THE SPECIAL SENATE COMMITTEE ON THE CHARITABLE SECTOR

EVIDENCE


OTTAWA, Monday, April 16, 2018

The Special Senate Committee on the Charitable Sector met this day at 6:30 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; and, in camera, for consideration of a draft agenda (future business).

Senator Terry M. Mercer (Chair) in the chair.

[English]

The Chair: I welcome you to the first meeting of the Special Senate Committee on the Charitable Sector. I’m Senator Terry Mercer, from Nova Scotia, chair of the committee. I’d like to ask senators to introduce themselves, beginning with the deputy chair.

Senator Omidvar: Ratna Omidvar, Ontario.

Senator R. Black: Robert Black, Ontario.

Senator Raine: Nancy Greene Raine, British Columbia.

Senator Duffy: Mike Duffy, Prince Edward Island.

The Chair: Thank you.

Today, the committee will begin its study to examine the impact of federal and provincial laws and policies governing charities, non-profit organizations, foundations and similar groups, and to examine the impact of the voluntary sector in Canada.

As our witnesses on our first panel today, we have with us here in the room in Dr. Susan Phillips, Professor and Graduate Supervisor, Philanthropy and Non-profit Leadership, School of Public Policy and Administration, Carleton University.

Via video conference, we have Dr. Rachel Laforest, Associate Professor and Director, Public Administration Program, School of Policy Studies, Queen’s University. She is with us today in Washington, D.C.

As well, by video conference is Peter Elson, Adjunct Assistant Professor, University of Victoria and senior research fellow at the Institute for Community Prosperity at Mount Royal University in Calgary, Alberta. He is with us in Victoria, British Columbia, this evening.

Thank you for accepting our invitation to appear. I would invite the witnesses to make their presentations, but I would also like to remind them that, as per the instructions they have been given in advance, their presentations should not exceed seven minutes in length. Following the presentations 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 questioning as time will allow, so senators do not need to feel required to ask all of their questions at once. This is a smaller committee so there will be plenty of time for questions.

During the question and answer session, I would ask senators to be succinct and to the point when asking their questions and I would ask the witness to do the same when answering.

Susan Phillips, Professor and Graduate Supervisor, Philanthropy and Non-profit Leadership, School of Public Policy and Administration, Carleton University, as an individual: Thank you for inviting me to present to the committee. I have studied charities in Canada and in a comparative perspective for some 30 years. I founded the country’s only graduate program in philanthropy non-profit leadership and I’m the editor-in-chief of the leading international journal in the field, which means I spend a lot of time reading the best scholarship.

This committee has an opportunity to really forge direction for policy for the charitable sector. It’s an opportunity that seems to come around about every 20 years. In framing the way you approach that, it’s important to think about the problems to which we seek solutions. What is the situation, the context, in which those solutions would land?

I would make the case to you that the charitable sector is undergoing fundamental shifts of a tectonic nature, and let me briefly outline those. First, concentrated philanthropy, philanthropy both giving and volunteering, is concentrated among a smaller, older cadre, and it’s more reliant on high net worth donors, yet those high net worth donors are not giving to their capacity to do so. In the next few decades, we will experience the greatest intergenerational transfer of wealth in history. How do we make sure some of that is directed for public benefit?

Demographic changes are important. Millennials, the largest and most diverse cohort in history, are engaged in philanthropy, although they are not yet giving in significant amounts given their life situation. It’s important to recognize that they differ from their boomer grandparents in that they mix their activism, volunteerism and giving and they are not brand or organization loyal. In terms of their work as leaders and employees in the sector, they value both compensation and meaningful work.

Although we are a culturally diverse country, we know very little about the giving patterns of minority communities.

Rising income and equality is creating new questions about the public responsibility of private wealth. Who philanthropy really serves is becoming a very significant question that’s putting pressures for greater transparency and legitimacy on private organizations and donor-advised funds, those being the fastest-growing destination for charitable giving in Canada and the U.S.

We have new business models, new finance tools and more entrepreneurial activity by charities. While we know the supply of private capital coming into this sector through social finance is increasing quite rapidly, the demand and the take-up is not yet meeting that supply, in part because charities lack the absorptive capacity to do so.

For governments, we have new models of service delivery as we try to solve “wicked” problems with system-based orientations and approaches. That means that governments are looking in greater degrees for innovation, to co-produce those solutions with charities and expecting greater collaboration among charities.

Finally, there is leadership renewal. A recent study by the Ontario Nonprofit Network indicated that 40 per cent of the current CEOs in the non-profit sector are over 55 years of age and that 60 per cent will plan to retire in the next few years. What that means is human capital renewal for this sector is a serious issue.

As you frame your work, I make the case that the demonstration of impact is more important than ever before; innovation, collaboration and co-production are more important than ever before; organizational governance is more complex; sector self-regulation is important; and decent work and leadership renewal need to be addressed.

So where does that leave us in terms of some of the priorities for policy and regulatory reform?

First, what kinds of organizations are considered charitable? This sector and our expectations of it have outgrown a historical view of charity and our approach increasingly lacks public legitimacy, it’s not easily understood and it does not serve society well. I would also suggest there’s likely to be a growing pressure to report on public benefit and to report on impact as has now been put into statute in the U.K.

Current rules on “political activities” are confusing and reporting is a fiction. The language and the limits on political activities need to be clarified. Now, I don’t anticipate that this would actually change the behaviour of charities very much, because they’re not engaged in policy and advocacy to the extent that they could under existing rules, but principles matter and our principles and approach to democracy matter.

As charities pursue more entrepreneurial strategies, the regulation of business activity needs to be reassessed and the committee could provide valuable advice on the appropriate treatment of business activities and social finance connecting with Employment and Social Development Canada on their review of regulatory measures as part of the Social Innovation and Social Finance Strategy.

What is a “modern” regulator in this sector? Effective regulation depends on the authorities, the credibility, the transparency and the resources of the regulator. Is the Charities Directorate of the Canada Revenue Agency suited to be a modern regulator? Does the approach to regulation appropriately balance facilitating the work of the sector and mitigating risk? Does it fit with a cabinet directed on regulatory management?

The pros and cons of various models have been debated for years, but I still think we need to revisit them.

Next is contracting and accountability frameworks. Charities provide vital public services, as demonstrated by the fact that governments account for over 40 per cent of the revenues of this sector. Yet most of those contracts do not cover the real costs of providing those services and there is a massive cross-subsidization of private philanthropy for the gaps in public funding on those contracts.

The accountability requirements were described in 2006 by the Independent Blue Ribbon Panel on Grants and Contribution Programs as a “morass of rules” and the panel admonished the Government of Canada to fix those rules, but progress has been limited.

In addition, we have a widespread public perception or misperception that charities should operate with very low administrative overheads, and there’s a general unwillingness of funders to support those, which makes it difficult for charities to invest in the systems they need to support innovation, to support new business models and better results. A major contribution of the committee could be to review the federal contracting regimes and associated accountability requirements.

What is “enhanced,” and how do we enhance a culture of philanthropy? Canada already has a generous system of tax incentives, and additional incentives are unlikely to expand the rates or levels of giving, the exception being perhaps making the tax treatment on the donation of private shares comparable to that of public shares. A tax credit for volunteering is unlikely to have the desired effect and is open to abuse.

I suggest we need to look and focus on what encourages philanthropy: greater awareness of opportunities and impacts, and the ability to easily conduct due diligence because of transparency, peer influence, social norms and the role of philanthropic advisers for high-net-worth donors.

Next is stronger governance, skills development and decent work. With increased expectations of impact, innovation and the pursuit of new business models, the need for effective board governance and leadership skills are critical — witness the recent scandal at Oxfam International.

I don’t believe that governments can realistically regulate good governance and leadership, only encourage and invest in it. The Imagine Canada Standards Program is one of the most rigorous sector-wide certification systems in the world, and more could be done to integrate it into a co-regulation approach. There is a need for charities to attract new leaders and employees with the right skills. The sector is advancing a decent work agenda that includes precarious work compensation, pensions and benefits, and the committee could assist the work of the sector by encouraging conversations around decent work.

Finally, better data. The ability of government and the sector itself to make evidence-based decisions depends on quality data. While our tax data — the T3010 — are among the most open and comprehensive in the world, we lost valuable data about trends in giving and volunteering when we discontinued the national surveys, the National Accounts and the HR Council. If we’re going to make evidence-based decisions, we need to improve collection and communication on data in the charitable sector, including enhancing the ability of charities to collect and share data on their impacts.

In conclusion, I think this is an exciting but uncertain time for the charitable sector. How governments think about, engage with and regulate this sector has really not changed in decades, and it doesn’t facilitate the kind of innovation that is needed. So the sector is hamstrung in its ability to realize its potential in a very changed environment.

I hope the committee will take up some of these fundamental issues so that we are not waiting for another round of reform for 20 years. Thank you.

The Chair: Thank you very much, Dr. Phillips. We’ll get to questions in a few moments.

Next will be Dr. Laforest, who is with us from Queen’s University but via Washington, D.C. Please proceed.

[Translation]

Rachel Laforest, Assistant Professor and Director, Public Administration Program, Queen’s University: Thank you for the invitation to speak to you today. I am excited about talking to you a little about my experience because I have just held many interviews with organizations in six or seven provinces.

[English]

I’m really excited to be here today because I just began a pan-Canadian tour. I did 100 interviews with non-profit organizations in seven provinces over the past two months, and I will talk to you a bit about the feel I got from some of that fieldwork. Before I start, I want to emphasize two points.

First, the volunteer sector, the non-profit sector, the charitable sector varies enormously from one province to the other. We’re not talking about a uniform sector. From one province to the other, you really have different discourse, narratives and political dynamics, which really shape the nature of the sector. It’s important to bear in mind, when you’re thinking about a pan-Canadian strategy, that there are really different local and provincial realities.

Second, the size and the scope of the sector is very diverse, and the majority of organizations are non-profit, not charities or philanthropies. There are 170,000 non-profit organizations across Canada. Only 85,000 of those — at least at the last count in 2004 — are charities or philanthropies. I want to draw some attention to the remainder of those organizations and some of the challenges they’re facing under maybe not the legal or regulatory regime but really some of the policy regimes and the impact that it’s having.

I’ll be open to answering some of your questions, of course, around the tax system and the regulatory system. I want to emphasize the dynamics happening in those areas.

The first thing to talk about is really financing of non-profit organizations. There have been systematic cuts to non-profit organizations since the late 1990s. There has been a shift away from core infrastructure funding towards more project-based funding. That has had a huge impact on non-profit organizations. It has made it much more difficult for them to sustain their operations. They have had to look at multiple new sources of funding, multiple new instruments of funding. Each of them, of course, comes with different requirements for accountability, for measuring performance, so the administrative burden these organizations face really has an impact on their ability to meet some of their expectations.

This is important because the capacity of non-profit organizations is vital to the quality of services that are delivered in provinces and at the federal level across Canada. It has an impact on their capacity to hire good employees, to offer them good remuneration, to be able to offer them stable job conditions. That can also have a huge impact on the capacity of organizations to balance their different roles.

As organizations go after different sources of funding, it becomes difficult to maintain the core operations, to focus on different roles like advocacy. As Susan Phillips noted, we’re asking these organizations to be increasingly innovative, to develop new tools, but they don’t really have the resources and the capacity to do that.

I think this is one of the most pressing and important governance issues for provinces and for the federal government. On the ground right now, there’s a real and important governance transformation around social services delivery systems. All of the provinces are reorganizing their systems so that they’re more aligned regionally, so that they’re centred on user needs, and so that users are involved in the design of these new delivery systems. That requires the involvement of non-profit organizations in helping make those connections with the users and the clients on the ground. It requires their knowledge and their involvement in policy development.

What we’ve also seen, especially at the federal level, is that policy issues of the day, such as homelessness and poverty reduction, are really complex issues that require the experience of people who have lived experience in the system and of these non-profit organizations. What would be really important for the committee to be looking at is finding ways where we can bring back more capacity to the non-profit sector as a whole and be able to bring back more stable funding to be able to meet some of those capacity challenges.

The second issue is the demographic shift Susan was talking about. I think it’s important to look at the demographic shift on the civic core. The civic core is those few and most important individuals who are responsible. Both are volunteering in charitable donations, and the demographic shifts are going to have a huge implication.

A small number of donors are responsible for the bulk of charitable donations, and that is also true for the bulk of volunteer hours. When you look at the civic core, those super volunteers and donors, it tends to be the elderly population and those who have been involved in multiple organizations and are now slowly limiting their involvement and charitable donations as they’re growing older. It’s part of that reason that you’re seeing a decline in the number of donors. It’s part of the reason why you’re seeing a decline in volunteer hours overall. I think we need to be thinking about how we’re engaging the next generation. Our youth are going to be lave-lève, if you will. They don’t engage in the civic sphere in the same way or for the same reasons. They tend to prefer engaging with organizations around work experience, but they also want to engage with organizations without traditional membership. They like to do it in ways more informal via social media and new technologies.

In terms of giving, they want to give smaller donations to organizations and they want to do it for a social cause that is different. They don’t want to invest in infrastructure. All of those dynamics are going to have a huge impact on the state of our sector.

I’m going to leave it there for the moment, but I’m happy to answer any questions you might have.

The Chair: Dr. Laforest, thank you very much for your presentation.

We’ll now move on to Dr. Peter Elson, who is with us from Victoria, British Columbia.

Peter Elson, Adjunct Assistant Professor, University of Victoria, as an individual: Good afternoon and thank you for the invitation, senators, guests and colleagues. I’d like to start by acknowledging that I’m speaking with respect and humility to the Lkwungen-speaking peoples on whose traditional and unceded territory the University of Victoria stands, and the Songees, Xwsepsum -- Esquimalt -- and WSÁNEC peoples who continue to care for this land.

There are three points I’d like to raise for your consideration. First is the role of charities and non-profits in Canadian society; second, as Rachel and Susan have noted, the funding and fiscal balance; and, third, reporting and regulation of charities and non-profits.

I think it will be important, while it may not be the focus of your attention, to explore the historical role charities and non-profits have played. There is a long history going back to the early 1600s. As Susan mentioned at the outset, although this institutional dynamic changes from time to time, the historical role of non-profits and charities in Canadian society is an important one. I think fundamentally one of the questions to be raised is, what are the expectations and roles of charities and non-profits in a contemporary context in Canadian society?

The expectations of charities and non-profits have shifted dramatically, but policies have often shifted through stealth rather than an overt policy shift which has taken place without the full engagement of the non-profit and charitable sector.

There are a number of core roles the collective sector has played in society. There is a complementary role. There’s a supplementary role. Obviously, there’s an expressive and service role. As Susan mentioned, up to 85 per cent of non-profits and charities in Canada are currently engaged in providing services, yet that wasn’t necessarily the way the balance has always been. So I think it’s really important to ask what the expectations are, because if our expectation, for example, is that charities and non-profits will continue to play a public service delivery role, then the very core issues that Rachel and Susan have raised related to decent work and remuneration become extremely important.

The second area is the dimension of funding and fiscal balance. Since the early to mid-1990s, the real message the federal government has sent to charities and non-profits is “go to market.” The program review in the mid-1990s that increased the donation allowance substantially from 50 to 75 per cent and the percentage of donations that corporations and individuals can make to charities was really part of that message. Charities have responded accordingly. The focus on high-net-worth individuals is really a fundamental part of that marketization of donations and volunteers that are now becoming a core characteristic of the sector.

It’s of no surprise, for example, that the market skills that have been developed by necessity since the mid-1990s are now being applied within the private market. Non-profits have an entrepreneurial motif they explore as far as the volunteers and donors are concerned, but the same skills can be applied with the private sector. There are also fundamental ways in which the capacity of charities and non-profits to engage within the private sector market are encumbered substantially, and they are doing so not necessarily because they want to become private entrepreneurs per se — although certainly social enterprise is a growing facet of the non-profit sector. It’s really because they’re utilizing all of the skills at their disposal to receive the resources they need to meet the needs of the community.

In the absence of government funding and the lowering or the segmentation of donations, the private sector or the private market becomes a viable instrument. I think that’s something that really needs to be given serious consideration.

Susan and Rachel have both made remarks related to decent work. I myself conducted a study several years ago on the non-existent state of pensions within the non-profit sector. It’s part of our legacy, in terms of seeing non-profits within a charitable motif, that even though people who work within the sector are often highly qualified, they are usually underpaid. Even senior executives can work without any pension benefits whatsoever.

So at the point of their retirement, the tables get turned and non-profit staff become the ones in need, even though they may have spent their whole careers helping others. I think this aspect of pensions and so forth related to the sector has to be built into your deliberations.

As a person who was an executive director for a registered charity for 15 years, I can assure you this is a reality. Contracts rarely, if ever, take into consideration not only salary but benefits for decent work. I think this is something that really needs to be given serious attention.

The third point is related to the reporting of regulation of charities and non-profits and the CRA as a regulatory body, per se. Again, Susan mentioned this. I think that shifts and changes have certainly taken place within the CRA. On the other hand, I think the CRA itself needs to be given the tools and the scope to engage the sector in new ways. I think that as a tax regulatory body, there may be some things related to political activities and so forth that they could, in a very viable way, let go of.

The whole issue of freedom of speech and political activities is an important one for the sector. When you think about it, charities are the only sector in Canadian society where its freedom of speech is curtailed. Corporations and private individuals have no such limits. I think we’re reaching a point where those limitations lack the kind of justification they may have had at the outset.

I’ll conclude with the issue of the classification of labour market information and the importance of the fact that non-profit organizations can register provincially or in a territory, as well as federally; and they can incorporate as non-profits and register as charities. It’s extremely difficult to get robust labour market information because of the characteristics of labour market information data systems, both at the provincial and federal level.

Statistics Canada has done some very good work in this regard. When you’re looking at long-term strategies in terms of the labour market for the non-profit sector, access to robust employment and wage data — even as data is being inputted -- and being able to flag that data appropriately and identify non-profits as such are important considerations.

I welcome your questions or comments.

The Chair: Thank you very much.

Before we go to questions, I want to make sure I introduce Senator Martin, who joined us after I started to do introductions. Senator Martin, from British Columbia, welcome.

Senator Omidvar: Thank you to all three of you for really concise but very thorough and deep presentations.

As you well know, this is the first time the Senate has conducted such a deep study on charities, and the burden of doing a good job is weighing, I think, on all of us. We have a year. When we look at charities and we look at their scope and size, it’s overwhelming. You have religious charities, educational charities and international charities; you have charities that operate outside of Canada and we have charities that operate in small places in Canada. It is, frankly, a little overwhelming to think of the size, shape and focus of our work.

I wonder if each of you could give me your top four questions this committee should seek to ask and have answered in order to do a bang-up job.

Ms. Phillips: My first question would be: Do we have a modern regulatory framework for charities — I’ll put aside non-profits and focus on charities — that enables innovation and mitigates risk while having that balance of facilitating the work of the sector?

Modern regulation is a question we’re asking of all sectors. Whether it’s emerging technologies, we should be asking those kinds of questions. I think in this field we have become so mired in particular ways of thinking about what charities do and of how we’ve structured regulations that it’s been difficult to answer that question. So my first one would be: What is a modern regulatory framework?

Second, charities are going to be entrepreneurial. They want to be entrepreneurial. We shouldn’t require that, because for some that is not appropriate. But they are enormously inventive. They are coming up with a whole variety of ways of mixing their mission and ways of funding and financing that. We need to think about how we, in a realistic, modern way, again focus on enabling some of that entrepreneurial activity in a sector that is much more hybrid.

Also, how do we help the sector really prepare to take advantage of social finance? I’ve looked at the demand side of social finance and what we know is charities often don’t have the analytical skills or the financial management capability and the financing tools aren’t the right tools to match what they do. There’s a big question about that aspect.

Ms. Laforest: Yes.

One question is definitely how we can modernize the sector. How can we help the sector take advantage of some of the new challenges it's going to be facing around demography in particular? Some of these changes will have a huge impact.

I think there’s another question around what the trends are. Susan Phillips noted that we don’t have the data. We’re looking back at 2004 data to be able to think through some of these trends and I think some of the demographic changes will have a huge impact on the sector. We knew in 2004 the sector was fragile. Most of the core volunteers and donors are those who have a religious background and are the older population and both of those trends are in decline. What is the evidence and what are the trends that can help us better understand where we’re heading? I think that is an important question.

How can we be effective and more efficient with our funding strategies so we can actually help build capacity within the sector and help them accomplish what we’re asking them to do, in particular around service delivery, but I think more and more around advocacy? There’s more consultation and more desire to engage the sector. How can we be more effective with our funding strategies to help the sector build their capacity?

I would also have a last question on how we can help the sector innovate. What are the barriers around innovation? As Susan mentioned, programs are created but there’s no uptake because there’s simply not enough capacity within the sector to take advantage of those innovations. There’s not enough wiggle room in the funding system to enable organizations to actually experiment, innovate and take risks. How can we better innovate and help the sector innovate?

Mr. Elson: The first question I would have is: What is the responsibility of government for the well-being of non-profits and charities in Canada? Is it their responsibility to help support, guide, or to get out of the way so that the contribution is, in fact, one of absence?

For a lot of volunteer organizations, beyond the regulatory or reporting relationship, a lot of small ones don’t have any ongoing connection with government whatsoever but obviously, as I mentioned before, those involved in services do. How seriously does the government want to take this relationship, and how consistent are the in-place policies, programs and supports in relationship to the well-being that they want to associate with the sector?

A complementary question would be: What role do Canadians expect of the non-profit and charitable sector? As I said before, often it happens by osmosis or by stealth rather than an explicit policy shift. I think that a real contribution would be saying: What is the role or expectation of non-profits and charities in Canadian society?

Senator Raine: Thank you very much, all of you, for being here. For us, starting this committee — and thank you very much, chairman, for your effort over the years to get the committee started — I think we do recognize the work done by non-profits and charitable organizations across our country. We see an ability to kind of unleash it to go forward with even more energy.

I’m just learning about it. I would like to ask Susan Phillips, if you don’t mind, what exactly do you mean by donor-advised funds? I’m not familiar with the field. Perhaps you could define that for me quickly.

I also have a question for Ms. Laforest. What exactly impacts the stability of staffing and how important is that? Do I understand that either the private donors don’t wish to fund administration or the government support doesn’t fund administration, and so without good administration, you can’t have a good organization? Could you elaborate on some ideas to change that?

Those would be my two questions.

Ms. Phillips: Donor-advised funds are accounts held by individuals or families, usually at a community foundation or at a commercial entity. Most of the big banks have a separate foundation which holds these accounts. They’re akin to a foundation but without some of the complexity of setting them up. They’re easily set up. You can probably get set up with $10,000 into them.

The requirement is that the foundation as a whole, be it the community foundation or the — for example, the biggest in the U.S. is Fidelity Wealth. It has to disburse from all of its funds at a fixed rate per year, 3.5 per cent. But that doesn’t apply to the individual fund.

The critique is some funds could sit there for years and do nothing. Some funds could spend out significantly above what they’re required to and the average would work out. It also allows donors to give anonymously, so you could give to a charity and the charity wouldn’t know who it is.

Part of the argument for high-net-worth donors is that means that I don’t have a whole bunch of charities chasing me because I can give anonymously.

Last year in the U.S., donor-advised funds surpassed the United Way as raising more revenue. People are putting them into donor-advised funds. They can grow a legacy for their families to join in giving over time, or they can simply decide what to do at a further point and don’t have to make those decisions.

The questions around their transparency, they have been called “parking lots” for charitable giving. On the other hand, their proponents would say they’re flexible vehicles that in fact distribute more on average per year than do private foundations.

Senator Raine: But it’s up to the donor to direct where the money goes.

Ms. Phillips: That’s correct. Yes.

Senator Raine: I would guess that the CRA doesn’t particularly like that, because they like to be in control of where it goes, don’t they?

Ms. Phillips: Well, because you’ve taken the tax receipt, it would have to go to a charitable purpose, a charitable organization, but there’s no control over which one it is and probably arguably shouldn’t be.

The Chair: Part of Senator Raine’s question was for Ms. Laforest.

Ms. Laforest: Thank you for your question.

The most important trend around funding, and this is mostly for government funding, is we’ve moved away from the core funding, from having available core funding to support infrastructure, to support day-to-day operations, towards more project-based funding. It’s funding that is quite specific. It’s time bound, and organizations are not allowed to take some of those resources to be able to pay for their core everyday operation, staff and rent and the like.

It has become very difficult for organizations because by the end of a project they need to be thinking about their next project if they want to keep their employees. It becomes very difficult to hire someone full time or permanent. In the non-profit sector they tend to hire people from project to project without any guarantee because they won’t know if they’re able to get another project.

There are also all the issues that Susan raised around infrastructure funding, around donations. People who make donations want to know their funding goes towards a specific cause as opposed to going towards a building or salaries. That puts pressure on organizations, making it difficult to allocate resources for some of those everyday core operations. Both of those dynamics undermine capacity, undermine the ability to hire people who are really competent because they’re competing with the private sector, competing with the public sector and they can’t offer comparable working conditions or commit for an extended period of time.

What ideas can we see to reverse that? Many provinces have gone back to triennial funding, which guarantees at least funding on a base of three years, as opposed to having annual funding where you have to reapply every year, again with no guarantee. At least that gives some element of stability.

There’s a possibility to change the project requirements to allow at least some portion of project-based funding to be allocated to some of those core operations and keep the organization afloat beyond some of the funding.

There’s the idea of streamlining at least the funding process, because as it stands the grants and contributions programs are really tedious in terms of application process, requirements, forms, so that’s taking time away that could be dedicated or resources that could be dedicated to core operations. That doesn’t get compensated through project-based funding either because again the funding needs to go to the specific project as opposed to covering some of those costs.

A great example is the Quebec government which has actually set up specific funds separate from any kind of project departmental funds to support core activities like advocacy, in recognition that a contribution to policy making is important. That’s how Quebec has dealt with those issues.

Those are a couple of options.

Senator R. Black: Thank you very much. It is absolutely exciting to be involved in this committee. I thank the senators for going down this road back in May of last year, and thank you for your presentations.

I come from the charitable, not-for-profit sector, having been a CEO and executive director for the last 18 years, up until three weeks ago. It’s because of the appointment to the Senate that I’m now causing a human capital renewal problem with the small organization that I’m involved in. So it is exciting.

I think about the impact of the work that charities do. Our funders — and we’re provincially funded — continue to talk, over the past few years, more and more about impact. When you’re only funded for a year or on a project basis, the impact is longer than six months or than a year. It’s sometimes 10 years; it’s sometimes 20 years.

How do we encourage resources — and this is for all three of you — to be put towards studying that impact? The impact is what’s going to keep the programs going because of the funds that we will be able to achieve. How do we do that when it’s project based and yet part of the funding requirement is to show that impact, but they just don’t get it?

Ms. Phillips: I’ll take a stab at that, because I’ve done some work in that area.

First of all, it’s in that relationship of funder to fund in terms of what the realistic expectations are in terms of timing, of working together on defining impacts at the outset and building evaluation capacity. I think we could support greater resources or expertise for the sector as a whole to build evaluation capacity.

But we’ve gone much further. We’re at a point where we’ve gone much further in this sector than just evaluating particular projects by organizations. We’re on the verge of this huge wave of impact investing, which is private capital coming into the sector on the basis of being able to trade impacts. That’s really what impact investing is. You invest in a project or you invest in traded impacts on social exchanges in which we have a whole variety of metrics.

The pressure that we’ve seen in the past for a demonstration of impact is small compared to what it will be five years from now. We’re in the wave of financialization of this sector in a way that the rest of our economy was 15 years ago. The ability to really focus on impact should not be underestimated. It’s the tsunami that is coming in a variety of forms, and we have to build that capacity at the organizational level, at the sector level and in those relationships with funders.

Mr. Elson: I think the issue of impact can be addressed in three ways: scale, purpose and bureaucracy.

In terms of scale, we’ve all talked about the fact that there’s a huge variety of sizes, shapes and forms of non-profits and charities across the country. So the idea of impact needs to address the issue of scale. That can be at an organizational level, local neighbourhood level, community level, provincial level or society level.

It’s important to address the scale of the impact that you want to measure. Small organizations — and this has happened in a tangible way within some social service agencies -- have to fill out the same evaluation form as they would have for a complex hospital or something like that because the forms are there. So the idea of the scale of the impact needs to be considered.

It is also the actual purpose. Often impact becomes a mantra. Some of the research that I’m doing around charitable foundations is going to address this because foundations are an important aspect of the charitable sector. They’re asking exactly that question around the impact that they make. It really comes to what is the relationship of the purpose of that impact, and what are you trying to achieve?

My third point, as I alluded to, is the aspect of bureaucracy and the fact that the actual scale and scope of the impact has to be aligned with the nature of the funding vehicle and the organization itself. It can very easily cripple the capacity of an organization to respond because they’re focusing too much on unrealistic impact measures.

Ms. Laforest: I agree with what Peter and Susan have said. I’d add that the sector is actually pretty good at impact measurements. Some of the bigger organizations like the United Way have been doing that for a long time. Some of the foundations have been pushing impact measurement. I agree with Susan; it’s here to stay.

What we need to do is encourage and help some of the smaller organizations. But I don’t think it’s realistic to ask the non-profit sector to be reporting back on impact within a year when they’re doing poverty reduction and we don’t even ask the same thing of government.

I think aligning funding patterns with some of those strategic plans to help organizations over the next three to five years is how we’re going to move the needle and be much more realistic about what we expect in terms of mid-term, mid-point, smaller outcomes that will lead to larger impacts, in the same way we expect that government and the public sector would be a better fit. That would require realigning the way we fund organizations to give them the time to be able to have that kind of impact.

Senator Martin: Thank you for your leadership on this. I too, in listening to your presentations, feel we have much food for thought and some really important ideas to go forward with during our study.

I have questions for all three of you. Let me begin with Professor Phillips. I apologize. I was a bit late, so I missed part of your presentation.

First of all, in terms of the need to innovate in this sector, how important that is because of the changing society and global environment? You had said in your presentation that the sector can be open to abuse or is open to abuse. I wanted to ask you to elaborate on some of the areas we should be further examining, and what we can do in recommending ways forward to improve the overall policies and systems in place. Would you further elaborate on the abuse that you were mentioning?

Ms. Phillips: I made the comment about abuse particularly in the idea of a tax credit for volunteering, which is difficult to administer and can be open to abusive reporting. Abuse is probably fairly small in this sector, but it can be spectacular when it occurs, because the sector depends so much on public trust.

One of the very concrete things we need to do is make it easier for the regulator, the Charities Directorate, to share information with the provinces. If a province is investigating a fraud or if the CRA is, it becomes difficult to share that information.

More than that, I think we need to improve organizational governance, because the complexity with which charities deal requires much more sophisticated governance. As I said, I don’t think governments per se can regulate that. It would take an enormous machinery to do so. But it can really look at models of co-regulation, for example, with the Imagine Canada standards program, where, if an organization has gone through certification and demonstrates it has good systems in place, that is used as a kind of passport for a lighter touch regulation or a way of looking at risk mitigation.

While preventing abuse is important in this sector, I don’t think it’s the main issue and the way you should come at your work. I think facilitating the work of the sector will be a much bigger win for the country, while we still need to look at how we deal with the risk of abuse.

Senator Martin: I recall about 10 years ago hearing about administrative hubs so that some of the costs can be shared and expertise from one organization can be used to help mentor and support other groups. Is that something that has been explored in Canada? This hub was in New York State somewhere. I had run into someone who mentioned this person worked at this hub and that various organizations, charities, were sharing resources in this way. I wonder if that’s something you have come across.

Ms. Phillips: Absolutely. It’s happening in a whole variety of ways. Shared services, back-end services where charities say we’ll share administrative support or various common services. The creation of integrated services through place-based community hubs is in fact a strong initiative of the Government of Ontario and, as Rachel noted, we’re seeing those kinds of integrated service models across the country. We’re seeing shared platforms where some organizations that aren’t charities can use a platform that is shared with others. There is enormous creativity and innovation happening in this sector, some of which has moved beyond our thinking, our policy and the way in which we regulate the sector.

It’s in helping that catch-up to support that kind of innovation that this committee can make an enormous difference.

Senator Martin: In facilitating greater sharing to be more efficient, is that something the provincial or federal government could do to perhaps bring together the sector, or is that already happening within the sector?

Ms. Phillips: Some of it is already happening in terms of shared services, but again, that takes that kind of infrastructure where, at the time of coordination to meld your systems and to do all of those kinds of things, you look at more integrated service delivery, and there’s good research on this from other countries.

Often, as those service models change, what you need are new technologies and new databases. Where does that money come from? It’s what we call overhead and we don’t like to fund overhead, and therefore we limit the ability of organizations to undertake that kind of sharing and new systems to support that integration.

Senator Martin: I want going to thank all of the speakers for their insights and good ideas. As I was listening to Professor Elson, I thought we do have a proud history of philanthropy and charities in Canada and, I think, public education just to remind us of what makes Canada a great country. That’s one role that government could play to highlight what is happening, and I think that makes Canada that much stronger.

In terms of youth engagement and innovative ways forward, I have met youth who are so passionate and they see the world in such a different way than I do just because it is so accessible to them.

One really great organization, their presence is online and they have created an innovative way of raising funds for their charity. I wonder about, again, the shift for some of the charities and non-profits to go online and make those connections and how we can facilitate that. I was curious if anyone had comments on whether technology is playing a role in how this sector is potentially growing and shifting.

Ms. Laforest: Absolutely. With respect to your question on new technologies, when you look at what’s happening in the sector, there is a capacity to take advantage of some of those new technologies. It’s hard because to be able to make new technologies a priority, you need to have staff who are cutting edge and able to follow the new platforms. Often, a lot of organizations are dealing with legacy platforms.

I did a study on new digital technologies and its uptake in the non-profit sector, and I was really surprised for those organizations that were able to take advantage -- like you were saying, there are some great models, such as ME to WE, for example, for youth in particular. Those active on social media are those organizations that have received foundation funding.

It’s those able to escape some of the limits of traditional funding sources, but without being able to leverage those external funds that would enable organizations to innovate, most non-profit organizations are still dealing with legacy platforms. It’s hard for them to keep up with this changing environment know what’s current, most relevant and most useful without someone dedicated to that.

You were asking earlier about whether there are some organizations that can help share practices. There are some really neat organizations dedicated to sharing new digital technologies and helping build the capacity within the sector. It’s just the uptake that’s difficult when you’re living and working in an environment in which you have very little flexibility to seek out those new challenges because you’re enmeshed in your day-to-day.

I just want to come back to your idea of public education because I think it’s really important. If there is one piece of advice I would give you around public education — because we do have campaigns around volunteering and charitable donations — I’d really like to see a campaign of public education around the value of the sector in policy-making. These actors are on the ground. They’re dealing with the clients. They have the knowledge and the expertise.

We’ve really faced an advocacy chill over the past 15 years. I think it’s getting better. I was excited in talking with all these organizations across Canada that are being consulted and engaged, and it would be really good if that public campaign included some recognition of the value of the sector in policy-making and policy development.

The Chair: Thank you very much.

Mr. Elson: I’d like to come back to your earlier comment about hubs. I think England and the United Kingdom generally are good examples of where they have scaled up capacity in the sector by creating regional resource hubs around particular issues. For example, we talked earlier around the issue of governance and the importance of increasing the governance capacity. That’s the kind of an issue that can be developed with a centre of excellence related to charitable governance or a hub where it acts as an intermediary between researchers on one end or universities that are developing new knowledge related to the capacity around governance systems and so forth, and the on-the-ground practical work. The idea of having a system-related hub is something you might want to consider.

From my perspective, I think young people are less caught up with the actual forum that they engage with in order to change the world, as it were. When they want to engage in something, they’re less interested in whether it’s a charity, a for-profit or a non-profit — what it is — as opposed to whether they are, in fact, making the kind of difference that they want to make in the way that they want to make it.

The charitable form is only one of many ways that young people see of accomplishing good works. If they can create a private company that will achieve exactly that aim, then they will do that. They’re not going to say, “If I want to do good, I have to create a charity.” They’re saying, “I want to do this and I’m going to create this, whether it’s a worker co-op or whatever, to do it.”

I think there’s a degree of flexibility that’s really driven by purpose as opposed to the actual form, as well. I think applied technology is a really good example of that, and it's starting to grow. It’s a good example they’ve shown that works.

Senator Duffy: Thank you. All of you who have given us such excellent presentations tonight have made reference to the demographic tsunami that’s coming, the age wave, which is when the Baby Boomers inherit from their parents and the boomers move on and pass it on to the still-yet younger generation.

While there will be, as Professor Phillips said, the largest intergenerational transfer of wealth in history as people inherit money, one of the notes I have here is you have a decline in donors. We’re going to have people awash in cash over the next 15 or 20 years, yet whose history or whose culture or whose upbringing doesn’t encourage them to make sure that at least part of that goes to good works, to charities and non-profits and so on.

How do we educate these younger people who are so passionate and committed to actually make that move? The money is going to be there. It’s a matter of it going to places where it will do the most good.

Ms. Phillips: Research certainly shows the factors that contribute to engaging in philanthropy. Early socialization is part of that.

I’m actually very optimistic about the millennial generation. They are engaged; they’re just engaged in different ways. They may not be out campaigning for a particular disease that their parents might have campaigned for, but it’s taking quite a different form.

The other thing we know is that particularly the donors who made their money quite young and as entrepreneurs — specifically in high-tech or other forms of entrepreneurial activities where they made big piles of money quickly — is they like to have much more control. They’re hands-on philanthropists, so they are directive in how they’re driving their own impact, sometimes even cutting out charities to be directly involved.

We need to understand much better what’s going on and to look at a variety of levers. I don’t think there’s one in particular, but we should not assume the younger generation is not interested in making change. In many ways, they’re much more activist than their baby-boomer grandparents were.

Senator Duffy: One of the witnesses said 85 per cent of charities and non-profits are in the delivery of services. I’m from Prince Edward Island. We had a crisis in our P.E.I. literacy effort — which is small but mighty — when they ran out of money and couldn’t get funding. It was only the intervention of the premier at the very last minute that allowed them to survive for a couple of more years. That, I assume, is being replicated all over the country, as people are up against the wall, out of dough and are looking for a lifeline, and you can’t deliver services.

What is more basic than literacy? As the chairman will know, in the Maritimes we have, sadly, a high rate of illiteracy, of people who can’t read to take on the new jobs. Here we have this tiny group in Charlottetown trying to help these people to read, and they have to go at the eleventh hour to the premier to save their bacon.

There has to be a better way of doing things. These people are essential to our society. How can people get jobs if they can’t read and if they don’t have these volunteers who are giving of their time and energy? It’s very discouraging.

Ms. Laforest: Yes, it’s being replicated across the province. What is unfortunate is often some organizations being cut are those that have amazing records and a long tradition within their communities. It’s not even related necessarily to their performance.

My impression is as government has offloaded services more and more, they don’t see the non-profit sector as being part of the delivery chain. It’s almost like we’ve offloaded it and organizations are taking care of that, but literacy is no longer a government priority and so it can be cut.

I think that’s changing. I think more and more governments, at least what I’ve experienced this year as I’ve gone through Canada, are much more attuned to the importance of organizations. There are a lot of consultations happening in communities all over Canada around some of these core complex issues such as homelessness, poverty reduction and child care. There is more recognition, so hopefully that will change.

I wanted to come back to your question around demographics. I don’t have an easy answer for you, but I think it’s important to recognize when you’re looking at volunteering trends and charitable donations that there’s a generational effect. It’s not a trend where depending on where you are in your life cycle you will, once you retire, increase volunteering.

There is something really particular about the people who were born before 1945 that made these people very generous in the way they engaged in the civic sphere. They were part of what we call those core volunteers, the few who dedicated the majority of the hours. As they’re declining, I don’t think it’s evident that the generation afterwards, once they get to the same age, will behave in the same way. I think there’s something really particular about the ethos of that generation.

As Susan was saying, we know a lot about some of the factors that contribute to donations and charitable giving. One, obviously, is early exposure to those experiences. Now that we have mandatory volunteering in high school, that increases early exposure.

The other is religiosity, people being part of a religious community. Those numbers are in decline as well. That will likely have an impact.

Like Susan and Peter have said, the next generation, our millennials, is very cause focused. They want to see change and are very engaged, but it will take a different format. I think overall we’re going to see a decline in volunteering in charitable donations because we’re going to see a decline in those two trends that I flagged.

Mr. Elson: I’ll bridge on the demographics and then come back to Senator Duffy’s point around the literacy and the vulnerability of organizations.

As Rachel has just said, the context in which we imagined volunteering and supported volunteering, particularly after the Second World War, doesn’t exist anymore, any more than there were some core assumptions about the welfare state on which it was based in terms of a one-income family, a nuclear family and so forth. It doesn’t exist anymore. The charitable and the non-profit sector and volunteering have not undergone the same kind of dramatic shift, as it were, but certainly the context has.

We can’t afford to think of volunteering in a nostalgic way. Often volunteering is instrumental. If I’m a teacher, a doctor or someone else, if I want to get admitted to graduate school or something like that, then the number of volunteer hours in my particular discipline really means a lot. That career aspect of volunteering will go be the incentive.

The aspect of segmenting the market, as it were, both in terms of volunteering and giving is something occurring within the field but would also need to be reflected in any kind of messaging or support that would be developed as well.

You’re absolutely right that the issue of literacy has shifted. That’s a very good example of something that has shifted from a core public service to something which is now essential but peripherally funded. The relationship of the non-profit sector wasn’t something that, historically, organizations would have been called on to address, although we do have Frontier College and others who have been and were in the vanguard of literacy training and continue to be so.

We may think of literacy as an essential service, but from a government’s perspective, we don’t pay for it like it’s an essential service. We don’t fund it like it’s an essential service. We don’t see it in our list of funding priorities as if it were an essential service, but we want it to be.

We can’t have our cake and eat it. If you want it to be an important service that is delivered to Canadians, then it needs to be supported and paid for accordingly.

The Chair: Colleagues, I’d like to pause for a moment. When we booked our session, we asked our witnesses to be here for an hour. We are now an hour and 20 minutes in.

I don’t want to impose any further on them if they have other commitments. We do have senators who want to be involved in a second round. If any of the witnesses have other appointments, please let us know and we can excuse them. I’ll take the liberty of saying you’ve indicated you want to do second round. We’ll try to get that in. Let’s be short. We’ll start with the deputy chair, Senator Omidvar.

Senator Omidvar: Thank you, chair. In the interest of being timely, I will ask only one question to one person, as that will allow more of my colleagues to get their questions in.

Dr. Phillips, I notice in your brief that you ask a question: Is the Charities Directorate of the CRA well suited to being a modern regulator?

I would refer to the Mowat School of Public Policy’s paper on the not-for-profit and charitable sector where they talked about an enabling environment for the sector. Certainly the CRA cannot be called, by a long stretch, an enabling environment. It’s a regulator. It’s an enforcer. It punishes, as the case might be. Other jurisdictions — the U.K., for instance — have a charities commission.

How should we seek to answer the question that you pose, which is where should the sector really rest, if not the CRA?

Ms. Phillips: I think we should approach that question from asking the same type of questions that are in the cabinet directive on regulatory management. What do we want regulation to do? It needs to be adaptive, predictable, efficient and coordinated, in this case, across departments and with other governments. It needs to be principle and performance based. It needs to engage with the sector. It needs to really understand the sector it’s regulating and make much greater use of co-regulation if it’s truly going to be innovative.

We have a structure in which the Department of Finance sets the policy and the Charities Directorate of CRA administers it. The extent to which the Department of Finance is really engaged with the sector I think is a very open question, diplomatically.

Rather than say we need a charity commissioner, we need this model, I think we need to ask: What does modern regulation need to do? We have some constitutional constraints. Can we build that approach to regulation into the existing system? If we can’t, then how do we change?

The other thing we need to be cautious of is that charity regulators internationally have been badly discredited over the last few years. The Charity Commission for England and Wales had its budget cut about 50 per cent. The parliamentary committee asked whether it was fit-for-purpose.

The U.S. became IRS regulated and became highly politicized, and there is a system in the U.S. where the states are rushing in with their own regulation. The system is more confused than ever and there’s a vacuum at the federal level.

I don’t think we should say this model is necessarily better than this model. We need to ask what we need it to do and how we understand regulation, and then start to think about the structures and the practices that flow from that.

Senator Raine: My question follows up on what you just said. My approach to this comes a little bit from having served on the Aboriginal Peoples Committee, where we studied the impact of INAC policies on the administration of life on the reserves around Canada where every year they have to justify and start over. Just as the school year is coming to an end, they have to lay off all their teachers because the funding has run out and they don’t get it again. It becomes crazy.

I agree with you that we need to take a good hard look during this study at what makes sense as a process in either a project moving forward, proving that it’s worthwhile, and then getting the ongoing multi-year funding and keeping it. The federal government’s role could be in providing that stabilizing base of administration.

However, I saw what happened in one sector where when they put in a formula like that: The government bureaucracy started to grow and the reports started to grow.

The ability for this sector to stay lean and mean is very important. I think that’s the strength of the sector. I’m wondering if you could comment on whether we should be taking a look at the federal government’s role in moving towards base funding to stimulate an increased ability for the sector to grow. Is that where you’re coming from?

Ms. Phillips: Rather than calling it base funding, I think we need to look at the contracting relationships — the stability is part of that — and the accountability requirements.

I think one of the dirty secrets of the sector is that cross-subsidization happens. I did a study a few years ago looking at a medium-size organization delivering services on a project base. By the time you looked at the delays and the amount of reporting that was required and some of the turnover in staff, that organization had to find, depending on how you count it, between 50 and 65 per cent of the value of the project. It was about an $80,000 project. They needed to come up with that amount of money to cover the delays; they still had to have staff and other things. Where does that money come from? It has to come from private donations or another contract or something.

Because of how we’ve dealt with the short-term contracts, the delays in contracts, the accountability requirements, it’s a bit of a house of cards in which we are relying on donors to fund public services when they don’t realize that’s what they’re doing.

Senator Raine: You mentioned project funding. I’m thinking the funding should be — the organization should be looking for project funding from the private sector and we would provide the administrative funding that would allow it, as long as they’re administering properly, to do its job in finding and serving the outside funding.

Ms. Phillips: I think there are a whole variety of innovative models you could look at, including how you centralize or provide funding to other sector organizations that provide some of those shared services to a wide range of different funding models. We have tended to get caught into a particular project base.

I don’t think the sector is saying — the message isn’t about more money. It’s about fair money that allows it to do its work more effectively.

The Chair: I want to make sure we give an opportunity to the other witnesses, to Dr. Laforest and Dr. Elson. Do either of you have a comment on Senator Raine’s questions?

Dr. Laforest, please.

Ms. Laforest: I would just emphasize what Susan had said. If the federal government starts doing base funding or just core funding, there’s a danger that it’s used as a political instrument where we’re funding certain causes as opposed to others and that would change over time. I’d prefer the idea of changing some of the requirements and expectations around project-based funding so that it allows the organization more breathing room within the project. Because there are multiple levels of government funding different projects, I think it could work if it’s done in a way that is supportive and helps the organization build capacity. I don’t think we need to reinvent the wheel, necessarily.

The Chair: Dr. Elson, do you have a comment?

Mr. Elson: I do. I’ll bring the provinces into this question, because I think we would be remiss if we didn’t acknowledge the tremendous role the provincial governments are playing.

In terms of proportional funding, certainly provincial governments represent the most substantive funder of non-profit related organizations and their activities and services, primarily because of their role within education, health and social services.

In Manitoba, for example, they’ve had a pilot project going on for at least three years where they’ve centralized both the funding and the reporting relationship to multiple organizations. Rather than organizations reporting to five or six different ministries, they do so through one portal. They’ve done that deliberately to address this kind of red tape and multiple reporting of the same information across different ministries.

There are a number of provinces looking at what has happened in Manitoba. We published part of a profile on that in an edited book that I published a year ago called Funding Policies and the Non-Profit Sector in Western Canada. Certainly, there are models at a provincial level because that’s certainly something they deal with on a day-to-day basis. I think that’s an important consideration to think about.

Senator R. Black: Just to follow up on that, how can this special Senate committee impact the work or the funding of provinces? When you said, Dr. Elson, that the bulk of funding for charities and non-profits likely comes from the provinces, how can this committee impact provincial funding?

Mr. Elson: To respond directly to your question, I would invite them into the conversation you’re going to have; it’s as simple as that. I think they absolutely need to be a fundamental part of it. Whether it’s conversations or responses to briefing notes, they’re asking exactly the same kinds of questions that you are, and it’s not going to help the sector if you’re heading in two completely different directions. Bringing the provinces into this question, I think, would be brilliant.

Ms. Laforest: I want to add to that, because I think even though a lot of the funding comes through the provinces, I believe the federal government has an important leadership role in terms of sending the signal around some of those expectations.

To some of those questions that Peter was asking earlier — What’s the role and responsibility of government? How can we build an effective funding system? What does that look like? — I think the moment the federal government will start to implement something that’s more stable, more effective and that recognizes the importance of infrastructure and allowing space for organizations to contribute to policy development, that recognition and that signal will trickle down and influence the provinces. I think there’s an important leadership role that you can play here.

Senator Duffy: The question of advocacy was briefly mentioned but then bypassed, and I think it is a major issue looming in the wings. Our political society has become more divided than ever, for various reasons that we all know, with everything from fake news all the way through. How realistic is it, Dr. Phillips, to expect any government of any stripe to be more open to advocacy given the political climate we have today?

Ms. Phillips: It goes to the question that Professor Laforest was addressing. Rather than thinking of just advocacy, we need the information. Governments need the information that charities have from working on the ground. We often have a rather long supply chain between government as the funder or the authority and what actually happens on the ground.

Often what gets called advocacy is actually information. Among developed countries, Canada has one of the most restrictive regimes. It’s confused and reporting is very loose because often the difference between advocacy and education isn’t understood, so we don’t know what’s going on.

Senator Duffy: Just so the viewers at home understand the context, advocacy in this situation is the complaint by some people that charities take taxpayers’ money and use it to advocate a particular political point of view with which other people might disagree.

Ms. Phillips: If that’s the case, then donors will stop giving to them. I think we need charities as part of that free market of ideas, and there will be a counter-organization that takes up a different point of view. I don’t think we should be afraid of advocacy as much as we have been. It’s part of the life of democracy.

The Chair: I have to interject a little story. In my background, of course, I’ve done some political fundraising in my day. My mother used to say to me when I was a political fundraiser, “Stop sending letters asking me for money.” And I said, “Stop giving me money and I’ll stop sending you letters.” She thought about that for a moment and said, “What do you want: For me to stop sending you letters or to stop complaining?”

I said, “Keep sending the money, mom.”

Senator Raine: I had a supplementary on where we are around advocacy and charitable donations and the charitable status of advocacy groups. What are your thoughts and what do you understand about funding coming in from outside Canada to fund advocacy groups that may not be accountable and transparent? And how does this impact advocacy?

I can tell you right now I’m thinking about the Kinder Morgan pipeline, where 500 people waving placards is seen as a huge demonstration in the middle of Vancouver, where there are a million and a half people surrounding that site who didn’t come to protest, and yet the message in the media is that everybody in British Columbia is against the pipeline. Many of the people identified in that particular group have been funded by sources outside of Canada.

I’m wondering how we deal with that in terms of being very careful how we respect the right to advocate without being influenced by outside forces.

Ms. Phillips: Because reporting on —

Senator Raine: It’s not a hot potato. I think everybody is aware of it. It’s a reality.

Ms. Phillips: Because we require reporting on external sources, we actually have information. The amount of money that comes into Canadian charities from external sources is actually very limited. Most of it comes to universities and a few other rather conventional conservation organizations. When we’re talking about advocacy, I think it’s very clear from what the sector would want and what most of its supporters would want.

We’re talking about non-partisan activity. It would be a danger to enable, as we learn from the U.S., explicitly partisan engagement in political activities. We’re talking non-partisan. The amount that’s coming externally is actually very small, and what we’re doing is dampening an enormous amount of expertise and knowledge that many charities are choosing not to pass along or not to be engaged in because they’re afraid of the current rules.

Senator Raine: I’ll give you another example where an organization which was funded from outside Canada took on a challenge as a non-partisan organization to support politicians in the last election. They supported whichever party seemed to be the most likely. They supported anybody but Harper. We’re very proud to brag afterwards that they funded the election in a certain number of ridings which swung the balance of the vote.

So we shouldn’t really talk about that here, but it is a good example of how we have to be very careful about what you said was not a partisan —

The Chair: I look forward to debate on this in the chamber.

Senator Raine: We’ve done that.

The Chair: I’m not going to allow us to —

Senator Duffy: Since I raised this monster, my intent was to get to what that concern in the past has led us to, which is my impression that CRA is unbelievably difficult and close-minded in terms of the way they deal with a lot of non-profits and charities, because they somehow fear that speaking up for the poor or something like that is going to get them in trouble with their political masters.

Which brings me back to the idea that has been kicked around of an SOA, a special operating ministry, like a minister of charities, that would advocate for the private non-profit sector, that would advocate for proper treatment and would be an interface. Instead of having thousands of small groups all trying to get their five minutes of time with a well-paid pension bureaucrat to make their case, this larger, more prestigious body would insist that these groups be treated fairly and not on some perceived permission or vision of bias.

The Chair: Again, I will look forward to that discussion in the chamber.

Senator Martin: I was just thinking that our laws are not perfect. There are loopholes. These are conversations that we will have in the chamber, but maybe in this committee we could look at it to some extent.

When Dr. Elson was asked about the key questions, you said: What is the role of government? I was thinking that the role of government is to really engage corporate Canada and corporate responsibility and how important that partnership will be to supplement, complement and enhance what is already happening. I think we need to do more of that. If we can, I think it would really help everyone across the board.

That was a thought I had when you answered Senator Raine’s question about that key role of government. It’s more of a comment than a question.

Senator Omidvar: I have so many questions. I will just find one to close the loop on an absolutely fascinating discussion.

Even though the Senate s beginning to do a deep dive on charities for the first time, it is not the first time that the government has looked at it. I refer to the Voluntary Sector Initiative in 1991. I refer to the blue ribbon task force on grants and contributions. Millions of dollars were spent. The VSI was a $91 million initiative.

Can someone tell me what stuck from that, what recommendations were in fact implemented and what we should resurrect? Or is that something you’d like to do in writing to us?

The Chair: I think that’s a fair question. Do any of our witnesses have a comment?

Ms. Phillips: I said these opportunities come around every 20 years. I was thinking of the panel on accountability and government, of which I was research director from 1997 to 1999 and Havi Echenberg was the associate research director. What did we talk about? We talked about the nature of the regulator. We talked about issues related to outcomes measurement, financing, all of the same issues now on the table.

It has been very difficult to make change. The VSI made some regulatory changes that were helpful. I think one of the reasons is because it engaged senior public servants with the sector, but it didn’t go as far as we needed.

Senator Omidvar: We don’t need to reinvent the wheel? We can get back to our Library of Parliament and all those things. Okay. Thank you.

The Chair: Do either of our witnesses on video conference have anything to add? If not, that’s fine. Don’t feel obliged to.

On behalf of the committee, I’d like to sincerely thank our witnesses for being here tonight. I think I could sum this up by saying that this has been a great start. We had the right witnesses to stimulate some thought and discussion. You put some interesting ideas in front of us. I see two or three possible recommendations coming out. We’d have to agree, of course, but there are things here for debate.

Colleagues, we are now going to suspend for a few moments. We want to do a bit of in camera work. If it’s agreed to move in camera for the next portion of the meeting to discuss the committee’s future work, we will take a brief pause to do that. If the senators agree, we’ll permit staff to remain in the room for the in-camera portion of this session.

(The committee continued in camera.)