THE SPECIAL SENATE COMMITTEE ON THE CHARITABLE SECTOR
EVIDENCE
OTTAWA, Monday, March 18, 2019
The Special Senate Committee on the Charitable Sector met this day at 2 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.
[English]
The Chair: I welcome you to this 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 start by asking my colleagues to introduce themselves.
Senator R. Black: Robert Black, Ontario.
Senator Martin: Yonah Martin from British Columbia.
The Chair: Other senators will be joining us later.
Today, the committee is continuing its study to examine the impact of federal and provincial laws and policies governing charities, non-profit organizations, foundations and other similar groups; and to examine the impact of the voluntary sector in Canada.
For our panel this afternoon, we have from Farm Radio International, Kevin Perkins, Executive Director; by video conference, we have Zaid Al-Rawni, Chief Executive Officer of Islamic Relief Canada; and from Canada World Youth, Mike Power, Vice-President of Programming and Operations. Thank you for accepting our invitation to appear.
Following the five- to seven-minute presentations, we will go to a question-and-answer session.
Kevin Perkins, Executive Director, Farm Radio International: Thank you. Good afternoon, senators, fellow witnesses and other attendees. Thank you for inviting me to appear before you as you undertake this important work.
Farm Radio International was founded in 1979 by a Canadian farmer and much-loved farm radio broadcaster named George Atkins. As a broadcaster, George served Canadian farmers with the information they needed to thrive and survive, talking about farming practices, markets and weather conditions. His radio program was as important to their success as good seeds and rainfall.
In the 1970s, after a work shop in Zambia with a group of radio broadcasters from across the Commonwealth, George saw an opportunity to use his passion and skills for farm broadcasting to benefit family farmers throughout the world. He started producing and globally sharing radio scripts for broadcasters about topics of practical benefit to small-scale subsistence farmers in developing countries. In May 1979, 40 years ago this May, the Developing Countries Farm Radio Network, now called Farm Radio International, distributed its first script package to 34 broadcasters in 26 countries.
Since then, we have grown to support a network of nearly 800 radio stations in 40 countries in Africa. We produce and share a steady supply of radio scripts, broadcaster how-to guides, and offer other resources and services that help rural radio stations improve their educational radio broadcasts. We also work directly with about 100 radio stations in 11 countries to deliver carefully designed radio series that have a sustainable and measurable development impact, affecting the lives of tens of millions of rural citizens in Africa. We have also integrated new mobile communication technologies, such as SMS and cloud computing, to create what we call Radio 2.0, an interactive and powerful two-way communication tool.
We have over 20 funding partners, including the Rockefeller and Gates Foundations; Global Affairs Canada, of course; and the World Food Program, among others. We are also supported by over 2,500 Canadians with annual charitable donations.
The charitable and voluntary sector is an important actor in efforts to reduce poverty, improve health, strengthen communities and achieve other important aims. It efficiently delivers programs and services, but it also brings deep knowledge and experience from long-term work with community partners around the world, work that informs us of needs, challenges and opportunities. The sector is an important source of social innovation, finding and testing solutions to perplexing problems.
I would like to comment on two elements of law, policy and practice that affect the capacity of the sector to fulfill its potential. The first is provisions in the Income Tax Act that govern the way that Canadian charities can work with partners outside Canada. The second is the increase in the value of the sector’s contribution to Canada’s international assistance through more responsive programming.
First, the Income Tax Act stipulates that a Canadian charity can spend money only on its own activities or as gifts to other Canadian charities. To work with a partner organization in another country, such as a community-based or women’s group, a national health education organization, a Canadian charity must contract it as an intermediary that implements specific approved activities under Canadian direction and control. It cannot offer grants to local organizations to, for example, strengthen their own capacity.
This can be problematic for Canadian charities involved in international development. Our ultimate success depends on helping local development partners to become more effective and sustainable. If these organizations function only as intermediary service providers, their critical role in effective development may be diminished, which could undermine the long-term goal of self-reliance.
This provision is also hard to square with what is asked of us by Global Affairs Canada. Canada’s policy for civil-society partnerships expects NGOs to follow partnership principles of local ownership, participation and inclusive decision-making. These principles seem to be at odds with the act’s strict direction and control requirement.
Of course, Canadian charities must retain fiduciary responsibility for the use of charitable funds entrusted to it. However, the act should be amended, I feel, to allow Canadian charities to grant more flexible capacity-building supports to non-Canadian organizations. In the U.K., legislation and guidelines for charities provide room for this while maintaining high standards for due diligence, responsibility and accountability.
The second point I wish to address is how Canadian charities can better contribute to official development assistance globally. In the past, the significant portion of Canada’s international assistance budget was set aside for responsive programming; that is, programs that responded to and supported ideas and programs brought forward by civil society partners. Innovative cost-sharing, decentralized funding models like Partnership Africa Canada provided additional effective, responsive modalities.
This kind of responsive programming is grounded in the belief that our international assistance is better when it includes solutions that are developed by Canadian civil society with their local partners. It recognizes we are more than service providers; that our missions, services and partnerships are part of what Canada has to offer the world and should be an integral part of official international assistance.
Over the 30 years I’ve been working in this sector, I’ve seen a decline in responsive program funding opportunities. In fact, they have nearly vanished. Canadian charities can submit unsolicited proposals, but there is no departmental money set aside to respond to them, and they are rarely funded. A new fund for small and medium NGOs offers responsive features, but it only represents 0.6 per cent of the total Canadian aid budget.
Instead, opportunities these days for Canadian charities to contribute to official international assistance emerge episodically and somewhat unpredictably when calls for proposals with predetermined impacts and outcomes are released by Global Affairs Canada. NGOs and consulting firms propose competing technical approaches to achieving these outcomes. Just a few are chosen and winners tend to win repeatedly. The model deprives Canada of a key benefit of having a charitable sector in the first place, which is that it has diverse organizations with diversity of missions and mandates that together bring innovative solutions to a range of challenges.
I would propose a rebirth of more responsive programming as a component of Canada’s international assistance. Canada can draw on its own experiences in this space and there is inspiration from other models, such as the Development Innovation Ventures program run by USAID.
That concludes my remarks. Thank you for this opportunity. It has been a real honour to have this chance to speak with you today.
Zaid Al-Rawni, Chief Executive Officer, Islamic Relief Canada: Thank you so much. I appreciate the opportunity to speak to you all and share some insights.
I actually find myself echoing a lot of the points Kevin made in his presentation, so excuse me if it sounds repetitive.
Islamic Relief Canada has grown to be the largest Muslim not-for-profit in Canada in the last decade. The amount of funds raised for good charitable works locally and globally from the Muslim community has been quite substantial, reaching up to $40 million in cash in 2018.
We are across Canada from coast to coast and some of our biggest challenges are marrying the two responsibilities and the two requirements, one from the CRA and the Income Tax Act, and the other from our programming side and encouraged by Global Affairs Canada and, more widely, in this particular space.
For example, one of the things that has been encouraged through the Sustainable Development Goals is localization. Localization is convoluted when you look for a formal definition, but, as we understand it, it’s giving local operators and not-for-profits in various countries, including Sudan, Haiti and other parts of the world, the opportunity to grow but also the opportunity to make mistakes. As Canadian not-for-profits, we simply cannot engage in that type of capacity-building work. After doing due diligence, which is making sure the money we are giving is being given to responsible people who will use it responsibly, we don’t have the freedom to say “You know your needs better than we will ever know your needs based in Burlington, Ontario; Winnipeg, Manitoba; or Edmonton, Alberta. So you use these funds to grow your organization and respond to your needs locally. ”
That’s simply a non-starter, because from a CRA perspective that’s reason for revocation. Your charitable status can be revoked if you’re not demonstrating enough direction and control of the funds or over your own programming in Canada.
The second challenge with that is that it’s a very expensive process. Managing the types of onerous requirements to demonstrate direction and control can be quite expensive. So we shy away from funding programs and projects, less so in Canada but specifically overseas, which are small amounts. Anything less than a quarter of a million dollars is not a huge amount when you are thinking of good works in Canada, but it’s a massive amount if you are thinking of a village in Niger or a community in Nepal. For a community in Nepal and a group of female-headed households, a quarter of a million Canadian dollars would literally change their lives forever. But you couldn’t engage in projects smaller than that because the cost of ensuring direction and control from a Canadian perspective is quite high. That’s a real challenge for us.
If the committee takes one thing away from my presentation it’s that there is a wide distance between the Income Tax Act and the expectations from the CRA’s perspective, and the needs of the communities we respond to, specifically overseas. This is less onerous in Canada.
We understand that there is a fiduciary responsibility for Canadian organizations to ensure that funds are not being diverted to support nefarious groups, organizations which are not promoting values which are enshrined in the Canadian Charter of Rights, not servicing women and girls, and discriminating against people on their religion or based on their ethnicity or race.
We understand all of those points, but I still think there is a lot that could happen where organizations work with groups in locales which have this commitment and, through a process of screening, demonstrate that all the funds that they have received and all the funds they do receive are never and have never been used in a way that is counterproductive or does any kind of harm to either the local community, Canadians or Canadian interests, but at the same time are doing work which is important to them without the type of oversight that we have to do.
That would be my message in a sentence: bridge the gap between responding to the needs of the communities we serve globally and being responsive and trusting those communities and those groups with the CRA’s Income Tax Act that we are mandated to operate under.
Thank you so much for listening and for giving me this opportunity to share my feedback.
Mike Power, Vice-President, Programming and Operations, Canada World Youth: Mr. Chair and honourable members of the committee, thank you for the invitation to be here today.
Before I begin, I wish to highlight the special connection between Canada World Youth and the Senate. Jacques Hébert, our founder, served as a senator from 1983 to 1998. Former Senator St. Germain was a board member; Senator Andreychuk is a former board chair; and Senator LaBoucane-Benson is a former employee.
I’ve been involved with Canada World Youth for close to 35 years, initially as a volunteer and now as Vice-President of Programming and Operations. I have witnessed a significant evolution of our organization and our programs reflecting the changes in youth and society over that period.
CWY’s expertise in youth engagement and development has allowed us to grow our community to close to 40,000 alumni in 70 countries. Our youth exchange model has been adopted by many countries, including the U.K., the Netherlands and Sweden. We’ve offered programs in communities across Canada from Corner Brook to Haida Gwaii to Rankin Inlet.
Above all, we believe that supporting youth’s agency and investing in young people’s participation in transformative learning experience creates a longer-lasting impact on themselves and societies.
Our theory of change is perhaps most simply expressed as building capacity through the head, the hands and the heart. The head represents knowledge, the hands represent tangible skills, and the heart represents values and attitudes.
CWY’s volunteer model is designed to both engage and challenge volunteers in exploring their individual and collective capacity to lead and/or become role models in their communities. Volunteer participation in CWY programs is often only the beginning of their involvement in international development and a lifelong commitment to volunteerism. For many, it’s an essential step in building their careers. As a pan-Canadian organization we aim to promote an inclusive vision of this country, embracing and representing diversity in our programming, notably with Indigenous youth, and women and girls.
While everyone agrees that volunteerism is a good practice, for my part I struggle with the idea of volunteerism as simply helping others or contributing to something. Based on my own experience and speaking with volunteers from many countries, I would argue that volunteerism is about benefits and rewards. Volunteers often receive as much or more benefit than they contribute. Further, the act of volunteering provides many different benefits to many different parties.
Consider the benefits accruing to the direct recipient of the volunteer’s time or service, the benefits to the volunteer herself, to the recipient’s community, and to the lifelong volunteer’s community. Youth thinks differently, so youth volunteerism helps spur innovation. Increased youth volunteerism strengthens community level ties and engagement, and contributes to countering small community youth outmigration not only in Canada but globally.
Consider the benefit to Canadian society and how much Canada gains politically, socially and economically by having young Canadians volunteer around the globe. What benefit might each new volunteer in these countries bring to herself, to her community and to her country?
I have listened to testimonials from a large number of CWY volunteers over the span of several decades, many of which had a common theme that the experience of volunteering internationally has changed their lives for the better. Most tend to undervalue their own contributions, as I think do most volunteers, but almost all shared how they benefited personally from volunteering.
I have also given some thought to what role our federal government might or should play in supporting volunteerism. My short answer is we should think less in terms of what the government should individually be doing and more about what citizens, communities and all levels of government should be doing collectively. Data collection and access to statistical analysis on the benefits of volunteering, disaggregated by age and gender, would be very helpful. Mechanisms for effective sharing of best practices, and innovation between large, medium and small non-profit organizations would do much to increase the efficiency and effectiveness of these organizations.
I am less inclined to argue for monetary compensation for volunteering, because I believe, as mentioned earlier, that volunteering offers many rewards or benefits to the person volunteering. However, I support having many types of internships and similar incentives in place which help remove barriers to volunteering. Barriers can be considerable, depending on the individual in question, and include elements such as economic opportunity cost, academic constraints or institutional rigidity. Knowing what I have learned about the benefits of volunteering, a student mobility rate of under three per cent is, to me, painfully low.
What I believe is needed is a collective effort in strengthening Canada’s volunteerism-focused enabling environment. There are many stakeholders across the country that would respond favourably to a sustainable initiative aimed at facilitating improved coordination between agencies committed to fostering volunteerism at home and abroad.
In conclusion, while the struggle for resources, funding and growth seems ever-present within the non-profit charitable sector, I consider myself to be extremely fortunate. My own initial volunteer experience changed my life. One aspect of my work at Canada World Youth never gets old. Each time a young person applies to participate in a CWY program, I see a transformational life-changing experience awaiting them, just as it awaited me 35 years ago. I hope all youth can benefit from that same opportunity. Thank you.
The Chair: Thank you, Mr. Power.
Senator Omidvar: Thank you to all three of you for doing the work that you do and taking the time to come and speak to us. It’s incredibly helpful.
My first question is to Mr. Perkins and to Mr. Al-Rawni about direction and control. Both of you spoke about the challenges of CRA’s guidelines around direction, control, working overseas with institutions that are not Canadian charities, and it poses a real problem and prevents you from getting down to the grass roots and the grassroots wisdom, which I completely agree with.
Two panels before your panel, we also heard that as Canadians become generous and interested in donating overseas, we need to exercise due diligence so that charitable funds are not misused and abused. There has to be some balance between the two.
From your point of view, can you give us that balance and some proposals and recommendations which loosen the grip of direction and control without giving up accountability and transparency of charitable dollars?
Mr. Perkins: I think that’s a very important question because, clearly, there are fiduciary responsibilities, accountability requirements as well as due diligence that must be done to ensure that the partners you are working with are bona fide committed to similar charitable purposes as yours.
I have reviewed the U.K. model for giving guidance to charities on when and how they can support with capacity-building grant-making, or grant-making that’s more flexible to local organizations. This might be the curse of getting what you ask for, because I think it’s quite rigorous, what is expected in the U.K. in terms of requiring. It goes through the steps that must be taken for due diligence and risk management, ensuring accountability and so forth. It gives a fair bit of flexibility on how that can be done, but it’s quite clear that it needs to be done and the expectations are fairly high.
So I think that’s a model that could be examined by Canada as an alternative to the direction and control requirement.
Mr. Al-Rawni: From my perspective, anybody who is arguing for less transparency, less accountability or less openness with donors and with Canadians about where their funds are going, that person should be viewed with a high degree of suspicion. Nobody is asking for a less rigorous process. The difference between what we are asking for and what currently is in play is that the direction and control, as understood now and as applied now, mean decisions have to be taken in Canada in order to satisfy the Income Tax Act. Decisions about how funds are spent, where money is spent and who it’s spent on, have to be taken here in Canada. Then the funds have to be viewed while they are in the field by the people using them.
If I can give a brief example. If we enter into a deep relationship with an organization that represents women refugees in Syria, female heads of households who have to look after their families, and we say we are going to do a capacity-building program for a group of 20 female leaders, and we are going to allow you to decide what type of training you think you need as female leaders, that would be complicated right now under the current rules as we understand them. It could be that our understanding is wrong.
What has to happen is they have to send a bunch of documents to us: This is what we intend to do. This is how we intend to do it. Then we have to vet it and question what is or is not appropriate. We have to have somebody else who is an expert in the leadership of female refugees or the development of female refugee leaders to look at the process, to look at what’s being proposed and advise our organization if what’s being suggested is or isn’t appropriate. Then we have to make a decision, reply back to them, send the funds in truncated forms, and agree milestones beforehand.
What could happen, in an alternative world, is that we agree these women should be supported, and we agree the key milestones they will share with us and say these are the key milestones which will ensure that the funds that you have given us have been spent wisely. Of course, they have to demonstrate that the funds have been used that way. I would never suggest we take that portion away. Knowing how the money is being spent and who is spending it and where it’s being spent is entirely appropriate. Not doing that would be a dereliction of duty, I think, on behalf of any world government organization. You absolutely have to demonstrate how your funds are being spent.
You allow the committee of women amongst themselves to say this is how they think your support can best be spent and where they think it will be spent. Our process, then, is that we are going to ensure the funds that we send are spent where you suggested they are spent. I hope that helps.
Senator Omidvar: That helped. I was looking for a real-life, contextual example. I’m still trying to sort out in my mind whether it’s just words. The due diligence will still have to be carried out. What you are proposing is that in this model you would cut out a lot of middle-men, if I may call them that. Thank you for that answer.
I’m sure we will get back to this, Mr. Al-Rawni.
Mr. Power, I have a comment and question. I, too, believe very much in the power of volunteering. Here is one Canadian who got her start in life because I volunteered, and today I’m a senator. That tells you something about the power of volunteering.
We heard a suggestion here, and I don’t know quite where it came from, that Canada, being such a big and diverse country, could use the youth service Canada program, where young people would do community service of some kind away from their place of home for six months or so. It’s sort of made-in-Canada, for want of a better word. I think other countries have a military service program or a youth service program. Has your organization thought of this?
Mr. Power: Can you repeat the last part of your question?
Senator Omidvar: Has your organization thought about the potential benefits and pitfalls of a mandatory Canada youth service program? After school, before university, every kid goes somewhere and does something for this country or overseas.
Mr. Power: Thank you for the question. Many of the international partners with whom we work have national service, for example. We have looked at the pros and cons of involvement and I would say it’s double-edged in a case like this. Anything that is mandatory calls into question what someone’s primary reason would be for participating.
Some of the purity I’m alluding to for the opportunities or benefits that accrue to the individual often come from someone who is electing to do this on their own. This is why I said the counterbalance is whether they have an opportunity to volunteer in the first place. I think you will find the answer is different depending on where someone lives, their age and gender. I would say the whole of it is that if the goal is to remove barriers to participation, then, yes, a program like this would be very important.
I would also ask myself who you are creating the opportunities for and who is being left behind. If it was a program that really eliminated barriers to participation, that’s the way to go.
Senator R. Black: Data from Statistics Canada shows that international development charities draw a small proportion of Canadian volunteers and donors. But on the other hand, statistics also show that financial support for international development charities has been growing over time while declining in other sectors. We see that through Statistics Canada data. To what do you attribute this relatively low participation rate for support for organizations working overseas?
Mr. Power: Much of the support that is being provided is for local beneficiaries, in this case. What we’re drawing attention to is the fact that it’s the Canadian volunteers and the youth who are facing barriers in participating. If there was a way to increase those opportunities, we’re not arguing that the money or the funds should be spent differently. It’s aligning with the needs of Canadian youth at the same time. I think there is a way to have both.
Mr. Al-Rawni: I think the figure for charitable giving in Canada shows that 95 per cent of what is given is spent here in Canada, so 5 per cent is spent for overseas aid. While there might be a decrease or increase one way or the other, the bulk of charitable giving in Canada stays in Canada.
The only reason I could see for a trend where more is given overseas, in the last decade we have seen a lot more major, high-impact disasters. I’m talking here about the floods in Pakistan, tsunamis, the earthquake in Haiti, and the war in Syria. These are high-impact, high-visibility travesties which have captured the imagination of the Canadian public and might have contributed to increase in charitable giving.
In our experience generally, among a lot of people in this space — big players like World Vision, Plan International and Oxfam Canada — when they’re sitting together around tables to see how it’s going, they would say every year seems to be tougher than the year before.
Yes, the trend wouldn’t surprise me if there is a general trend up, but I don’t think it is so large that it has changed in any way the proportion between giving domestically and internationally, as I understand it.
Senator R. Black: Thank you.
Mr. Perkins: One factor that might explain a decline is that there is a lot less work done by Canadian NGOs and purely what just used to be called development education and reaching out into communities to educate them about the work that’s happening and the needs exist. That used to be an eligible component of a lot of development programs funded by CIDA at the time. Ten per cent could be used to do educational work in Canada and that really helped to grow the number of people who knew about it and were committed. Since that has disappeared, I think that might be partly a cause for the decline.
In terms of share of development assistance flowing through NGOs, my observation is that much more of it is because the NGO is contracted as a service-delivery partner that delivers the programs on behalf. So more funding is managed by Canadian NGOs but there is not more money going to NGOs for their work. It is more the role of NGOs has shifted toward implementation of other organizations’ programs and not as much support for the work that the NGO itself is set up to do.
Senator Duffy: I had a follow up to Senator Black’s question about the amount of Canadian aid that actually goes overseas, and I think the professor said 5 per cent. Has the rise of social media and, in particular, the phenomena of fake news made it more difficult for people who are trying to help the less fortunate in the rest of the world establish credibility, get their message across or provoke a positive response from people? There is so much clutter in the air and a lot of is absolutely and factually wrong. Have any of you run into that? Is that a concern?
Mr. Al-Rawni: Yes. In our perspective, a lot of the people who would ordinarily give say things like, “I’m not sure if it gets to where it needs to get. I’ve read or heard somewhere that only 10 per cent of what we give ends up with people who need it, or I’ve read somewhere that organization is doing bad things or supporting bad people.”
Now, whenever I’ve been confronted with somebody who has shared that sentiment and I have sat with them and explained our position and shared actual real-life data, I have always walked away with a cheque. “In that case, you have cleared that up for me, so here’s a cheque for X amount of thousands for your work in Malawi or your work educating girls in Afghanistan or wherever.”
It’s definitely one of the things we have to deal with. It’s a day-to-day reality of our existence as an organization. The $40 million that we raise is all raised from Canadian individuals. This is not government money that comes to Islamic Relief or is funded by Islamic Relief. It is from individuals writing charitable contributions. It is something we know we have to do. We spend a lot of time doing it and we spend a lot of time dealing with hateful messages or people spreading bad messages about the work we do, our organization or the sector in general in our marketing and our public relations work. Yes, we do face that.
Senator Duffy: Is there anything that government should be doing about this? This gets into the whole argument about free speech, the Internet and so on.
Mr. Al-Rawni: Yes, I think it’s a much bigger question, but I don’t know that I have an easy recommendation for policy-makers.
Senator Duffy: Should part of it link back to what we heard earlier about the limitation on funds being used for education in Canada so we get the message out to people here about the good work being done overseas? It seems to me that ignorance is the breeding ground for some of this hateful speech, and if we can go back to the days when charities were allowed to tell their stories to Canadians, it would be good for everybody, the recipients and for our social atmosphere in the country.
Mr. Al-Rawni: I think that’s a wonderful suggestion and I agree. I would say that telling your story is part of your charitable program. It is a powerful tool in the hands of charitable organizations to do their work or share the good work that all of them are doing.
Senator Duffy: My hobby horse at this committee has been to appoint a minister who would have responsibility for championing the charitable cause, and there have been lots of debates about it. It seems to me that one of the vehicles would be to have someone whose mandate is to go from community to community, full-time, telling Canadians about the voluntary sector, the need we have for volunteers, and the declining and aging population, and all of the other statistics that you well know, so that it becomes real to people as opposed to some abstract thing that they only think of when they see a disaster on TV.
Mr. Power: I would say I wouldn’t refer to it so much as fake news, but it might be unevenly understood in terms of how you measure aid effectiveness. For most organizations, we would want to talk about what makes it sustainable. What is the programming impact an organization might have in a given community overseas?
My experience has been that there are many different ways you can get there. All of the organizations that are here today would be a part of the solution. It’s a mixed bag, so to speak, but without the support from the Canadian public, at a certain point we are not going to be able to reach the goals that we have. To me, that is clear.
My experience working with young people is that I have seen a sustained impact in the communities because of the peer-to-peer relationships established through that. However, I would not argue that it is a solution in itself. It’s a part of one. It’s working with an age group that has an opportunity to contribute at the community level for many years after the project ends. What is missing sometimes is an objective means of analysis or measurement of these programs.
We talked earlier about the interesting work done with increasing transparency, for example, but there are many who still hold to traditional beliefs about how aid is delivered and I think that can be harmful as well.
Senator Omidvar: I will stick with direction and control for Mr. Perkins and Mr. Al-Rawni. I understand that the CRA, in its guidelines, has stated that there can be flexibility in direction and control based on the size of the project: more flexibility in smaller projects and maybe less flexibility where millions of dollars are involved. How have you both experienced this flexibility in your work? Is this something the committee should explore further in defining the parameters of this flexibility and direction and control?
Mr. Al-Rawni: We actually err on the side of caution, given our name and areas where we work in Iraq, northern Syria, Somalia, Yemen and Afghanistan, which are some really hot spaces. We don’t tend to give ourselves any notion that there is any kind of flexibility.
There might be some guidelines where flexibility is okay in certain circumstances, but our legal and compliance teams are always urging us to make sure we err on the side of extra caution because of the spaces and the name. We know there is already quite a lot of heat geographically where we choose to work and how we choose to respond in the communities we choose to help. We don’t make any distinction ourselves from one being a bit more relaxed and another being less relaxed. Let’s take our lawyers’ guidance and follow it to the T.
Mr. Perkins: I have noticed some slight modification of the language and more space in smaller amounts. I’m a volunteer on the board of another charity that does very small grants to small groups mostly in Uganda. In that case, we have agreements with them that we sign that follow the expectations of Canada Revenue Agency for engaging intermediaries. We are able to take advantage of that slightly greater space for the smaller projects.
My feeling is that, rather than putting the expectation on direction and control of the daily spending decisions or the activities that the intermediaries do, we should be putting more emphasis on the due diligence, monitoring and assurance sides of things. That includes making sure there is a system to monitor and ensure that the partner is doing what it said it would do and using the money the way it said it would use it, and putting in more emphasis on the due diligence but also more flexibility in terms of allowing the partner to make more decisions about the priorities for that community.
Senator Omidvar: I am going to make an assumption that all three of your organizations receive some kind of government funding. Is that true? I actually have Farm Radio International’s annual report in front of me. A major part of our deliberations have dealt with the relationship between the federal government’s grants and contributions to organizations in Canada, whether they are local, whether they are national or even international.
We’ve heard from the federal government as a result of the Voluntary Sector Initiative that certain improvements have been made. There are three-year grants and information is posted on a website. Have you experienced these changes and, if so, are they positive? Have you not experienced them at all?
Mr. Power: Yes, in recent years there are several working groups where our sector is working directly with Global Affairs, for example, on creating new efficiencies in the administration of grants. For me, it’s a testament and it’s clear that Global Affairs is listening because of the increased dialogue. That might have to do with policies related to salaries and elements such as time sheets. For example, what kind of justification is going to be used to support expenses on these projects?
Mr. Perkins: There has been more transparency in terms of how to respond to a call for proposals. There have been moves toward breaking the process into stages so that a more time-efficient concept note is written first, and only if that clears the hurdle do you then have to go through the tremendous work involved in a full proposal. That all comes from the dialogue that has been happening, so that’s positive.
Having a 30-year view on it, I think there is tremendous value in the times when there was responsive programming. I called it a responsive fund. It was a small portion of the total budget, but it was funding that NGOs could bring their own ideas to and get them funded for longer-term periods and have the long-term impact, and being clear about the framework and the broad goals that it should achieve, but giving more flexibility in terms of outcomes that get achieved with the communities. I think we lost something when we moved away from responsive to the government almost entirely issuing competitive calls for proposals.
Mr. Al-Rawni: We have noticed the difference. There has been a more engaged Global Affairs Canada. The bulk of Global Affairs Canada’s grants still go to bilateral and multilateral agencies. I don’t know the percentage or the proportions, but I know most of what is given by Global Affairs Canada goes to support Canada’s commitments to the United Nations, various UN bodies and multilateral organizations and bilateral organizations.
That is still the bulk but, in terms of the way they are engaging with civil society, Global Affairs Canada has made a tremendous change for the positive which we are certainly witnessing.
Senator R. Black: We need to acknowledge that at some point in our report.
Several witnesses in testimony and briefs we have received have called for the need for better data, more data and more up-to-date data on the charity and voluntary sector to support a variety of things. How would additional data support the work of your organizations? If more data were to be collected, what statistics would be most useful?
Mr. Power: For the first part of the question, in terms of data collection what would be most useful is organizations often talking about repeated or repetitive effort. You have many organizations putting time and energy into the same types of tools and development policies. Something like that could be addressed directly through better harvest of data that could be shared within the sector. That’s one piece. I’ll let my colleagues address this as well.
Mr. Perkins: Data can certainly help with better decisions about where to focus and being able to learn better which approaches have the best impact and are the most cost effective. Some of my concern around data is that there is a tremendous amount of data collection going on by many different organizations. I have been to quite a few villages in Africa where we’re doing a baseline survey, gathering monitoring data or finding out what is happening in that community, and it’s the third or fourth time an evaluation team has been through their community asking the same questions.
We should be a bit more respectful of the people who are providing the data and their time, and also do a better job of sharing what we are learning back with them. Farm Radio International has made a strong commitment to that. We have collected data about listeners to Farm Radio programs. We invite listeners to share their views and experiences and they can use their phones to tell us their plans or give us feedback and we will collect data from 70,000 or 80,000 rural people almost for free using their phones.
We always have a radio show that reports back to them what their neighbours are saying, instead of just taking. That’s another important dimension to data: whose data is it and for whose benefit?
Mr. Al-Rawni: We all acknowledge the power of data. From our perspective, we wish we had better and more access to data. There are so many organizations working in so many parts of the world and there is no space for a shared data portal. This means that somebody has to do the work again and again. It’s a waste of resources. If I already know a situation where my colleague is in Uganda and he knows there are this many villages around Kampala and this many people and this is what the last data collection exercise told us, it would help us to no end if we were planning to do work in Uganda before we went in.
I don’t know how practical this is. I wish it did happen. I know it exists. If our organization shared the data we have with others and made it publicly available, obviously without sharing any personal data, and everyone did the same, the compound effect of that would be massive. It’s just that, as a space, I think we are well behind where we need to be, because this is supposed to be a not-for-profit space and data is not supposed to be territorial and “I own it and I did the work and no one should have it” shouldn’t be a thing, almost like a Wikipedia type of response to data.
This is the first time I’m having a conversation outside of our organization about data, to be honest, which is a bit of a bad sign in terms of how far we are in terms of having these conversations.
Senator Omidvar: I have a question for Mr. Al-Rawni. I would like to know more about your donors. I know your community is under some stress as a result of that very unfortunate incident in Christchurch, if I might even call it unfortunate; it’s just horrific. Are most of your donors members of the Muslim faith, or do you have donors who are just people concerned about things happening? Do you have any data on that?
Mr. Al-Rawni: We have extensive data on where our donors are and who they are. We know exactly how many people are active, how many are in our database, where they are, what they do and where they live. There is so much we have. Primarily, we do have donations from members of different communities from across Canada who are not specifically Muslim. There are a lot of donors from different parts who give to causes because they have seen something online and are interested in supporting it.
The majority of our donors are Muslim or from the Muslim community. Most of them are under 45 and most of them are between the ages of 28 and 45. In terms of gender, 51 per cent are female and 49 per cent are male. Geographically, they are in the suburbs of the major cities across Canada. We do obviously have some support in rural areas. We have a Google map which plots every single donor and where they are from and we find someone way up North and we ask, “Hey, who’s this?” The majority are in the suburbs of those major urban centres.
The Chair: Colleagues, I would like to thank our witnesses, Mr. Perkins, Mr. Al-Rawni and Mr. Power, for their contributions today. They have been significant and we hope they will be reflected in our report when we file it. I thank you for being here today.
We are now pleased to have with us, via video conference from Montreal, Mr. Sidney Ribaux, Co-founder and General Manager, Équiterre; from Big Brothers Big Sisters of Canada, Mr. Matthew Chater, National President and Chief Executive Officer; and from Centre d’action bénévole Léonie-Bélanger, Ms. Suzanne Parisé, Director General.
Thank you all for coming here. We will start with Mr. Ribaux. We will have statements from all three of you, and then we will go to questions from the senators.
Sidney Ribaux, Co-founder and General Manager, Équiterre: Thank you for the opportunity to testify before you. I will be presenting in French.
[Translation]
My name is Sidney Ribaux. I am the cofounder of Équiterre and have been its general manager for 20 years. Équiterre is a non-profit organization (NPO) that has charitable organization status and whose mission is the promotion of environmental solutions. We have 23,000 members, citizens who provide our funding. The rest of our funding comes from different sources, like many other organizations, such as the sale of sponsorships, corporate donations, family trust donations, and government subsidies. We have offices in Quebec, Ottawa and Montreal. Over the past years we have managed to influence the tenor of several important public policies, both federally and provincially.
I will speak to you briefly about our views on the need to reform the laws governing NPOs, particularly with regard to the Income Tax Act and the restrictions it places on groups that have charitable organization status.
According to Statistics Canada, the non-profit sector represents 8.5% of the GDP, that is to say 2.4 million jobs and almost $170 billion in economic activity. In that context, it is surprising to see to what extent that sector is neglected in public policy and governed by laws that sometimes literally go back to the 16th century. For comparison’s sake, the combined sectors of mining, quarrying and oil and gas extraction—that is Statistics Canada’s category—generate economic activity of $128 billion on average. This was the average in 2011-2015; so that is $40 billion dollars less than the non-profit sector.
I don’t think we have a precise figure as to the number of non-profit organizations there are in the country. Perhaps you will find out in the course of your study, but we believe there are approximately 160,000, half of which, or 86,000, have charitable status. So this is an enormous sector and we have to pay attention to it, and I congratulate your committee for considering this matter in depth.
Even now in 2019, charitable organization status is granted pursuant to a decision made by the British House of Lords which determined, 140 years ago, that there were four charitable objectives: poverty, education, religion and a category identified as “other”. In 2015, among the 86,000 registered charitable organizations, 33,000 were religious organizations. There were also 19,000 organizations that strove to alleviate poverty, and as many in the “other” category, which is where Équiterre fits in. Approximately a quarter of the NPOs in Canada fall into the “other” category. This law is thus completely obsolete and needs to be totally overhauled.
What is the link between a church and an environmental organization like ours? Although there is a historical link between religion and education, what link is there, in 2019, between the respective missions of a religious group and a modern university? It seems obvious to me that if we wanted to grant a tax credit in 2019 to religious groups, universities or environmental groups, they would not be subject to the same advantages or the same rules. Imagine if the mining sector, pharmaceutical sector and restaurants were all subject to the same tax rules. Do you think we would manage to optimize or develop those sectors?
Statistics Canada’s 2017 survey on the charitable sector shows that community non-profit organizations derive only 18% of their revenues from individual donations. I mention it because it means that the majority of organizations that have charitable status are subject to rules and restrictions, even if that tax credit is only responsible for a small part of their revenue.
Why is Équiterre interested in this matter? In 2012, the federal government adopted a budget of several million dollars to conduct policy audits on several organizations. Almost 60 groups were audited under this program, most of them large Canadian environmental groups, but also human rights advocacy groups and international co-operation organizations. The program was conceived to harass organizations that did not share the viewpoints of the government. Équiterre was one of the audited organizations. Revenue Canada auditors visited us in January 2013. Over the four years that followed, we exchanged emails and telephone calls with Revenue Canada auditors. We lived with a sword of Damocles over our heads. At any time, according to the existing rules, the Canada Revenue Agency had the power to revoke our charitable status. The conclusion of the audit was much less problematic for us than for others. In the end, we received a letter that recommended that we amend some of our practices. This experience led us to take an interest in the law and in the amendments that should be made to it.
After we exerted pressures, together with other organizations throughout the country, the government amended the Income Tax Act and lifted the restrictions on charitable organizations with regard to their intervention in public policy. We applauded this change. This rule was unjustified and, in our opinion, unconstitutional. This change encouraged NPOs to take part in political debates, either municipally, provincially or federally. However, the amendment to this rule is not enough to stop organizations from being harassed. There are still several things that need to be changed to ensure that healthy debate can take place and that community organizations can take part in it. I’ve drawn up a list for you. We can get back to it during the question period.
There is still a rule in the law that prevents NPOs from being directly or indirectly partisan. The notion of being “indirectly partisan” poses a problem and leaves a lot of room for interpretation on the part of the government or of public servants. The appeal of a Canada Revenue Agency decision is done directly in the Federal Court of Appeal, for legal, very restrictive reasons. Many people think that this should take place before the Federal Court, which would leave much more room for the evolution of common law in this sector. There are notions of restrictions and private benefits in the law which are problematic in our opinion. We must review the restrictions on the control of amounts transferred to a third party, control which in English is referred to as “direction and control”.
Finally, we must review the objectives of charitable organizations. These objectives derive from a decision that goes back 140 years. The mission of Oxfam, for instance, was to put an end to poverty. However, they were told that this could not be a charitable objective and that their only purpose could not be to alleviate poverty. In 2019, we need to rethink this law, and like other Commonwealth jurisdictions, review what are considered suitable charitable objectives. Thank for your attention.
The Chair: Thank you, Mr. Ribaux.
[English]
W. Matthew Chater, National President and Chief Executive Officer, Big Brothers Big Sisters of Canada: Thank you, Mr. Chair, and thank you, committee members, for the invitation to be here with you today. My name is Matthew Chater. I’m President and CEO of Big Brothers Big Sisters of Canada.
Big Brothers Big Sisters is a youth-led, youth-centred federation of 108 local charities serving almost 42,000 young people annually in more than 1,100 communities across Canada. We build strong communities by mobilizing 21,000 Canadians who generously volunteer over 2 million hours of their time through high-quality, intentional mentoring programs.
As the committee studies the impact of public policy on charities and non-profit organizations, as well as the impact on the voluntary sector, we welcome the opportunity to highlight the impact of our volunteers and to underscore the urgency of investing in charities that offer youth-mentoring services. Big Brothers Big Sisters is just one program within the mentoring movement in Canada. That said, I sit here today as a representative of Big Brothers Big Sisters, as well as an advocate for youth mentoring more broadly.
The Government of Canada can play a critical role in building strong communities and encouraging thriving economic growth through youth mentorship by first considering that mentoring changes the trajectory of young people’s lives and makes an extraordinary impact on society.
Every young person deserves the right to reach their full potential. However, many young people struggle with systemic barriers and face adversities such as poverty, mental health issues, and family or community violence. Children who are continuously exposed to these adversities are living with toxic stress and are more likely to experience negative lifelong consequences on their physical and emotional health, educational achievement, economic success, and overall well-being.
According to Public Safety Canada, this pathway can cost $1.4 million. These costs include only tangible or direct costs of crime, including criminal justice, health care, and social services. The intangible or indirect costs due to decreased quality of life and psychological distress are not included.
With that being said, what is the good news? That neuroscience tells us that a nurturing, caring relationship with a stable, consistent adult is critical for buffering the impact of toxic stress caused by early adverse childhood experiences.
The Boston Consulting Group undertook a multi-stage study that compared the outcomes of children who participated in one-to-one programs with those who did not. The study demonstrated a social return on investment of $23 to $1 when it comes to long-term economic health and social outcomes for youth in the most vulnerable of situations. Key outcomes they identified were participants are two times more likely to stay in school and 63 per cent move on to post-secondary education. Participants are 17 per cent more likely to be employed and have 13 per cent higher earnings. Forty-seven per cent hold senior-level positions.
Research has clearly demonstrated that mentoring relationships provide the foundation for empowering the essential life skills that positively impact social and economic outcomes for youth, and for strengthening community safety and well-being across the country. On average across Canada, attaining these outcomes costs just $1,764 per year.
To recap, the cost of providing a one-to-one,community-based mentor is $1,764 per year per child. The cost of not reaching that same child at an early age could be $1.4 million or more. Therefore, mentoring is critical and it is a preventative intervention. Mentoring is an essential service.
Second, youth mentoring is a catalyst for a new generation of donors and volunteers. The committee has already heard from experts emphasizing that we need to engage the next generation of donors to overcome sector challenges linked to aging donor populations and declining volunteer rates. According to Statistics Canada, donor and volunteer rates have been on a slow but continuous decline for several years.
Financially, this puts higher pressure on charities to do more with less, an unsustainable model that will eventually lead to lower-quality services and the closing of charities providing critical social services and increased demand on governments to provide funds for the charitable sector.
Declining volunteer rates have already spurred the federal government into action with the launch of the Canada Service Corps.
Again, research demonstrates that youth mentoring is a vehicle for change in these efforts to build a better Canada. Our research shows that mentored youth become more engaged citizens, with 13 per cent of Big Brothers Big Sisters alumni more likely to donate to charity and, when they do, they donate 20 per cent more. They are 50 per cent more likely to volunteer and they spend 30 per cent more time volunteering.
By addressing sustainability in the charitable and voluntary sectors, the government will be supporting a new generation of donors and volunteers. Direct investments in youth mentoring will, therefore, generate a ripple effect that benefits Canadians for decades to come.
Third, we would also like to emphasize that charities provide critical leadership opportunities for young people. According to a 2018 Abacus Data poll, Canadians believe we should be preparing youth for civic leadership by increasing their opportunities to develop job-ready skills and creating experiences where they can interact with people from different age groups and backgrounds. Sixty-two per cent of Canadians believe it is important for youth to interact with their peers through a variety of organizations that help them develop positive social and leadership skills.
At Big Brothers Big Sisters, we are implementing a national youth engagement strategy to ensure that young peoples’ voices are heard within our federation of charities. The diverse members of our national Youth Advisory Council are actively advising staff on the future of mentoring and they recently shared their concerns on youth employment and youth mental health with political and government leaders in Ottawa. These youth leadership opportunities are critical for the future of our sector.
All of these factors bring me to my final point. Canada needs to develop a national mentoring strategy to align the efforts of all stakeholders, including youth-serving charities, private-sector stakeholders, multiple levels of government, diverse communities and young people.
Big Brothers Big Sisters has begun this work in partnership with organizations such as the Alberta Mentoring Partnership and the Ontario Mentoring Coalition. Together, representing over 250 organizations, we have begun to establish the Canadian Mentoring Partnership. This undertaking is an effort to co-create and build on existing infrastructure that elevates the impact of mentorship across multiple sectors by devoting shared resources to research, information systems, public education and knowledge mobilization.
We would like to urge the committee to recommend the Government of Canada to invest $25 million annually in youth mentoring. To put that into perspective, remember the $1.4 million in direct costs for a youth who ends up in the criminal justice system. We only need to change the path of 18 youths each year for that investment to pay for itself. Also, with $25 million and an annual cost of $1,764 to provide a community-based mentor, we could reach more than 14,000 more youth annually.
In an effort to reduce duplication of services and strengthen an abundance mindset around youth mentorship, we believe that the government should work hand-in-hand with the Canadian Mentoring Partnership as strategic partners and advisors in the allocation of these resources to efficiently achieve its policy mandates across ministries and departments. Youth mentoring must be viewed as a critical preventative intervention and youth mentoring must be viewed as an essential service for future economic growth.
Thank you once again to the committee and to you, Mr. Chair, for the opportunity to be here today.
The Chair: Thank you very much, Mr. Chater.
[Translation]
Suzanne Parisé, Director General, Centre d’action bénévole Léonie-Bélanger: Good afternoon. Thank you for having me here today. My name is Suzanne Parisé and I am the Director General of the Centre d’action bénévole Léonie-Bélanger in Mont-Laurier. I am also the Treasurer of the Fédération des centres d’action bénévole du Québec and the Vice-President of the Corporation de développement communautaire des Hautes-Laurentides.
Today, I want to discuss two specific topics: first, the recommendations of the Fédération des centres d’action bénévole on a policy of educational success through volunteer work, and secondly, background checks on volunteers.
With respect to educational success, the Fédération des centres d’action bénévole recommends that the government develop an action plan to initiate young people to volunteer work. It is a well-known fact that volunteer work provides great benefits to young people. Socially, volunteer work helps them to discover new interests, to be a part of a group, to strengthen their self esteem and their confidence, and to integrate a new community. Volunteering can also be a real springboard toward a professional career. Through their new responsibilities, young people create a professional network.
Healthwise, volunteering helps reduce the rate of depression among young people and increases their feelings of well-being and happiness. Their self-esteem also improves greatly. In a community, volunteer work makes the world a better place. We recommend that volunteer work be established as a relevant avenue in the development of an educational success strategy in order to encourage developing the full potential of those who engage in it. Volunteer work is good preparation for the transition to the workplace. Thanks to volunteer work, while they are in school, young people develop skills that can be used in a future career.
I would like to specify that at this time, in certain schools such as alternative schools, there are already volunteer work programs. However, in public schools, this is often done on a volunteer basis. Consequently, we recommend that an initiation to volunteer work program be established in primary and secondary schools.
There are 115 volunteer action centres in Quebec, and we are present in every RCM. We have already developed programs that could be implanted directly in schools. I am thinking of Cité des jeunes and of the Programme des jeunes bénévoles, among others. These are programs that could easily be integrated into a new policy of school success.
We have also discovered that among the immigrant community, either in rural or urban areas, both young people and older people are involved in volunteering. This is a good way of integrating their new community, either to learn a new language or to acquire a better understanding of the culture of their milieu. We suggest that you introduce such programs in schools to help these people who arrive from foreign countries to better integrate their community.
As I mentioned earlier, we would like to see inclusive programs introduced in schools. Currently, volunteer work is often reserved for an elite in alternative schools and private schools. We propose inclusive programs where all social classes would be integrated into the educational policy. Everyone would have to get involved in their community.
To conclude on the topic of educational success, the integration of partners would be an important component in this policy.
We know that the schools are on board; yes, we can develop new programs, but the partners that are often the local community organizations would also have to be included, because they too will have to amend the way they do things, to some degree, in order to integrate young people into their activities or volunteer involvement. That is an important point.
I will move on immediately to my second topic, which pertains to criminal background checks. In the early 2000s, organizations, either charitable organizations or organizations that employ volunteers, had signed agreements with the Sûreté du Québec—I’m from Quebec—to carry out criminal background checks free of charge.
Since that time, in 2015, the law was changed. The Sûreté du Québec, under the law, no longer recognizes vulnerable clienteles. It is the definition of the word “vulnerable” we must discuss again, because since 2015, the Sûreté du Québec has in a gradual way stopped helping vulnerable clienteles with regard to the cost of criminal background checks for all of the non-profit organizations that work with those people.
The people concerned were often volunteers who were planning to work with a vulnerable population. The objective of the agreement concluded between the organization and the Sûreté du Québec, which carried out the background checks, was to protect the organization but also to protect the population to be helped. When a systematic check was carried out, people felt more secure in knowing that the volunteer was a person who could safely provide assistance to a vulnerable person.
Since this service is no longer offered free of charge, community or non-profit organizations, that are not among the richest organizations, have had to pay for the cost of criminal background checks since this new law was passed. These costs range between $50 to $80 per check. For each of these organizations, this means yearly costs of $2,000 to $5,000.
Basically, the centres d’action bénévole and the federation recommend that the government once again provide free background checks to non-profit and charitable organizations for vulnerable populations. The definition of what constitutes a vulnerable clientele needs to be reviewed, because currently, only children are considered to be a vulnerable population, and only in very particular situations. In fact, they are not always recognized as such. For instance, as a volunteer action centre, we work with an elderly clientele, and these are often people who are in vulnerable situations and are losing independence, live alone or are beginning to develop dementia or Alzheimer’s disease. We consider that these people are in a vulnerable situation and it would be easy for an ill-intentioned volunteer to join a team of volunteers for the wrong reasons. This is one way of protecting the clientele, but also of protecting the organization, since the organization has a responsibility with respect to the services it provides to the population.
I am also here to suggest that you amend the law to make criminal background checks free of charge for those who work with the vulnerable population we serve.
The Chair: Thank you very much, Ms. Parisé.
[English]
The witnesses and the audience should know that if a senator or a member of Parliament has a volunteer who comes regularly to their office on Parliament Hill, they too must have a criminal record check done at the local police department. It’s an onerous task, but it’s an important one. It’s important that we all follow that. I have a number of volunteers in my office on occasion and they all have had their proper criminal record checks.
Senator Omidvar: Thank you to all of you for being with us today.
I have a question for each of you, but perhaps I could start with Mr. Ribaux of Équiterre. We don’t have a written brief from you and I don’t speak French, so I listened to the translation carefully. I hope I understood you properly.
I think you were suggesting your concerns about the outdated aspect of the Charities Act and I think I heard you say that it is no longer possible to have the same set of rules apply to the four different heads of charity because they are different beasts so to speak and we now need different strokes for different folks. Could you elaborate?
Did I understand you correctly that there should be different rules governing the charitable activities of religious organizations, educational organizations, relief of poverty and the big swimming pond of “other organizations”?
Mr. Ribaux: Yes, you did. As I said in my testimony earlier, the rules that govern what can constitute a charitable organization date basically from a judgment from 1892, so its 140 years old. What we conceived as being charitable 140 years ago has obviously evolved. In most other Commonwealth countries, as with any other countries around the world with different justice systems, they have elaborated much more modern rules around what we basically allow for a credit for non-profit activities.
Obviously you can’t give the credit to everybody. For example, there are business non-profit organizations that you might not want to give the credit to, but most other jurisdictions have elaborated legislation which basically does away with this 140-year-old judgment and replaces it by a simple list within legislation that says, “Here are the objectives that we are willing to give a credit for,” and this needs to be modernized.
Obviously, 140 years ago the church controlled a lot of things. They controlled health and education. They were involved in a lot of the areas that had to do with charitable activities. This has evolved, even though the church is still a big beneficiary of this legislation. We definitely need to modernize that.
Senator Omidvar: May I probe a little further, Mr. Ribaux? We have heard from other witnesses, primarily lawyers, who have said let common law evolve and let the decisions made by the courts help us understand the evolution of definitions in charities.
We’ve heard from academics more or less in the same line, but every NGO who has spoken to this has advocated from your point of view: we should not wait for common law, we should actually redefine “charity.” Australia, for instance, has 14 definitions — 14 heads so to say.
Is there a balance to be found in between letting the common law take us to a different place or letting legislation be more prescriptive or more expansion of helping us understand what is charitable and what is not?
Mr. Ribaux: In both cases you need to modernize the legislation. If you were to adopt legislation under the common law system with a list, that list would then evolve with common law if you also modified the appeal process from the Revenue Canada decisions. Right now there are basically no decisions that are taken. Because the appeal is sent directly to the Federal Court of Appeal, it’s basically almost impossible to win. Therefore lawyers will always recommend to clients not to appeal, which means the common law doesn’t evolve.
The point of view at this point of saying “let’s leave it to common law” in Canada with the structure we have now makes no sense because it has not evolved here.
Finally, one of the issues I found in this debate over the past four or five years is that all the lawyers, everyone who is thinking about this, is from the common law perspective. Obviously, there is a wealth of information and lots of good examples within common law countries, but there are other systems out there. We do have a double system in Canada and we should look at what is done in France and in the rest of Europe and other countries around the world that are not from common law.
We should also look at examples in the rest of our fiscal structure in Canada. Most fiscal benefits given, both to non-profits and to businesses, don’t have the series of restrictions that are given to charitable organizations. A simple example is nonprofits have a rebate on the land property tax. Nonprofits are exempt from that almost across the country. There is a list of objectives which you need to fit into. Once you fit into those, you get a huge exemption. There is no restriction in terms of the rest of your activities. Serious thinking needs to go into why we have restrictions that are given to organizations because they have a fiscal advantage.
Senator Omidvar: It is important to get a diversity of opinion.
I will hold my questions and let my colleagues question now.
Senator R. Black: The committee has heard that funding arrangements with the federal government or other funders can contribute to difficulties faced by organizations in recruiting, retaining and providing decent working conditions for employees that work in your organizations.
Have you experienced any of these challenges with respect to staffing, conditions of work, or employment practices? If you have, how have you overcome it? If you haven’t, what recommendations would you have for us to include?
[Translation]
Ms. Parisé: If I may begin, yes, we have had trouble retaining personnel, because we can’t compete with the public sector. The salaries in a community organization cannot compare to those at the Ministry of Health. So we have seen people leave because they were offered better remuneration elsewhere.
For our part, we’ve tried to emphasize our working conditions. For instance, we have worked on facilitating work-life balance. We now offer flexible schedules and considerable independence in the workplace. We tried to eliminate bureaucracy. I think people who work in a community environment are looking for that. We improved working conditions with regard to holidays and things we do not have to pay for. We upped some salary scales, but we focused particularly on working conditions. We provide a fitness allowance, for instance, so our team is in better health and there is less absenteeism. We tried to improve our working conditions so we could retain our personnel. Yes, there is a serious shortage at this time, so we have to be creative in our efforts to keep the staff we have.
[English]
The Chair: Any other answers?
Mr. Chater: I would agree. Big Brothers Big Sisters of Canada are not funded by the federal government. However, we receive funding for various projects. I can’t answer your question specifically. However, as a sector and as a federation, we face similar challenges. I’m not going to address those challenges because they would be represented within our federation as well.
The challenge for our organization and the services that we provide to community are the amount of complexities that young people are facing today, the challenges placed upon individual young people as well as their families, and what that does to create vicarious trauma within the staff and individuals working within our organizations and supporting those families.
Not having robust infrastructure to provide the supports and perhaps the degree of group benefits that we would like to provide our employees across the entire federation to access counselling supports and services in dealing with those challenges would be an additional challenge, in addition to what has been shared already, in not only retaining but also attracting people to our organization.
[Translation]
Mr. Ribaux: I don’t have anything to say about that. Of course, we have challenges just like any other organization, but I agree with my colleagues’ comments.
[English]
Senator Duffy: Thank you all for your testimony and the wisdom that you are sharing with us.
Ms. Parisé, you say you have 115 centres in each regional municipality in Quebec. Can you tell us a bit about what services they provide to the smaller groups? For example, we’ve heard a lot about the paper burden and that the federal and the provincial governments have endless forms to fill in. Through this network, can you provide back office support for these smaller groups and advice on how to complete the paperwork, and so on? Are all of those 115 talking to each other electronically?
[Translation]
Ms. Parisé: The federation consists of 115 volunteer action centres, so our paths do intersect. We see each other three times a year at group meetings or symposiums. Our federation is very solid. If you have time to meet him, our director general, Fimba Tankoano, would be very pleased to meet you. He could give you the pulse of volunteer action in Quebec.
If I understood your question correctly, you want to know if we help people with paperwork. In Quebec, about eight years ago, the Secrétariat des aînés created a program called Carrefour d’information pour les aînés. We work with an elderly population, so one of our objectives is to help elderly persons fill out forms. We help our people with all forms, whether they involve provincial or federal government programs, taxes, or understanding government communications; we will help with a change of address, or to renew health cards. The government funded this program for three years. Unfortunately the program is no longer funded, and some volunteer action centres have had to cancel it. There is a real need for this in our area, and we decided to keep it going, but the services are now provided by volunteers since we no longer have funding. We make do with the limited means we have at hand. It was a very useful program. We would like to see it brought back. So, yes, we do provide help with paperwork.
[English]
Senator Duffy: Picking up on that same point, Mr. Chater, you talked about the declining volunteer rates for big brothers and big sisters.
We have heard witnesses talk about providing some kind of recognition to people for volunteering. We provide a tax credit for volunteer firefighters for uniforms, hats and all the stuff they put into their work. Is there room here? We heard the same thing from Ms. Parisé, namely, that they’re depending on volunteers to provide much-needed services.
What about the idea of some kind of tax credit or other incentive for volunteers?
Mr. Chater: As Big Brothers Big Sisters of Canada, we would be strongly supportive of that.
Our system is supported by professionally trained staff that work directly with the volunteers in order to provide the intervention. Without our volunteer base, Big Brothers Big Sisters of Canada would not be able to provide the services we do currently. To be able to have a tool such as you are recommending would be impactful for an organization like ours.
Senator Duffy: Mr. Ribaux, any thoughts on retaining volunteers?
Mr. Ribaux: We struggle with that in our organization. I can only talk for Équiterre. Contrary to my colleagues, I’m not part of a network of volunteer organizations, but we have hundreds of volunteers at Équiterre. Any programs that would help us either train or support, or give some sort of fiscal rebate for people who volunteer would be helpful.
We often have people who are volunteering and basically are paying for transportation to come to work at our offices every day. We struggle with the idea of reimbursing part of that cost. We have had handicap volunteers who have special needs and special issues when they do come and work for us. Any type of support to encourage people to volunteer would be helpful.
This might be a bit different in Quebec from the rest of Canada, but culturally the idea of some sort of information campaign or some sort of work within schools, as my colleague Ms. Parisé was saying, to get people not only to experience what volunteering is but also to make volunteering something which is well regarded would help.
Again, volunteering in 2019 is very different from what it was 50 years ago. It’s often regarded as something you do when you can’t do anything else. We need to rethink that and help people think about volunteering in a different way.
Senator Duffy: Mr. Chater I almost forgot about the whole question of RCMP and security checks. Big Brothers Big Sisters of Canada are big on ensuring their clients are safe. Are you now bearing the cost in the rest of Canada? The Quebec provincial police are now charging. Is that the same thing in the rest of Canada?
Mr. Chater: Yes. It remains a challenge and it’s different across municipalities and across provinces. The challenges come up, whether a candidate needs to be fingerprinted or screened, or whether it’s a vulnerable sector screen and checking the broad database that that captures, it continues to be a challenge.
Processing time across all of those different sectors or different levels of government is also very different. You can have a police records check that can be processed within the hour as somebody waits in one municipality in Ontario, or in another it can take two months. When engaging in trying to close the gap between inquiry of volunteerism to then being able to integrate them into program oftentimes poses a significant challenge and the individual may not be in a position to be able to volunteer anymore. So, it is a challenge.
A challenge that has come up across the sector — and we have seen it within Big Brothers Big Sisters of Canada — is the amount of third-party services that are now providing background checks. There is a high number of them. I probably receive a request to look at their models at least monthly. I think there is a risk for organizations that are desperate to be able to look at background checks and police records checks to get their volunteers through the door. However, with the vulnerable populations that my colleague had spoken to, in that volunteer sector, that screening can only be done by one group, namely, the RCMP.
Senator Duffy: So we understand, and so our audience at home understands, there are now private companies offering background checks?
Mr. Chater: Quite a number of them.
Senator Duffy: Are they the RCMP or are they working with the RCMP, or are they separate?
Mr. Chater: This is the risk that I believe currently exists. There are certain services as part of their business model that reflect a vulnerable sector screening. Some of these companies use the term “enhanced record screening” or “enhanced background check,” but it doesn’t check all the different databases that the vulnerable sector screening does through the RCMP. We follow the protocols in order to be able to make sure all of the databases are connected. Something for the committee to consider is to look into the growth and abundance that now exists around these companies that can potentially cause challenges and risks for young people and other vulnerable populations in their organizations.
Senator Omidvar: I’ll ask my question to Mr. Chater. I am a huge believer in mentoring. I have been mentored — I’m still being mentored here. I have also established national mentoring programs.
You are looking at mentoring for youth. There is another national organization that is looking for mentors for entrepreneurs. There are mentoring organizations for new immigrants and their occupations. Have you come together? Instead of asking for $25 million, go big! Ask for $100 million for all these wonderful mentoring initiatives.
Mr. Chater: Yes. I couldn’t agree more. As part of the Canadian Mentoring Partnership, Big Brothers Big Sisters of Canada see mentoring for young people as early intervention. As we continue to build out the mandate of the Canadian Mentoring Partnership, we see coming together with these other organizations that have critical models and infrastructure that we can also then build in creating that abundance mindset around mentorship.
I may be back to urge the committee again, but we’ll be working with the federal government to look at the ways in which we can collaborate and work together across sectors. For example, last week I met with the executive director of a fantastic organization and talked about the model that they are currently implementing and how there are close linkages with the model that the Canadian Mentorship Partnership is looking at and how we can work together.
The Chair: Thank you all for your presentations.
Our next witnesses are from Australia via video conference.
From Sydney, representing the Australian Charities and Not-for-profits Commission, the Honourable Gary Johns, Commissioner; and from Brisbane we have Myles McGregor-Lowndes, Professor Emeritus at the Australian Centre for Philanthropy and Non-profit Studies, Queensland University of Technology.
Thank you, gentlemen, for accepting our invitation, and thank you for getting up at such an early hour to talk to us. We do appreciate it. It’s 4:10 in the afternoon here in Ottawa, and it’s cold as hell but sunny. We know it’s probably warmer there.
We are going to start with Mr. Johns and then Mr. McGregor-Lowndes.
The Honourable Gary Johns, Commissioner, Australian Charities and Not-for-profits Commission: Thank you very much. It’s a delight to be up at this hour to talk with the good people at the Senate. I know a good breakfast awaits me after the hearing.
I’m conscious that we have my colleague Professor Myles McGregor-Lowndes with us. Myles has been kind enough to send me his notes, so I’ll try to cover some separate ground.
The issue for us in Australia, a bit like in Canada, we are a federation, so there are competing government rules, federal and state. We are a federal regulator. We run a federal register of charities only. We have been in existence for six years now and we have about 57,000 charities on the register.
Of course, we like to minimize the amount of regulation imposed on charities and we can do that by negotiation with state governments to ensure, where possible, that a registration with us satisfies a state government’s needs for registration. We have been able to achieve that in four out of six states, but unfortunately not with two states. Nevertheless, we continue negotiation.
Beyond that matter of the registration of charities and the interplay of rules between state and federal charities, bear in mind that charities register with us so that they can receive various tax advantages through the Australian Taxation Office. We don’t grant those directly.
I might just spend a couple of minutes on the purpose of this whole exercise. The object for us, of course, is to provide the public with confidence in the charities we register. Now, how we provide that confidence is, to me, the most interesting question. I’m bound by the act to inform the public of the work of the charitable sector. That is of all the charities I register.
We are a number of years into a discussion about what good information is. What is useful information? Who can use the information on our register? At present it’s an open register with free access. Anyone can dial in and find information about a charity, some basic information about its activities and its charitable purpose, responsible persons and some financial information — more financial information among large charities, less among smaller charities. The small charities constitute half of our world. About 25,000 charities in our register employ no one. Very small organizations.
I would like to make our register more usable and we are discussing with the sector whether they might report to me, as they do annually through an annual information statement, on the level of programs which they deliver. The issue we have is that someone can come to our website and, if they know the name of a charity, they can find it and they can find its credentials, and that’s a very useful tool. We have millions of hits and inquiries on our website from who knows who. A lot of them will be charities themselves.
The trouble is that when charities report to me and I ask what have your activities been in the last year, I’ll get a one-word reply. It’s “education” or it’s “environment.” I’ll ask them who they are assisting, who the beneficiaries are, and you get a long list of possible beneficiaries just in case they miss anyone. I ask where those activities take place and it will tend to be the head office. So, where I am, Sydney, general post office.
That information is not very useful and it’s not accurate. It doesn’t describe what the charity does. We are talking to charities now about whether they can answer those three simple activities questions at a level which has meaning to the charity and to donors — taxpayers, volunteers, whoever might want to use our electronic platform to find something that is useful to them and that appeals to their charitable interests.
We are having a significant conversation and great interest on the part of charities, philanthropists, grant makers, researchers and others who like the idea that, in time, they would be able to come to our register and enter in their charitable interest, the people they want to help, and perhaps where that help may be delivered.
If charities — and I won’t do this by compulsion — I’ll invite them to use a piece of software to enter their charitable programs and to answer the same questions that I ask them each year, and that I think will provide a rich menu of what I’d call comparable products, things that are in the marketplace, the charitable marketplace that charities undertake on behalf of their beneficiaries. The donors will be able to find a list of charities that potentially deliver the sorts of programs that are of interest. I think that will give us a much greater insight into literally how the sector works. That is what the act tells me. It tells me to inform the public about the work of the sector.
I might close my remarks there. We are on a journey to turn the information that I gather by law over to the public in a form that we believe will be insightful and useful to them. Thank you.
Myles McGregor-Lowndes, Professor Emeritus, Australian Centre for Philanthropy and Non-profit Studies, Queensland University of Technology, as an individual: Thank you very much for inviting me to speak today. I have already had my breakfast.
It was suggested that there may be some topics of interest to the Senate and I have prepared some brief notes on those. I don’t intend to go over those but I’ll just mention them quickly.
An agency separate from the tax office. I think the new regulators, being New Zealand, Australia and Singapore, appear to have benefited from having something which is separate from the revenue or tax office and it appears to be going pretty well. I think there are some reasons for those.
An expanded definition of charity. Australia has adopted a charities act which sets out a statutory definition, but it still allows for the common law and the courts to move the definition forward but the statute clarifies some ambiguous areas. There doesn’t appear to have been much litigation in Australia about that, so it’s early days. The expanded definition appears to have provided much comfort to charities and those that advise them about the definitional aspects.
Australia has a destination-of-profits test; that is, charities can earn by unrelated business income and retain those profits, provided that they put them solely towards their charitable purposes. Treasuries are not happy around the world about that situation, but as far as I can tell it doesn’t appear to have had too many adverse consequences in Australia. Of course, charities are becoming more and more self-reliant by having measured and appropriate income-generation businesses to support their charitable goals and purposes.
We have recent decisions from our high court of fairly unrestricted policy on political advocacy and they overturned the British precedent for restricted political purposes in the charity law. The charities act codifies that or puts it into statute. It’s probably narrower than what the high court in common law thought and that’s caused a deal of controversy.
My view simply is that we should leave charity law alone. If there are issues with charities overstepping the mark into the political process, if there are mischiefs, that should be dealt with under separate legislation which applies to all players — individuals, businesses, political parties — to create a level playing field basically in the political process.
I would just draw the Senate’s attention to two other issues, which I have dealt with in a co-edited book on charity regulators recently, which surveyed the reflections of actual charity regulators over the last 25 years. That is, if you want to provide some cheaper, better faster ways for charities to resolve their administrative burden, then can I recommend that you have a look at the ACNC website and the National Standard Chart of Accounts. It basically addresses this issue. Government departments and other funders that fund non-profits require those grants to be financially acquitted. They set the definitions for acquitting those grants; what is “postage and petties”, what is “salaries.”
What we find grows up is that every grant maker and every government department has a different definition of what are “postage and petties,” and “wages and salaries.” In fact, when we had a look just in one state alone, there were 25 different definitions of “postage and petties.” This requires non-profits that receive multiple grants to have to translate from their accounts of what they think “postage and petties” is to what the funder deems “postage and petties.” This is often a very time-consuming task if it is done properly.
There are benefits in having one definition which is accepted by everybody, so a standard definition of what are “wages and salaries” and what are “postage and petties.” Through standardizing the definition, you can save a bunch of administration costs and also improve data and comparability of data.
The final matter that we picked up in the reflections of charity regulators was a general dissatisfaction with the way that appeal processes from decisions of charity regulators operated. The appeal processes generally are costly, which prevents litigation. That may not be a bad thing in some circumstances, but in many cases charity law is only developed through superior courts deciding what the law is and keeping the definition current and contemporary. A lack of cases causes an ossification of the definition. In Australia we went for 33 years without a supreme or a higher court pronouncement on what the definition of charities was, and we suffered from that.
So I suggest you have a look at your appeal processes and make sure the access is available, the cost, and that it is not restricted to the actual materials that the charities lodge in their initial foray with the regulator. It needs to be wider than that. That cramping of what is available for the court to look at appears to be a common problem across the jurisdiction.
I’ll end my remarks there.
The Chair: Thank you very much.
Senator Omidvar: Thank you, commissioner and professor, for both being here at such an unearthly hour. We appreciate that. We would appreciate some of your weather.
My question is first to Commissioner Johns. Your system is similar to but quite different from ours. Could you walk me through the system that grants charitable receipts, which are not the charities directly but another organization. Could you explain the rationale of that to us, please?
Mr. Johns: When you say charity receipts, I presume you are talking about a tax benefit that —
Senator Omidvar: Tax receipt, yes. Because your charities don’t issue the tax receipts. There is another organization.
Mr. Johns: The Australian Taxation Office has all those and I think will always look after the grant of taxation benefits. Nevertheless, the discussion in Australia six years ago was that the registration, the grant of the status of charity, should rest in another organization, a commission, and that’s my commission. So for six years we have been exercising our discretion to grant by law registration to organizations as a charity. Once they have charitable status, I apply to the tax office for various taxation benefits.
Now, we do work very closely with the taxation office so that, by and large, they are satisfied with our registration process and they can pretty well grant, if you like, the lower level taxation benefits. But that’s at a federal level. That doesn’t necessarily apply at a state level. States themselves choose to grant or not grant taxation benefits. They will tend to follow a registered organization on our register, but it really is a matter for them as to what they do or do not grant and to whom they grant it.
Senator Omidvar: Thank you. I understand that a little better now.
Commissioner, can you tell us about the legislation that is in front of Australia that is creating some challenges around charities? And I quote a piece from The Australian that says:
Charities commissioner Gary Johns has warned a new Turnbull government bill aimed at cracking down on foreign donations will place an extra regulatory burden on charities which may inhibit their ability to advocate on issues directly related to their charitable purposes.
What’s that about?
Mr. Johns: Yes. We are now past that point. We do have an act which governs foreign donations. It’s not an act that I administer, but part of the discussion in the charitable sector was the administrative burden that would have arisen had charities had to, if you like, account for foreign donations and those could have been in very small parts.
By and large, our sector has been exempted, so those reports in The Australian are now out of date. We are in a position where the sector is not burdened by the foreign donation legislation.
Senator Omidvar: So they don’t have to register as political campaigners?
Mr. Johns: No, they don’t. There are some very rare circumstances where they might if they are a very large organization or have very large political activities, but otherwise not.
Myles, you might add some information for me there.
Mr. McGregor-Lowndes: When the bill was first announced, it drew a very wide net, which would have caught charities, particularly those charities and environmental charities which received grants from international sources and use those for political advocacy in Australia.
After a very long, protracted and heated discussion, the government finally passed into law a much reduced system which mitigated the unintended consequences of the provisions to make transparent political party donations in Australia.
Although not all charities are happy with it, it appears that the vast bulk of charities will not be burdened by the legislation. The Electoral Commission has provided a fact sheet on its website for charities and most seem to be satisfied with that for the moment.
Senator Omidvar: Thank you.
Professor, I am very interested in this chart of accounts. We have heard many representations from our sector leaders here that the paperwork in reporting and outlining the same facts over and over again is a burden that gets in the way of charities doing their good work.
How long did it take the government and you, I imagine, to come up with an agreement on the chart of accounts? Who was involved? How was it agreed on? Can you walk us through that, please?
Mr. McGregor-Lowndes: It started with an observation, when some researchers got together with some practitioners, that there were many clerical positions in the finance departments of charities and that these people did nothing but translate from their financial data, their charter of accounts. They then translated that into what the funder or funders required. The more funders you have with different definitions of “postage and petties” and “salaries,” the more people you need to do the figuring.
We had a look, with the help of our state government,the Queensland Treasury, by surveying all the government departments and asking them for all their charity acquittal forms for grants. We put all those terms into a large spreadsheet and that’s how we came to 25 different definitions for “postage and petties,” and I think there were 117 different ways to calculate “wages and salaries” across all the departments.
We cooperatively got the government and the charities sector representative bodies to agree to a data dictionary, such that “postage and petties” means this, and “wages and salaries” means that. This took account of accounting principles, accounting standards, and what governments and funders actually needed to acquit the grant.
In many cases, these different definitions have just grown up, with different units having different ideas of people designing the forms and not much thought had been given to what the terms actually meant. By governments disciplining themselves only to ask for that financial term, non-profits — if they choose and only if they choose — can design their original chart of accounts to capture that information. So it’s capture the information once and use it many times.
It is not fundraising costs, it is not other administrative costs, but it is acquitting grants that appears to be the largest backroom office expense in non-profits in Australia that, in fact, can be reduced dramatically by governments disciplining themselves to only ask for financial information according to a single data set.
That has gradually occurred in each state and territory of Australia, and finally the Commonwealth Government and the ACNC is now is the custodian of the chart of accountants but, of course, keeping it current with new accounting standards and requirements of our governments for financial acquittal.
We found over the years that governments have started to wind back from just merely output, that is financial acquittal, and look at more sophisticated measures of the acquittal of the grant in terms of social impacts, so the financial acquittal has tended to be less onerous and less important than it once was, although it is still important, with government departments looking at actual outcomes and impacts.
It’s a process that took about six years and it requires the good faith of both government and the sector to get together with the accounting profession to move toward a chart of accounts with a data dictionary with the key financial terms defined.
Senator Omidvar: Thank you.
Senator Martin: Thank you very much for your presentations. I know you mentioned that it took six years to standardize the definitions to undertake this process. This must have been quite the undertaking, so this is a good model for us to consider.
Commissioner, I had a question about minimizing regulations imposed on charities in that one of the purposes of your commission was to reduce the red tape. This is something we’ve heard again and again from many of our witnesses and from submissions.
Would you talk a little more in detail about the steps you took to reduce the red tape and what has resulted as part of that process? You said you are still in progress with two states, and what about the territories? I would love to hear a little bit more about that process.
Mr. Johns: The process is essentially between the commonwealth and the states.
It’s a constant negotiation really between ourselves and the states, but in the case of four states and territories, or the ACT particularly, there is an agreement that those states and the territory are satisfied that we gather the information on their behalf and, if you like, relay it to them. We satisfy their needs at the same time we satisfy ours. Now that does reduce the burden on charities for double reporting.
However, here we are six years in and we still have two states who haven’t been able to be brought into the fold. As Myles reflected, these are discussions and negotiations between states and players, and let me reflect on this.
For instance, a number of charities in our sector are highly regulated. They are school sectors, university sectors and hospitals. They receive huge grants from government. The needs of the education department, health department or age care department will be far different to the needs of, say, a simple regulator like ourselves who is dealing not only with highly regulated charities but those who have no regulator, very small and intermediary charities. Complication comes for good reason sometimes, although we would like to wipe it out.
We really can’t step in and say to the commonwealth education department that they should reduce the amount of the information that they require of a school system or universities, whatever, when they are dealing with literally billions of dollars of taxpayers’ money. We shouldn’t forget that underlying this desire for simplicity, national standards and so on are the real needs of the funding organizations.
We continue the journey and continue the discussion. We talked with the Australian Accounting Standards Board about a national standard of reporting as well as accounting, but it’s a long journey. I can’t wait for them. My organization has to get on with the registration and, of course, all of the compliance activity. I have to get on and think about what simple pieces of comparative information I can turn over to the public. Meanwhile, all of the other regulators continue with discussion about their needs for data.
Senator Martin: You also talked about the registry,matching the public donors with the charities. That sounds very 21stcentury and that is a wonderful way to do this matchmaking. I was curious, if all of the registered charities are part of this, is this a giant database that’s an online feature; would you tell how that works?
Mr. Johns: Right now the 56,000 charities are all registered charities in Australia on my register and that, to us, is the total number of charities that are of interest to donors who want to know that they are dealing with a verified charity. This is the one that the government says is a real charity.
The issue with our website is that if you know the name of a charity, you can find it and look for its credentials, say its annual report or annual information statement, responsible persons, its constitution and so on. That’s very important. That is a credibility measure.
However, there might be several charities who would satisfy your needs as a donor. They may be doing work you would like to support, but you can’t search for that across our register. It seems to us, yes, we are 19 years into the 21st century, we are all digital and we could use this platform, which is already being paid for by the taxpayer, to much greater effect.
Right now each charity each year fills out an annual information statement and, among other questions they answer, there are three questions about their activities. The reason I ask them is, if you like, to inform myself and the public every year that this charity is pursuing its charitable purpose. In other words, it should remain on the register. But the answers they give me are too narrow, there is not enough information, and I don’t really know what they are doing.
It’s not me the regulator talking; this is the theoretical donor or philanthropist who says, “I really don’t know what you’re doing. I would like to know of comparable organizations who are delivering comparable programs.”
I am in a conversation with charities that if they could answer the same questions but at a program level — whenever I walk into a charity, and I do that all the time and I love it, we sit around the table and you say, “Well, how is it going? What are you doing?” They almost always say, “Well, we have three programs, one for this group, one for that group, one delivered somewhere else.” If we could get that common language of programs, a report by programs, the purpose of the program, people they are helping and where it is delivered, you will have a very powerful menu such that a donor could come to our website, inquire electronically and get a drop-down list programs that match their interests.
In order to do that, we would need a taxonomy of charitable purposes, that the charity can nominate the purpose in a dictionary, words that are commonly used to describe, and then the people and the place.
Fortunately, there are a number of organizations, but a particular one in Australia called Our Community that has been matching grant makers with charities for five years now using this common dictionary, this taxonomy of charitable purposes, and they only cover 6,000 charities. We want to scale that up, in essence, to the entire 57,000. They are thrilled with that. They really like the idea that we can put those who want to give with those who need in touch, and we are doing no more than that. When you come to the end of the journey, you find a number of charities that might satisfy your interest, and then the donor would have to go off and make their own inquiries about those charities. We think that would be a very powerful, simple tool to use.
Senator Martin: Thank you.
Senator Duffy: Commissioner Johns, my name is Mike Duffy, not related to Mike Duffy of Channel 7 in Australia, although he is a friend.
Your idea of broadening access to this database strikes me as something that would be very helpful to charities. You’re helping them reach more potential donors.
My questions during our inquiry here have been about the decline in the number of donors, the growing age of donors, and the fall-off in donations generally to charitable purposes.
Do you have, in addition to your regulatory duties, a promotional role in which you travel the country and speak about the benefits of the charitable sector and why people should be supportive of it?
Mr. Johns: Well, the simple answer is no. We have a regulatory role, and that’s something that the sector has to come to grips with. I am their regulator. If something goes wrong, I have to step into the door, look at their books and put it right.
Having said that, of course we have great sympathy for the charitable sector. Every week we register around 40 new charities. So we see enthusiasm. We see the desire for people to establish charities.
Mind you, the charities already on the register say, “Why are you letting so many in? There are already 57,000 of us.” I don’t have a rule for that. No government will ever right a rule, I believe, that excludes people who have the desire, knowledge and the interests to establish a charity.
Of course, we are as enthusiastic as anyone else for people to step in and do good work. There may be a flattening out in giving and some decline in the number of people, but I believe that will vary over time. I see charities who work very hard to contact donors, who reach out and are looking for support. I don’t see any problem there.
We have 57,000 enthusiastic organizations who are constantly in touch with their donors and potential donors. That’s their work, if you like. I can assist in a minor way, but most of my staff are tied up, as you can imagine, in the registration and compliance processes. It leaves us some time to issue statements and put the material on our website, but honestly there are hundreds of conferences that take place in this sector all over Australia every year. I see enormous buoyancy in the sector. The sector is doing very well in that sense.
Senator Duffy: Is there a minister for charities in Australia? You’re the commissioner, but is there a minister, a champion for the charitable sector in government?
Mr. Johns: Yes, there is the assistant treasurer. That’s a minister in the government who is, if you like, the champion and talks about the sector. Although there are many other ministers as well, such as the treasurer himself from time to time might, or other ministers in social security, who might talk about it. That could be enlarged and could be made more prominent; there is no doubt about that.
Again, I stress, I don’t think it’s all about government. I think governments can set rules, and they should be minimal rules, and allow the sector to get on with its good work. It has been there for a long time. It preceded government, and 57,000 and the hundreds of thousands of responsible persons and the millions of supporters ought to be able to get on with their work. That’s the most important thing.
I actually think governments can overstep the mark because the more they talk, the more people will come to governments for assistance and not to the charity. The charity has a separate life and it deals directly with civil society, and that’s a very powerful, unique and important element that we shouldn’t ever give up.
Senator Duffy: Thank you, sir.
Senator Omidvar: My question is to the commissioner and then one to the professor.
Australia is clearly ahead of Canada in many ways, and there is a lot we have to learn. You have modernized the definition of “charity,” and we still have the old Elizabethan definition of “charity,” and we rely on the common law to understand its evolution.
You have, I believe, 14 definitions of “charity.” Perhaps you could explain the relationship between the common law heads of charities and the legislative definition, and whether or not you think you run the risk of changing definitions with changing governments?
Mr. Johns: That risk, if you like, could have occurred at any time. Any government is free to legislate and change the charities act, but Myles McGregor-Lowndes reflected on this.
There was very little common law redefinition for 30 years. These things don’t often come to the courts. Nevertheless, it was a high court decision in 2010 which stimulated a government to define for the first time all of the charitable purposes and then a grab bag at the end of anything similar to them. This particular high court decision also clarified to the extent that charities could pursue advocacy freely as long as it was in pursuit of other charitable purposes.
These things are set in law. I don’t think there has been any demur. In the two major parties I have not seen any debate about changing the statutory definition, but I would hope you can never lock in a future government who might take a different view about a particular head of charity.
I think my summary would be that we have a very liberal regime and the definitions are fairly forgiving and open-ended. We register charities every day and you are always in discussion to say, do you fit in and then you continue the discussion. By and large the charity begins to fit in once we clarify its purpose.
I think the system is open and endearing toward charity. We actually trust them to get on with the business. I don’t think there are any problems from the government end but, as always, things might eventually end up in court and you will receive further clarification.
Senator Omidvar: Professor, in our last few minutes I have a question that is of great importance to this committee. That is about the progress Australia has made around unrelated business activities by charities. Perhaps you could unpack the Word Investments Case and help us understand whether, through the new regulations, social enterprise in charities is flourishing. Is it succeeding? Are charities making more money to do their good work?
Mr. McGregor-Lowndes: Yes. I think it has been a watershed in Australian charity history. It was called the Word Investments Case. Basically, a group of businessmen who were supporting the Wycliffe Bible Translators did what businessmen do and created successful businesses. One was a funeral business, one was financial advice and a few other bits of business, but the destination of those profits were all to the charitable cause.
The series of courts which heard the appeals right through to our highest court said it is the destination of profit through the charitable purpose which is the important issue here, looking holistically at the enterprise. If the destination of the effort is to assist and further the charitable purpose, then that is fine and that will be allowed and encouraged.
This was a momentous decision. What consequences has it? One might expect everybody would inform themselves as a charity and conduct their business in that way in order to avoid income tax and other imposts. That doesn’t appear to have occurred. Charities have not altered their activities radically. It has given confidence to those who are a bit more timid about unrelated business income activities to engage in them, but charities are usually pretty conservative in doing such things. It’s really only when they can make a profit and put those toward purposes that they do engage in this.
Has it encouraged unfair competition? We’ve had a couple of government inquiries which have looked at the economic theory and the actual evidence of this and they basically found that, in terms of income tax and general market forces, it doesn’t create unfair competition through undercutting of prices because charities don’t have to pay tax on the way through.
They do find that there are distortions with input taxes, like GST and other taxes, and maybe there should be some restrictions upon charities in that regard in unfettered business activities.
Our government couldn’t find a compromise to cap or to restrict the unrelated business income of charities, so the horse has bolted and it would be very difficult to wind back.
It has had a positive entrepreneurial impact on social ventures and others in carrying on businesses. They still have difficulties in structuring their business, whether they want it structured as a charity. Charities still have some fetters and should they go to a full-profit, purpose-directed entity to do that.
In Australia, unlike the U.K., we have not developed a special social enterprise entity, a bespoke entity for them. Some would argue that this is needed in order to give credence and facilitate what they do for purpose-driven organizations.
My view, and I think the view of the majority of lawyers, is that you can structure just about anything that you want to do within the available legal parameters and structures.
What a bespoke legal entity for social enterprise does is it gives that group of people an identity and something to cling on to and to claim.
I think that it probably diminishes the charity brand to have another brand of do-good organizations out there, but, as I said, in summary, the Word decision has had a profound effect on charities becoming resilient and self-reliant. It doesn’t seem to have had, as far as I can tell, too great an impact on unfair competition outside input taxes. Where there are outbreaks of businesses claiming unfair competition from time to time in the political narrative, it doesn’t really stand up that it’s having a major adverse effect on any of the parties.
Senator Omidvar: Thank you. That was great.
The Chair: Gentlemen, I would like to thank both of you, Mr. Johns and Mr. McGregor-Lowndes. It has been very informative and an educational process on the Australian situation as we go about our study. We’d like to thank you for that and thank you for getting up early in the morning. It is five o’clock in the evening here, but don’t think we are going home — the Senate sits at six o’clock and goes to God knows what hour. No rest for the wicked in the Great White North. Thank you very much.
(The committee adjourned.)