looking to are relatively straightforward, require probably more bureaucratic than legislative change, and are not very expensive.
It is important is to get away from the snapshot of the economy Statistics Canada and I have talked about so far and put things in motion to have a moving picture as opposed to a snapshot. One part of a moving picture could be what has happened up to today. When we look at the numbers provided by Johns Hopkins in the National Survey of Voluntary Organizations that Statistics Canada talked about, we see that charities have grown faster than the economy as a whole.
Up until about 2009-2010, where our statistics absolutely stop dead, the economic growth was good at around 3.5 per cent in real terms, but charities have grown faster. Statistics Canada alluded to this . Why have charities grown faster? In my view, they have grown faster because demand has grown faster. They have grown faster because the demand is driven by different factors than the economy. The economy generally cares about productivity, investment, and so on and so forth. Demand for what charities do is determined by demographics, culture, changes in family structure, diversity, increasing addictions, and those sorts of things. The number one influence among them is the aging population.
You can look at the sector over time to see that it has been growing faster for good reason than has the economy as a whole. I guess my argument would be that in the future these trends are likely to continue and even accelerate. Demand for charities will continue to increase rapidly because the population will not get any younger. Culture will continue to change as will family structure. Addictions, homelessness and so on, we don’t see as slowing down. If anything, what charities are facing on the demand side will place increasing stress on them.
What about the means, the means generated by the economy? We see, as backed by the Parliamentary Budget Officer, the Conference Board of Canada and others, that long-term economic growth is likely to slow to less than 2 per cent, a very significant drop from about the 3.5 per cent that we have seen over the past couple of decades. This creates for us a divergence of the outlook for ends and means, which creates real problems for governments and charities. In some ways, governments and charities are in the same business of delivering social goods to individuals.
The biggest example is health care. The aging population will impact on health care. It will impact on tax revenues. Demand for health care is going up and tax revenues are not going up as fast. The Conference Board has forecast deficits for the provincial governments at about $300 billion a year by, I believe, 2036. It’s a fairly long-term forecast, but the idea that ends and means will diverge as a fundamental one.
We have tried to look at the forecast. If demand for charities continues to grow as rapidly as it has in the past 15 to 20 years and if economic growth slows down, can we come up with a number for a deficit that will stress the charitable sector? We have come up with a number of about $26 billion social deficit in the year 2026.
In our view, the gap between ends and means will grow, and there will be a real deficit in 2026. You will not see that on Statistics Canada’s books because it will be a deficit that shows up in longer waiting lines at food banks, longer waiting lines for health care, congestion, overstress on staff, and charities trying to do too much with too little. It’s what we might call a shadow deficit but it will nevertheless be real in unmet social needs.
I would also point to other ongoing work in Ottawa. Indices of well-being and the role of charities are entangled issues. This draws on work done by Andrew Sharpe in Ottawa, and by the OECD in trying to measure increases in well-being as opposed to increases in gross national product. While well-being is based on economic growth, job insecurity and economic inequality, they show that it has been lagging increases in economic growth.
As you look forward and see economic growth beginning to slow, you begin to worry about what will happen to rates of increase in well-being. To the extent that slow growth in well-being also exacerbates demands on charities, it’s a major issue. It’s also a major contribution charities can make because they deal with the marginalized.
The bottom line of the message I want to convey is that we are not talking about a charity sector problem when you look at the synergistic relationship between the economy and the charitable sector and when you try to forecast forward to see the divergence between ends and means. We are talking about a Canada problem. The Canada problem is that what most Canadians want is a mixture of economic growth, wealth creation, social justice, environmental responsibility, and those sorts of things. The divergence between ends and means will make it more difficult for all of us, governments and charities, to achieve that. To me, that means you want to look to each sector being in a position to maximize its value to Canada.
In my view this committee could valuably focus on, and I am sure it is in your minds, what kind of framework we need to have in place so that charities can make the best contribution they can to Canada over time. At the moment we have an out-of-date policy framework, much of which dates from the 16th century. My own feeling is that modernization is desperately required. Modernization need not be that expensive or difficult. Thank you.
The Chair: I appreciate your presentation. I have a couple of quick questions of my own. You have said the demand for charities will continue to grow, and I have two questions related to that.
First, what is driving that growth in need? Is it simply our aging population? Is that the thing that is driving the growth of the charitable sector?
Second, does this mean that the CRA or some other government agency will need to have greater oversight of the sector as it is growing and having a greater impact on Canadian society?
Mr. Emmett: Certainly among the factors I have looked at, aging is by far the dominant one. In some ways, it’s by far the easiest to predict because in the social sciences demography is the most obvious of the social sciences in some ways. You can say with a fair degree of confidence how many 75-year-olds there will be in Canada in 2020.
What you can’t say nearly so clearly, because we don’t have a real handle on the demand side, is: How many homeless will there be in 2020? How many people will be lining up at food banks in 2020? Certainly, as you look at the shape of society, the changes in family structure which lead to demand for daycare and so on, the changes in diversity with respect to the refugees and immigrants demand for integration, and these sorts of things, you can develop a fairly clear idea there is a mix of factors causing stress on charities to increase more quickly than economic growth and the means to do it have been increasing.
The Chair: And my question on oversight?
Mr. Emmett: In some ways it would be better for my colleague from Imagine Canada to answer this. In my view, if anything CRA exercises too much oversight. One of the things that I think obstructs or inhibits charities from being as dynamic and innovative as they can be is the way CRA tends to look at the sector. It tends to focus not so much on charitable purpose as opposed to charitable activity. This is my own feeling and my colleagues can disavow me if they wish. It tries to micromanage the sector. The sector would be very well placed if more government took a more enabling attitude. Get out of our way and let us do our job.
The Chair: That’s a theory but then another theory is: Get out of our way but also continue to give us money.
Mr. Emmett: I didn’t hear that.
The Chair: The tendency of some is to say, “Get out of our way but continue to give us money for our good work.”
Mr. Emmett: That’s a very good point. I would say that many of our recommendations are to get out of our way so that we don’t need to ask for more money and we can explore things like social innovation, social finance, increasing our own revenue from the sale of goods and services, and those sorts of things.
If you look at one of the things that makes charities go, we are in a world where you look at donations from individuals. Those are showing signs of softness. They have tended over many years to be a fixed proportion of GNP. One of the problems with donations is that many of them come from the baby boomer cohort, of which I am a member. To be blunt, the boomer cohort has only so many donations left in them. It’s showing signs of tailing off and being really dependent on continued support from that particular demographic.
When you look at the sources of funding, you start to ask yourself, if that’s soft, where the money is to come from that will allow us to continue to do our job. I think you have to look at some of those other areas.
Senator Omidvar: I have a point of clarification on your deck where it refers to the economy and the charitable sector. Am I right that you are in fact focusing only on the charitable sector and not bleeding over into the not-for-profit sector?
Mr. Emmett: That is correct.
Senator Omidvar: I want to ask you more about the idea of an enabling mechanism. You talked very briefly about charitable purpose versus charitable activities. We have the report from the minister’s advisory panel, but perhaps you could clarify for us again: What does the CRA do in terms of these particular line item activities versus purpose? How does it hinder and what should be changed to enable the sector to maximize its contribution?
Mr. Emmett: One of my colleagues in the consulting world has talked about the CRA with the example of slicing a sausage. Its focus on activities allows the CRA to slice the sausage of what charities do very, very finely. Focusing on charitable purpose would allow charities to take a higher level interest in what charities are doing but doesn’t involve what I would call niggling in their day-to-day activities. It gives them a bit more freedom. I think that’s important for charities to be able to do their jobs.
Senator Omidvar: I will ask you a follow-up question on what might be a concern. If you shift from activities and focus on purpose, what if the activities go astray in the use of charitable dollars? Is that not a concern? Perhaps I’ll just ask you the question.
Mr. Emmett: On the misuse of funds and charitable dollars, if you’re talking about fraud and that sort of thing, it’s an issue whether you slice the sausage finely or you slice it broadly. Imagine Canada has a terrific program that looks at charities and certifies them with respect to their governance, how they are structured, how transparent they are, and that sort of thing. Those sorts of mechanisms created by and policed by the sector itself are really much more useful than excessive oversight by the CRA.
It’s the Imagine Canada standards program by which companies are certified and there is actually a peer review element to that to keep charities up to standard.
The Chair: If you want government to get out of the way and allow the sector to grow, it would seem to me, though, that there needs to be a regulator when something goes wrong. What normally happens when something goes wrong is that the government gets blamed for not watching it and having the proper oversight.
Mr. Emmett: That’s right.
The Chair: People who are involved in governance aren’t that anxious to have fingers pointed at them because they haven’t had the proper oversight of a government program or of government money that may be involved in programs.
Mr. Emmett: I sympathize with that. I was a bureaucrat for many years. I share the risk aversion. I know the downside of not being careful enough.
I guess the question is: What is careful enough? Charities will have to continue to be registered and to be clear about what are their charitable purposes. They will be under scrutiny by their donors. They have boards. It’s increasing interest in things like the standards program.
To me, it’s weighing the costs and benefits to risks and benefits. I come down on saying that it would benefit Canada if charities had more leeway to do their job as they see fit.
Senator Frum: I am having difficulty with the idea as well of broadening or letting the charitable sector be potentially at carte blanche from CRA to do things. I mean, you mentioned social enterprise as something that could fall within charitable purpose, but it can also fall within a profitable purpose.
Mr. Emmett: It can, yes.
Senator Frum: How do you regulate for something that is both profitable and charitable?
Mr. Emmett: A task force is coming forward with recommendations on social enterprise and social finance, but I do take your point. It’s a challenge.
If you go into social finance you receive funding, but you have to pay it back. How do you pay it back? Do you pay it back from donations? Do you pay it back from earned revenue through sales of goods and services? Do you become more private sector like? I think it’s a real dilemma for charities.
When it comes right down to it, we’re talking about something that accounts for about 4 per cent or 5 per cent of the revenues of charities from donations and those things policed by and of most concern to the CRA. The bigger issue is: How will charities fund themselves to meet the diverge between ends and means? If we’re 8 per cent of the economy and the economy is $2 trillion, we are talking about a $160 billion sector.
The question for me is: How will we be able to continue to maximize the value of charities in that broad picture? Admittedly, donations and their propriety are issues, but there are many other broad issues we need to focus on as well.
Senator Frum: When there are low tax jurisdictions, have you ever measured in your studies if that has any influence on charitable activity versus high tax jurisdictions?
Mr. Emmett: Mainly we like to compare ourselves to the U.S. The U.S. is very similar to Canada. Revenue to charities from donations tends to be a fairly constant proportion of GDP, particularly in the U.S. where taxes change a little more frequently than they do in Canada. The non-refundable tax credit has been in place for some time in this country. I think the observation in the U.S. is that taxes go up and taxes go down but donations remain more or less constant.
Senator Frum: I have a question on one of the charts you gave us at page 5 on the growth of the non-profit sector versus the GDP. Australia is kind of an outlier on this chart. If I am reading this chart correctly, the growth of the non-profit sector outpaced the growth of GDP. Is that right?
Mr. Emmett: That’s right.
Senator Frum: Australia is the most extreme. Do you have any commentary on why it’s different from the rest?
Mr. Emmett: I don’t know specifically why Australia is an outlier. The one point I would make about Australia might be relevant for the committee. Among the bureaucracies in the world, the public services, they do by far the best work on the charitable sector. They have tons of research. They have loads of numbers. They come up with very creative recommendations. Whether or not that’s related to the different performance in Australia, I just can’t say.
Senator Omidvar: I will stick with the enabling mechanism. I heard you talk about the enabling mechanism. The sector needs to be enabled to maximize its contributions to society, not just the economy.
I have also heard people say that the CRA is not an enabling home. It’s a regulator. It’s an enforcer. It’s not an enabler. Where in government or outside government would you see a home? What can learn from other jurisdictions in terms of this question?
Mr. Emmett: That’s a really interesting question. One of my jobs in the public service was as assistant deputy minister for forestry. I had a thousand people reporting to me. Our concern was the health of the forest industry or enabling the forest industry, if you like. We were doing a lot of science, working on economic policies of the government, interacting with government and meeting with ministers once a year in a fairly formal way.
If I had gone to the forest industry and said, by the way, that their only point of contact in Ottawa was the CRA and all they were concerned about was whether they paid their taxes, they would have had a fit. We have a sector that is at least as big as the forestry sector, and we have no place to go except the CRA. That’s a real problem. It’s an indication that in some ways the government doesn’t really understand the sector.
First, I would like to see the sector being treated by economic policy-makers as equally important as many of the primary industry sectors or any sector in the economy.
Second, I would like to see a point of contact in government, a plug and socket, if you like, so that when government policies are made the view of the sector can be incorporated.
Industry Canada has divisions concerned with aerospace, automobiles, small business and so on. Perhaps a division of Industry Canada or perhaps a minister with some responsibility for the sector would be extremely useful. Some examples occur to me for a sector with basically two million employees that is an important element of the economy.
What about the sector in innovation? When you look at the measures developed to stimulate innovation, most of them are delivered through the tax system, through accelerated depreciation and so on. Those are irrelevant for the charitable sector because we don’t pay taxes. If sitting around the table when those measures were devised there was somebody from the charities with a plug and socket interest in charities, in my view they would say, “Hey, we can get real benefits from making these measures more broadly applicable.”
I think it’s a real lack in government, and I would like to see it remedied.
The Chair: You’ve mentioned in your presentation and throughout your answers the government’s responsibility and perhaps changes the government should make to get out of the way and let the charities do their job. However, you haven’t put an emphasis on the people, which is an integral part of this. Charities are run by volunteers. Yes, they are many people who work for charities. I was one of them for many years but I always had a boss, and my boss was always a volunteer.
You’ve not talked about the value of the volunteers, the lack of recruitment of volunteers, the training volunteers, how the sector will grow with good volunteers, or how the sector will interact because it is a volunteer-driven sector.
Mr. Emmett: I personally think volunteering is extremely important. It’s not particularly treated very well in my presentation. I’d like to spend some time working on that. It is embedded in some of the numbers. I think Statistics Canada made the point that when you talk about 8 per cent or 8.5 per cent of GDP it includes a factor for the contribution that volunteers make.
To go beyond that, my own view is that people want to be able to volunteer. They want to be able to participate in their community. They want to be part of things. They want to be part of social development. It’s a real advantage to Canada going forward to have a system in which volunteers are valued, they are trained, and they have the opportunity, as somebody put it, to be more fully themselves to participate in the community and its well-being.
I absolutely agree that it’s important. It should be beefed up in what I am doing but I haven’t got around to it yet.
Senator Frum: Your reference to the 16th century model of charity and our framework having been updated since then, can you elaborate on that? Can you be more specific about what you mean by that?
Mr. Emmett: No legislative framework defines what a charity is in Canada. It’s defined by common law. Some of those common law decisions date from Elizabethan times and define charities as focusing on three or four very narrow areas: relief for poverty, education, religion and other general advancement of society.
Again, without pointing out Australia, other countries have legislation that actually says the term charity applies to a not-for-profit organization dedicated to the following 15 things. It’s a bit clearer what a charity is under those definitions.
The point I would make is that every once in a while we update corporate law, income tax and so on, to reflect the fact that we have a changing society. That seems to have passed the charitable sector by.
Senator Frum: That gets back to this issue of what counts as being a charitable activity. As it is now, certain social enterprise activities can or can’t be charitable. They can sometimes; that’s the thing. Under CRA rules, are there social enterprises that would be considered charities?
Mr. Emmett: I am sorry, I just couldn’t answer that.
Senator Frum: I understand. If the definition needs modernizing, in your view, because it’s inadequate for what’s going on, I would like to know what are the activities that maybe aren’t covered which you think should be covered.
Mr. Emmett: Right. Again, I am not a lawyer and I just can’t answer that.
Senator Raine: I am sure you know the Senate is deeply engrossed right now in dealing with the cannabis legislation. Today, just a while ago, we had a presentation from a woman, Dr. Bertha Madras, a professor of psychobiology at the Harvard Medical School. She painted a very bleak picture, a little bit, about the impacts this might have on us that we are not expecting. She mentioned a term called amotivational syndrome, which I recognized right away. I had never heard the term before, but it’s where young people who start using cannabis become unmotivated and then don’t succeed very well in life. She quoted statistics of much higher use incidents of homelessness, mental illness and things like that as a result.
Now I am hearing from you how we will be stretched in the future because of the moving out of the baby boom generation. If we want to turn this around, it has to be an action by all of government and not slotted into Revenue Canada and maybe touched on by Statistics Canada. Nobody is really fully appreciating the value of Canadian life comes with these non-profit societies and charities that help make us a great country.
I fully support your plea for some kind of a minister of state for charities and non-profit organizations or something like that. I am sorry I am retiring because this is a very important committee. If we could outline this, it would be good. I am hearing from you that we should perhaps take a good, hard look at what Australia is doing, being a country very similar to Canada. If they are getting it right, maybe we should look at their framework.
It’s sort of a statement, but the question is tacked on to the end.
Mr. Emmett: It certainly corresponds to my thinking. Government should increasingly think of charities as a partner in achieving these things and in thinking together to maximize our individual value, including the private sector as well. There are an increasing number of private sector providers out there.
With respect to Australia, there is a terrific piece of work by the Australian Productivity Commission that goes into charities in great, great detail. It would be worthwhile for the committee to have a look at that reference. I would be happy to supply it. I got a lot out of reading it.
Senator Raine: Do you have any contacts in Australia whom we could perhaps have testified before the committee?
The Chair: Perhaps you could forward those to the clerk.
Mr. Emmett: Certainly, I can look into it. I would be happy to provide a reference and try to find a name for you.
Senator Omidvar: Before I ask my question, I want to let everyone know that the Senate Social Committee next week will be tabling its first report on social finance, which dovetails very nicely with what our witness is saying.
As an economist you need data. What is your view of the data that is currently being collected by Stats Canada? If you were in the room today, maybe you have a view on it. How can it be improved? What needs to be updated? Especially in terms of what you have said are the emerging trends around aging, diversity and demographics, et cetera. I wonder if you would help us out here a little.
If we were to make a recommendation that Stats Canada should improve its evidence collecting and the service of the sector, where should that recommendation be focused?
Mr. Emmett: In some ways, my colleagues who are experts on statistics should respond to that.
Just talking about my own experience in looking at the numbers, trying to see what story they tell me, and then particularly trying to look forward, to forecast forward, the last really good numbers we have on the sector in macroeconomic terms are for 2006. That’s 12 years ago. They talked about the last iteration of the NSVO was around 2009, which is nine years ago. The numbers that we’re working with are out of date. I would be happy if we had an NSVO updated to 2018.
One of the problems you have from the Statistics Canada presentation is that over time the understanding by statisticians of what they should be measuring changes. There are different data sources in Canada and you have to bring them together. We use Revenue Canada data on donations, and there are all different sorts of things.
The Statistics Canada has been very helpful to us. They’ve recently provided some numbers updated to 2014 but on a fairly selective basis. We have to sit down to try and figure out what has happened between 2006 and 2014 in terms of changing definitions, of mapping our definitions into their definitions and of making sure that we’re both talking about the same thing. People tend to get confused by different numbers describing the same thing. How much do charities contribute to the economy? What is NPISH and all that stuff?
Statistics Canada has been helpful to us. I would like to see much more routine satellite accounts that give us easily understandable, reliable information on the sector in macroeconomic terms.
To do the forecast for the social deficit, I had to start in 2006 and forecast what the sector should look like today if we had numbers on it, which we don’t. To me, it’s an urgent matter. I can’t think of another sector of our size in the economy that makes do with less.
The Chair: One factor that you haven’t talked about throughout the whole presentation this evening is the taxation aspect of it and the fact that charities survive by giving tax receipts to Canadians for their charitable contributions and Canadians getting a small benefit for that.
You haven’t talked about a change to that or have made any real comment on the system that’s in place now. Should it be revised? There have been people who have talked about taking the charitable donation and making them the same as political donations. Instead of having tax deductions, having tax credits as you get for your political donations, with the aim of increasing the amount of donations to charities.
Do you have a comment on that?
Mr. Emmett: We’ve done a considerable amount of work on charitable taxation. The first thing to say is that you start in Canada with a system that’s quite generous in terms of the refundable tax credit. In some ways it’s quite equitable. If you look at the U.S. where you get a deduction from your income, the value of giving a dollar to charity depends on how rich you are. In Canada, it doesn’t. It depends on how big a donation you make. In many ways it is an excellent system.
There are some areas where we would recommend thinking about making changes, one of which is to stretch tax credit which would compensate people a little more if they increase their donations over their historic level. We’ve been in conversation with the Department of Finance about that.
Other issues are the donation of privately held securities and real estate, on which the sector has made recommendations to government. We’ve generally found the comeback on that is we already have one of the most generous systems in the world and the government is not willing to move on that. We continue to be very interested in anything that would make donations more attractive, but we have to recognize there is a certain reality of pushback there.
Senator Raine: You said earlier what framework was needed so charities could make the most of their efforts. I just wanted a clarification. Does Australia have a framework? Does it have legislation?
Mr. Emmett: Australia has quite different legislation than we do. It names for charitable purpose. It has a charity sector regulator which has been quite controversial. It just started up, and now their recommendation is to remove it and so on. I don’t know the current state of play there.
When I talk about a framework, I talk about some things that are really simple. When the government considers macroeconomic policy, charities should be at the table. We should be regarded as important as any of the other sectors in the economy that produce jobs and growth. We should have a plug and socket in government.
There’s a lengthy list. We also would like to see action on the political activities recommendations. I guess what I’d like to see is a framework that would allow government to recognize the importance of charities and charities to recognize the importance of the economy. I would like to see us act a bit more like partners in achieving equitable growth, social justice, and so on in the country.
Senator Raine: Not adversaries.
The Chair: On behalf of the committee, I’d like to thank you for being here, Mr. Emmett. If there’s something you feel that we have overlooked, or as you’re watching us proceed over this next little while, I would encourage you not to hesitate to communicate with our clerk.
Before I go this evening, colleagues, I think it’s important to recognize that this is the last meeting of our colleague Nancy Greene Raine.
Nancy Greene Raine is a very, very special senator. We all like to think of ourselves as special here in the Senate, but I remember where I was on the day she won the gold. I remember that day. I wasn’t a skier in those days, and not much of a skier now, but I know the pride I felt that day because of what you did. I know Canadians coast to coast to coast felt that pride. You brought that kind of image with you to the Senate.
We’d like to thank you for your contribution to this committee. We will miss it. You’ve made many other contributions to the Senate since you’ve been here. I think of your very important proposal on honey, which will have a lasting effect. You’ve been a great sports ambassador. You’ve been a great ambassador for the country, but also a great ambassador for the Senate.
Personally, and on behalf of our colleagues, I thank you for your contribution to this committee. It has been significant, and it will make a difference.