THE SPECIAL SENATE COMMITTEE ON THE CHARITABLE SECTOR
OTTAWA, Monday, April 8, 2019
The Special Senate Committee on the Charitable Sector met this day at 11 a.m. to examine the impact of federal and provincial laws and policies governing charities, nonprofit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada.
Senator Terry M. Mercer (Chair) in the chair.
The Chair: I welcome you to this meeting of the Special Committee on the Charitable Sector. I’m Senator Terry Mercer from Nova Scotia and chairman of the committee. I will ask the senators to introduce themselves.
Senator R. Black: Senator Robert Black, Ontario.
Senator Doyle: Senator Norm Doyle, Newfoundland and Labrador.
The Chair: We will be joined by other senators. As usual, there are other committees happening.
Today the committee will continue 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. It’s important that we talk about volunteers today because my understanding is this is National Volunteer Week, and as a long-time volunteer myself and a participant in the sector for a long time, these are the champions of this sector. They are the people who make it work, so it’s appropriate that we are talking about them today.
For the first panel, the committee decided it would be appropriate to highlight this week as National Volunteer Week, and what better way than to invite organizations and individuals who understand the importance of volunteers who can share their own experience. To that effect, we have the privilege of having with us from Board Voice Society of BC, Ms. Terry Anne Boyles, and from Réseau de l’action bénévole du Québec, Marilyne Fournier, Director General, and Irène Langlais, Volunteer, Canadian Red Cross.
From the Canadian Association for Disabled Skiing - National Capital Division, Mr. Jeff Boucher, Coordinator Canadian Adaptive Snowsports; from Big Brothers Big Sisters of Canada, Mr. Matthew Chater, National President and Chief Executive Officer; and Ms. Karine Pomilia Gauthier, National Youth Mentoring Advisory Council Member; from Ottawa Food Bank, Mr. Michael Maidment, Chief Executive Officer; and from Héma-Québec, Sylvie Allard, Vice-President, Customer Experience; and Mr. Miville Mercier, President of the Provincial Association of Blood Donation Volunteers.
Thank you all for accepting our invitation to appear. I would like to invite the witnesses to make their presentations. I would also like to remind them, as per instructions they have previously been given, the presentation should be no more than five to seven minutes. We have a lot of people this morning. Following the presentations made by the witnesses, a question-answer session will take place and each senator will be given five minutes to ask questions before the chair recognizes another senator, and there will be as many rounds of questions as time permits. Senators do not need to feel required to ask all their questions at once, although some will try. During the question-and-answer session, I would ask senators to be succinct when asking a question, and I would ask the witnesses to do the same when answering.
We will begin with Ms. Boyles.
Terry Anne Boyles, Co-Chair, Board Voice Society of BC: Good morning.
Thank you for the opportunity to present to the committee. I would like to open by recognizing that we are meeting today on the traditional unceded territory of the Algonquin Nation.
Board Voice represents the collective voices of more than 700 volunteer board members and senior staff of community-based non-profits providing social care in B.C., from child care to immigrant and refugee settlement, from social housing to mental health care, senior services, community kitchens, family counselling, help for children and youth, and lifelong support for people with adult developmental disabilities. Our organizations address the social determinants of health.
Our members range from small organizations like the Kootenay Boundary Community Services Co-operative to large, urban service providers such as the Vancouver Aboriginal Friendship Centre Society and the B.C. Schizophrenia Society, Association Advocating for Women and Community and my home Board of Family Services of Greater Vancouver.
Our member agencies and volunteer boards of directors who lead them are experts in identifying and addressing the challenges our communities face. We know that unless we plan for better social outcomes and get to the root causes of major societal problems, such as opioid deaths, homelessness, poverty, children going hungry, cultural isolation and the vanishing of affordable housing, harmful social crises will just keep rolling over us.
In particular, Board Voice wants to share our thoughts on three areas where we need your support. Board development: The volunteer community leaders who sit on non-profit boards across the country play a vital role in strengthening social care, health care and well-being in our communities. As stewards of our organizations, boards of directors have unique voices for bringing the issues of communities to government and partnering with you in strengthening communities. Board directors have immense personal and professional networks for leveraging needed change and a duty of responsibility to the people we serve and the federal, provincial, territorial and municipal governments that fund the majority of our work.
We ask for your support in strengthening our ability to do this important work, to partake in development opportunities like those provided by Board Voice Society of BC, which I co-chair, and Vantage Point and others to bring a new generation of board members with the diversity of skills, backgrounds, cultures and life experiences that both enrich and reflect our organizations and the complex society in which we now live. We give our time for free, but we really need funding to support more board development efforts.
Second, Indigenous reconciliation and recognition: Board Voice strives to garner the knowledge, wisdom and advice of our Indigenous friends, colleagues, neighbours, organizations and governments. As individuals and community leaders, we recognize the intergenerational trauma and continuing impacts of colonization and strive to expand the important public conversation and do our part to follow the Truth and Reconciliation Commission recommendations.
The children, families and communities we serve continue to be dramatically impacted by fragmented policies and continuing laws of the colonial periods. Our volunteer boards need financial support to enable them to further strengthen and grow their knowledge and understanding with our Indigenous partners. We ask that you lend the committee’s support for such initiatives.
We are your partners. Every non-profit got its start when people saw a need not being met in their community and came together as volunteers to make changes. The non-profit model is an ideal partner in the delivery of government services and supports because we are born from the community and reinvest every penny into our communities. When government partners with us, it’s also partnering with all the other community non-profits we collaborate with, as well as First Nations, federal, provincial and municipal governments and private funders.
Together we build the foundation for a just, equitable and healthy country for all. We trust you agree with us that the vital work of social care in Canada must be done in partnership with volunteer-led community non-profits committed to building better communities.
In closing, every Canadian has a vital role to play in strengthening social care in our communities. The voices of volunteer board directors of B.C.’s community social service organizations are needed now more than ever. We ask you to celebrate this passionate innovative sector with its long-standing commitment to improving community well-being and social health and to support us in this essential work.
I am here speaking from the volunteer perspective, but we also want to note that we appreciate that Imagine Canada, the United Way, Volunteer Canada and others will be heard by the committee this afternoon. We wish to lend our voice to the insights they will bring to the committee. Board Voice greatly appreciates the opportunity and the invitation to appear before the committee to share our perspective.
Marilyne Fournier, Director General, Réseau de l’action bénévole du Québec: We at the Réseau de l’action bénévole du Québec were asked to report on the impact of volunteering on the public. I will share some data with you before turning things over to Ms. Langlais. According to a survey done by the network in 2018, 38 per cent of Quebecers are currently involved with organizations, with an average volunteer involvement of about 10 hours a month.
According to 76 per cent of Quebecers, health and social services are sectors that receive the most volunteers. It’s true that, combining these two sectors amounts to 47 per cent of the volunteers. However, only 11 per cent of Quebecers had identified culture and leisure as a volunteer sector, while 37 per cent of volunteers are involved in culture and leisure. I will simply give you some statistics that come only from the 28 groups that are members of the Réseau de l’action bénévole du Québec, which includes 6,000 organizations and more than 1.6 million volunteers.
In the health and social services sectors, volunteering makes it possible to prepare and deliver 2 million meals a year to 30,000 people with decreased independence thanks to Meals on Wheels. Volunteers also volunteered 1.5 million hours in health and social services institutions. There are 15,000 volunteers directly involved in health facilities. We are talking about 80,000 seniors who are reached through community centres for seniors. More than 40,000 people were accompanied nearly 300,000 times by volunteers from volunteer centres to run errands or attend medical appointments, representing 10 million kilometres travelled in a single year by volunteers from volunteer centres.
Indeed, 1,530 single seniors receive more than 15,000 visits annually from Les petits frères, and nearly 1,000 people with physical, intellectual or mental health disabilities are currently matched with volunteers. It should be noted that there are still 1,000 people waiting to be matched. In terms of culture and leisure, 560,000 community newspapers are printed for each edition of community newspapers. In addition, 290,000 people in Quebec benefit from a public library operated solely by volunteers in more than 700 municipalities; nearly 400 municipalities are served by independent community television, representing 236 hours of original programming each week, including 71 hours of local and regional information. More than 12,000 young French-speaking Canadians can participate in Scouting thanks to volunteers, and nearly 3,000 young athletes can experience a provincial final with the Jeux du Québec each year and participate in sports competitions thanks to more than 2,500 volunteers.
It is interesting to note, in terms of leisure, when we talk about scientific, cultural, socio-educational or outdoor leisure, that there are currently 44,500 such organizations in Quebec, including 3,000 that operate on a volunteer basis only. This information is interesting since 66 per cent of Quebecers believe that volunteer organizations have a lot of paid staff. That is really not the case.
Finally, volunteering also has an impact on volunteers themselves. Volunteers are in better physical health. According to a recent study, the physical fitness of men and women who volunteer is equal to someone five years younger who doesn’t volunteer. A 55-year-old volunteer is as healthy as a 50-year-old non-volunteer. Sixty-six per cent of volunteers said that their volunteering helped build their skills. This statistic goes up to 88 per cent among youth under 35 years of age and 77 per cent among youth under 35 years of age among volunteers born outside Canada.
Finally, volunteering is contagious. Indeed, 47 per cent of volunteers have a spouse who volunteers, 47 per cent of volunteers saw their parents do volunteer work and 54 per cent of volunteers saw their children volunteering as well. I’ll now give the floor to Ms. Langlais.
Irène Langlais, Volunteer, Canadian Red Cross, Réseau de l’action bénévole du Québec: Good morning. First of all, thank you very much for giving me the opportunity to talk to you. I have been a Red Cross volunteer for 15 years. I would like to thank you for giving me the opportunity to talk about the impact that the Red Cross has had and continues to have on my life, and the impact of our actions on the people we help. I have to go back to the beginning of my retirement to talk to you about all this, when I really wanted to give back to society, because I always believed that I had been very lucky in life.
I was looking for a volunteer experience that would be in line with my principles and aspirations, and would allow me to continue to lead a very active life and meet challenges while travelling. So I did some activities in volunteer sectors that are all very useful to society, but they did not meet my expectations.
Finally, I found the volunteer and palliative care centre in Hudson, and especially the Red Cross. For the past 15 years, the Canadian Red Cross has succeeded in meeting almost all my expectations. I found the Red Cross very satisfying because it is an organization whose fundamental principles mean that it is respected worldwide. These principles have made me very open-minded about all the challenges I have to face and all the people with whom I have to work and be in contact.
I have also found great satisfaction in the teamwork at the Red Cross, which is seen on a daily basis between Red Cross employees and volunteers, and also because the organization places a high value on teamwork. This teamwork allowed me to use my communication skills, because I had been a teacher at both the high school and college levels. For a long time, I was also a department head, which requires a lot of communication skills. This teamwork has allowed me to participate in training some employees in the program, because the Red Cross has signed agreements with major companies such as Bombardier, Bell Canada and Desjardins, to name a few. Under these agreements, the Red Cross was able to train employees of these companies to participate in the partners in action program, to help us when we are involved in major operations. Indeed, we know that, more and more, there are major disasters. In my early days, the Red Cross did not let me take part without training me, without making sure that I was able to respect the fundamental principles of the organization and be very effective when I tried to help disaster victims. Thanks to the training and various Red Cross operations in which I have participated, as well as the example of all its volunteers and respect for its fundamental principles, I have learned to be more flexible in life and adaptable, which was not necessarily part of my personality. I am the daughter of a Canadian Army veteran who has been well “drilled”.
The Red Cross also allowed me to pursue a second career in teaching, in something that was quite different from what I had done before, namely teaching versus emergency services. This new career, which I have been involved in for 14 years now, has allowed me to travel throughout Quebec to train people who were part of the personal disaster assistance (PDA) team, who respond to level 1 disasters in their municipality, and also to train volunteers from the emergency response team (ERT), who respond to levels 2 to 5 disasters, and to help open reception centres, information centres and emergency shelters.
This new career has also allowed me to travel—which was one of my wishes when I retired—throughout Quebec and Canada. I went to train people everywhere and helped to do new training, which is very important for me, because I always valued the training of people who had to work with specific staff.
So, once again, I was able to use the skills I thought I had, and I was also able to acquire new skills that are very useful to me today, not only at the Red Cross, but everywhere else. This new career in emergency management has also allowed me to acquire new skills in personnel management because, as a teacher and department head, it is not at all the same thing to manage people who are salaried and unionized as it is to manage volunteers. It has been very rewarding to work and train at the Red Cross.
My experience at the Red Cross has also allowed me to acquire new communication skills. Indeed, I am in charge of an intervention team in my RCM. I have given and continue to give training, and I participate in conferences within various associations, both for recruitment and for training people. I meet with firefighters at fire stations to explain the work of Red Cross volunteers, and I meet with many suppliers to ensure that they have places to receive all the services to which they are entitled.
I take great pride in working with the Red Cross, which trains its volunteers and the public before and during disasters. So I am proud to tell you that we have helped to limit the number of disasters and perhaps even save lives. It is a great privilege to continue to feel useful, even at my age. The Red Cross subscribes to principles: there is no racism, there is no talk of age, and we make sure that people, whatever their age, are able to carry out their mission, to be very humane towards their colleagues, employees and victims. Working with disaster victims in difficult situations has allowed me, through their resilience, to maintain a very positive attitude towards everything that is happening in my life.
When I come back from taking part in the assistance we provide, I always feel like I have done something good, which is very good for the heart. I invite you to become a Red Cross volunteer.
I will now talk to you about the impact of our actions on the people we are trying to help at the Red Cross. When people see the Red Cross vest, no matter what time of day, even at night, no matter what time of year, even during storms, people are always comforted. They know that we are there to provide them with the services to which they are entitled based on their needs. They are also offered a safe place to stay, which greatly reduces the tension among people who have just experienced a disaster. They know that Red Cross volunteers will provide them with the services to which they are entitled, such as shelter, clothing and food, but especially comfort, because they have just experienced very difficult situations. They are also given, and I am very happy about this, references to other organizations, which are almost always non-profit. We also give them instructions on the steps they must take, because we know that people in these situations are very disorganized. Disaster victims often say thank you, and they are surprised to see strangers offering them things for free. They are always told that it is not us, but that it is thanks to the donations that the public makes to the Red Cross. It means a lot to us, and it’s our biggest reward. Basically, this proves that it isn’t always money that makes people happy. Thank you.
The Chair: Thank you very much, Ms. Langlais.
I must say, having worked in the sector since 1978, myself, the reputation of the Red Cross is extraordinary in terms of training of staff and volunteers. If you’ve come from the Red Cross, you are usually a well trained and very valuable commodity in the sector.
Sylvie Allard, Vice-President, Customer Experience, Héma-Québec: Mr. Chair and members of the committee, our organization is pleased with the invitation extended to it by the Special Senate Committee on the Charitable Sector during National Volunteer Week.
My name is Sylvie Allard and I am the Vice-President of Customer Experience at Héma-Québec. I have the privilege of being accompanied by Miville Mercier, President of the Provincial Association of Blood Donation Volunteers.
Be it donors donating blood, stem cells, cord blood or breast milk, or volunteers volunteering their time to recruit and welcome them to blood drives, each individual makes an invaluable contribution to helping thousands of people regain their health and save lives. Each year, some 16,000 volunteers welcome more than 175,000 donors who donate blood or plasma. These donors are themselves volunteers who generously and freely share a portion of their health. In addition to these thousands of people, there are more than 45,000 people who are willing to donate stem cells to save a person’s life, and 850 new mothers who donate their excess breast milk for premature babies. We must also not forget the approximately 1,000 people who consented during their lifetime to become human tissue donors upon their death last year.
These few figures strongly illustrate how much volunteerism is a fundamental and vital element in the daily activities of an organization like Héma-Québec. The importance of the contribution of volunteers in maintaining the collective supply of blood, stem cells, breast milk and human tissues is immense.
Without their actions, Héma-Québec could not fulfill its mission to provide hospitals, mainly in Quebec, but also elsewhere in Canada, with biological products of human origin, in sufficient quantity and safely.
Héma-Québec faces great challenges. Each year, nearly half a million blood components are sent to Quebec hospitals. We must do so in the current budgetary context. We must therefore constantly reinvent ourselves. The complicity and commitment of volunteers are essential. For example, in conjunction with the Ministry of Health and Social Services, we have made the decision to increase plasma self-sufficiency in the province, so that we have a local source of an ingredient to manufacture drugs for which immunodeficient individuals or hemophiliacs have a critical need. This decision has a direct impact on the increase in our plasma collection activities from volunteer donors, notably through the opening of plasma donor lounges called PLASMAVIE.
These plasma donor lounges are now open in Gatineau, Sherbrooke, Trois-Rivières and Saguenay. We are also planning to open other PLASMAVIE plasma donor lounges in Montreal’s west end.
Volunteers have been with us since our creation 20 years ago, in September 1998. They agree to give generously of their time and energy several times a year or monthly to help others regain their health and save their lives. Our work consists in maintaining this vital axis of solidarity between volunteers and donors.
It goes without saying that any federal government assistance that could encourage volunteerism among Canadians will be welcomed by our organization. We would like to take this opportunity to raise awareness among committee members of the challenge of recruiting young volunteers from the 18-35 age group. Our organization places great importance on rejuvenating the volunteer and donor base that supports its mission of giving life. Currently, the 18-25 age group accounts for 25 per cent of volunteer blood donations, but only a very small portion of the volunteers who recruit these donors and who support our collection organization activities.
The recruitment of replacements for our volunteers is a particular challenge. The reason for this phenomenon is largely due to the steady decline of a large pool of volunteers from community social organizations, such as Lions Clubs, Optimist Clubs, Knights of Columbus and the Cercle des fermières, to name a few. We must, therefore, rethink the traditional model of how we do volunteer work. Simple measures can help. For both blood donation donors and volunteers, promoting measures such as granting paid leave to encourage blood donation or volunteering in the federal public service or the armed forces could contribute to achieving our mission, which depends heavily on volunteering.
We are pleased to further refine our recommendations to increase the pool of young volunteers and donors if the Senate committee considers it appropriate. Thank you very much for your attention.
The Chair: I should say that it was my pleasure to work with Héma-Québec and Canadian Blood Services a number of years ago to sponsor the bill to establish National Blood Donor Week. It was good to work with the professional staff but also with the volunteers. Both groups have some excellent people.
Michael Maidment, Chief Executive Officer, Ottawa Food Bank: Good morning. As I was sitting here, I was thinking about rushing out to volunteer for the Red Cross. I think I may need to, after I go back to the office this morning.
I appreciate the invitation to address you this morning regarding this important and essential impact of volunteers in the voluntary sector. Across Canada, nearly 1 million people turn to a food bank every single month. I’m privileged to be the chair of the board of directors for Feed Ontario, which is the provincial organization that guides food banks across Ontario. Here in Ontario, that number is nearly 400,000.
At the Ottawa Food Bank, we serve 37,500 people monthly, 37 per cent of whom are children. The way our organization works is that we support a network across the community of 114 community-based food banks and programs, such as addiction rehabilitation programs, but also men’s and women’s shelters.
Volunteers play an important role in our organization, and we rely on 3,000 volunteers every single year. We’ve calculated the time volunteered and it is the equivalent of 13 full-time staff. Our organization has 31 paid staff and the equivalent of 13 full-time staff as volunteers. Those volunteers perform a variety of different tasks. They sort food, receive donations, hold food drives, deliver food to our partners across the city and in a new program they grow food on our farm. Last year, just here in the west end of Ottawa, we grew 130,000 pounds of fruit and vegetables with the help of 1,000 volunteers.
Last but not least, volunteers include our board of directors. I didn’t strategically put board of directors as the last group of volunteers.
We are fortunate to have volunteers of all ages and abilities. We have students, individuals with sports teams, youth sports teams, corporate groups and retirees, but I know that the committee has heard from other groups about what groups of volunteers are missing. I think in our organization — and we’re an example of many food banks across the country — we are missing young professionals and those between the ages of 18 and 35. I have a colleague whose name is Alexandra. She is between 18 and 35, proudly describes herself as a millennial, and she’s using every bit of her extra time to earn money to pay debt from student loans and save money to participate in the economy. Right now she’s saving to buy a house. I don’t believe her story is unusual for individuals across Canada in that age group.
There are a couple of common themes we see as an organization which relies on volunteers so heavily. We have a lot of students because students are mandated to volunteer in Ontario. We have a lot of corporate groups when staff from those corporate groups are paid to volunteer. We’ve seen an increase in corporate groups as community building is more the norm in corporate Canada. We’ve certainly seen an increase in the number of corporate volunteers, but still, individual volunteers are largely seniors or those who are retired and have the extra time to volunteer.
In closing, in your examination of the voluntary sector, I believe we also have to ask the question what the volunteer sector is doing that government should be addressing? I think food security is potentially one of those issues. Food security is an income issue, not a food issue. As food banks were created as a temporary solution in the 1980s, we’ve now become a relied-on and essential part of the social safety net. In Ottawa, 60 per cent of people served by the Ottawa Food Bank are recipients of social assistance. The question is, should government policy be to rely on the voluntary sector to fill a gap created by ineffective government policy? Thank you.
The Chair: Thank you very much, Mr. Maidment. I think Canadians all understand the importance of your organization and it’s one of the few organizations that appear around these types of tables constantly. We’d like to put you out of business, and I think we all agree with that. I know people from food banks across Canada have the same opinion.
Now from Big Brothers Big Sisters of Canada, Mr. Chater and Ms. Gauthier.
W. Matthew Chater, National President and Chief Executive Officer, Big Brothers Big Sisters of Canada: Thank you, Mr. Chair and fellow committee members for the invitation to be here today.
My name is Matthew Chater and I’m the 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 42,000 young people annually in more than 1,100 communities across Canada.
We are committed to ensuring that young people have access to the highest quality one-to-one and group mentoring programs so they can gain the confidence to achieve more. While many of you probably know us as the organization that matches youth with an adult mentor, you may not be aware of our commitment to reflect and serve the diverse communities of which we are a part.
As a national mentoring organization we have a vested interest in improving the lives and outcomes of children and youth across the country, including those from Indigenous communities, from newcomer, immigrant and refugee communities, from black, African and racialized communities, as well as from lesbian, gay, bisexual, trans, queer and two-spirit communities. This is only possible through their involvement in mentoring programs that are culturally proficient and that acknowledge, honour and celebrate them, their communities and their stories.
Within our commitment to being equitable, we are taking time to pause and reflect about where power and privilege lie in our communities and how colonialism, systemic racism, intersectional oppression, heteronormativity, cisgenderism and xenophobia are realities for many of the diverse communities with whom we work.
For National Volunteer Week, 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.
The Government of Canada can play a critical role in building strong communities and encouraging thriving economic growth through volunteerism and youth mentorship by first considering that mentoring has an extraordinary impact on society through the unpaid economy.
At Big Brothers Big Sisters, we mobilize over 21,000 Canadians who generously volunteer over 2 million hours of their time through high-quality intentional mentoring programs. That equates to more than $30 million in unpaid work every year. Let’s consider that to be a donation to Canadian society.
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 situations. So if we have $30 million invested in the Canadian economy every year by our volunteers with a return of 23 to 1, that equals a $690 million return over a lifetime through Big Brothers Big Sisters volunteers alone.
In addition, charities provide critical leadership and skill-building opportunities for volunteers. Our volunteer mentors consistently tell us that they get as much, or more, out of a mentoring relationship than a young person. They feel they grow as a person and use the skills they’ve developed and the experiences they’ve had in other areas of their lives at home, at work and in their community. The increase in employability and productivity would add millions more to this estimate.
Second, youth mentoring is a catalyst for the next generation of volunteers. According to Statistics Canada, volunteer rates have been in slow but continuous decline for several years, and declining volunteer rates have already spurred the federal government into action with the launch of Canada’s Volunteer Service Corps.
Again, research demonstrates youth mentoring is a vehicle for change in these efforts to build a better Canada, and alumni from Big Brothers Big Sisters programs are 50 per cent more likely to volunteer and they spend 30 per cent more time volunteering.
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 organizations and stakeholders, multiple levels of government, diverse communities and, of course, young people.
Our volunteers make an extraordinary impact on society, but they cannot do it alone. Big Brothers Big Sisters has more than 1,500 professionally trained staff in local communities who play a critical role in recruiting, screening and training volunteers, matching them with the children and supporting them through the mentoring relationship. While that number sounds big, keep in mind that we are active in 1,100 communities, meaning most of these people are working alone or with one or two people locally with an office sustained through local fundraising.
That match support infrastructure is critical. Our local charities need to hire, train and retain qualified staff to be able to mobilize that volunteer energy. They rely on grassroots generosity of Canadians in addition to essential government and corporate support in order to make mentoring matches happen.
We also need to design and build intentional partnerships that will maximize the impact of mentoring on youth who need it most. A national mentoring strategy would align all efforts and that’s where the Government of Canada can help.
We urge the committee to recommend to the Government of Canada to invest at least $25 million annually in youth mentoring. Youth mentoring must be viewed as a critical, preventive intervention for youth but also a catalyst for volunteerism. Mentoring is essential for future economic growth and to fight against Canada’s looming social deficit that is predicted to manifest itself over time in reduced social services, unmet needs, longer waiting lists and a general erosion of the quality of life in Canada.
Thank you once again for the opportunity to be here today and thank you as well to the many volunteers who give their time to make our communities thrive and grow. I now proudly hand it over to a former mentee and current volunteer with Big Brothers Big Sisters to share her experiences.
Karine Pomilia Gauthier, National Youth Mentoring Advisory Council Member, Big Brothers Big Sisters of Canada: Hello, Mr. Chair, committee members. It’s a pleasure to be here. My name is Karine Pomilia Gauthier and I’m here on behalf of Big Brothers Big Sisters of Canada as a former little sister and a current member of the agency’s National Youth Mentoring Advisory Council.
I have been a little sister since the age of 8. Although I aged out of the Big Sister programming at the age of 18, one never truly stops being a little. It may be in part because I still keep in contact with my big sister, but on a greater level it’s because being a part of Big Brothers Big Sisters has become a part of my identity. It’s integral to who I am today. I credit my experience with the agency with breaking the cycle of abusive relationships within my family.
Within my lifetime, my mother has been in two abusive relationships, one with my father and the next with the man who came after. My mother is an incredibly strong person, but she was stuck in a cycle. Without my Big Sister and her beautiful and loving family, I likely would have followed in my mother’s footsteps. But my Big Sister’s life offered me a happy alternative. My big sister didn’t set out to volunteer with the goal of changing my life but she did. I think that encapsulates the effect and the impact of mentoring and volunteering on a young person’s life.
My own volunteering experience came through Big Brothers Big Sisters as well. I’d help out with local fundraisers and host award nights. Through that, I found my passion for public speaking and later for politics. I didn’t only volunteer with Big Brothers Big Sisters. I volunteered in day camps and sat on youth councils that aimed to include more women in politics because I wanted to and because it went towards the 40 hours of volunteer work required for my high school diploma in Ontario. But I almost felt embarrassed to ask for a sign-off on those hours because I wasn’t volunteering for some kind of reward or acknowledgment. Volunteering should feel good. Personally, I never feel more productive, motivated and ambitious than I do right after volunteering, so I keep doing it. Being on the Big Brothers Big Sisters of Canada Youth Council gives me the chance to volunteer and give back to an agency that has already given me so much. In this capacity, I chair monthly meetings, write blog posts, help out with national and regional conventions and learn an enormous amount of transferable skills.
It has opened so many doors through other opportunities in volunteering. I currently sit on the youth panel committee which is planning a friendly discussion between upcoming federal leaders in the election season. I sit on the public policy and government relations committee of Big Brothers Big Sisters and I volunteer with my local MP.
I get to do something I love each and every time I volunteer, and maybe, just maybe, I’m helping someone else too. Thank you.
The Chair: Ladies and gentlemen, if you ever wonder if the program works, I present Ms. Gauthier. It’s wonderful to have you here. Thank you for that. From the Canadian Association for Disabled Skiing - National Capital Division, Mr. Jeff Boucher.
Jeff Boucher, Coordinator Canadian Adaptive Snowsports, CADS-NCD Edelweiss, Canadian Association for Disabled Skiing - National Capital Division: Thank you for allowing me to appear to represent adaptive skiing in the National Capital Region. We are 100 per cent volunteer organization with 200 volunteers in the National Capital Region. Nobody gets paid a penny. Some of the things I say will be repetitive, but I hope that encourages and strengthens what other people have said.
CADS-NCD is a national organization with divisions and provincial organizations within their span of control. In the Ottawa area, there’s a national capital division that oversees five individual programs Edelweiss, Camp Fortune and Mont Cascades on the Quebec side, and Calabogie and Mount Pakenham on the Ontario side. There’s also a separate program run at Calabogie, a winter sports clinic for ill and injured military serving members and veterans. It is not associated with the Soldier On Program. It’s 100 per cent fund raised and organized by the Calabogie CADS program.
All programs are self-sufficient monetarily and rely on the division as a not-for-profit and charitable lead and the national organization for training and certification expertise. The ski hills where we volunteer with are all hosts to our programs in the region, but we have no affiliation with the ski hills themselves. By that I mean we are not aligned by the regular teaching programs and the only fees we get charged by the hills are lift tickets. The ski hills are all very supportive of our programs, and they offer equipment storage areas included in the lift ticket revenue. We work closely with the hills but are completely separate.
We have been in existence for 40 years and have operated as a not-for-profit charitable organization since its inception. We have one treasurer for all of the programs, and he is our watchdog to make sure our charitable status remains intact. He wanted to be here today, but he is helping out the United Way with some of their funding programs.
KPMG is the auditor and the watchdog to our watchdog. This is a cost we don’t like to incur, but we know it is essential to ensure we follow all applicable rules and regulations to a tee.
We are a fairly typical adaptive skiing program. I am speaking about Edelweiss, the program I help out with. I actually run the program. We had 105 volunteers and 59 participants this past winter. We have acquired approximately $200,000 in adaptive equipment over the years with the bulk of that through fundraising within our program. There was support in the past from the Canadian Paralympic Committee that helped us with a 50-50 splitting for buying new equipment. That has changed. We haven’t got any money from them for about five or six years as they go from supporting grassroots projects to their Own the Podium, which is their decision. We are now purchasing parts and equipment without any outside funding. We currently have about 25 sit skis, at about $6,000 each. Those do need replacing, so we need to raise funds for equipment every year.
Voluntary recruiting is a full-year endeavour and we use all means available to attract new and appropriately qualified volunteers. We use social media, university volunteer websites, booths at local events, but our most successful method is by word of mouth from our volunteers and participants. Family members, friends, work acquaintances and neighbours seem to yield the best volunteers; knowing the program and the skills required to be a good volunteer and allow our existing volunteers and participants to recruit appropriate individuals.
We have started looking at training family members of those with kids with disabilities to ski with their sons and daughters. This has been a great success in the past couple of years and permits us to take more kids into the program.
As Michael has stated, we have a lot of young volunteers, we have a lot of retired and fairly ancient volunteers. That middle sector is where we can’t get people to come, and it’s very understandable. I did not volunteer any of my time when I had kids. That sector is pretty much out of bounds to us and we can’t take people with young families and ask them to come volunteer.
Since money cannot be used as an incentive, we must rely on the good, old-fashioned methods of praise and pins. We praise our volunteers as much as we can and give them five-year pins, which is all the compensation we can give them.
I returned last night from a week-long winter sports clinic in Snowmass, Colorado for U.S. veterans with disabilities and did get to ask some of the U.S. adaptive ski instructors if there were any incentives in the way of tax breaks for their volunteer efforts, and indeed, they are permitted to claim mileage, accommodation and training course costs as charitable donations, which we cannot do in Canada. Unfortunately, there wasn’t enough time to pursue how they go about doing that. I found out very late that I was coming here.
Unfortunately, the cost of volunteering is seldom free. Transportation, courses and registration fees are sometimes disincentives to people helping out. Those are costs that cannot be paid by most 100 per cent volunteer-driven organizations.
Although some organizations are capable of attracting volunteers by compensating them for their time with free day passes for events, as is the case with a number of music festivals here in Ottawa, we do not have any such means of compensation at our disposal. Perhaps small tax breaks would be appropriate. This would obviously place a burden on programs to record and dispense receipts, but it would be worth the effort in the long run. We already record who is at each program day and training day and it wouldn’t be a whole lot of effort to continue that.
We do love high school, university and college students volunteering. The unfortunate part is we are January-February during exams. If we take on too many high school, college or university students, they all disappear in the same weekend or close to each other. The program is very difficult to run when all of these people are gone. We limit the number that we take on. However, last season we took on five high school students who were all of such high-calibre volunteers, we had many discussions on who would be the junior volunteer of the year, and we had to recognize all of them because they were all so good.
I know there are a tremendous number of fantastic people out there willing to assist. It is just a matter of finding them, training them and doing our best to make sure they are suitably matched up for an enjoyable volunteer experience. They will keep coming back as long as they are doing enjoyable work, being appreciated for what they accomplish and any added incentive would be very much appreciated. Thank you very much.
The Chair: Thank you. On behalf of my colleagues here and also on behalf of all 105 senators, I’d like to thank all of you for the work that you do. This country sometimes doesn’t work that well, but, generally speaking, it does work well, in large part because we have such a broad and deep volunteer base. I want to thank all of you for doing that.
Senator R. Black: Thank you very much for your presentations. I really appreciate you being here. I come from a rural and agricultural background. Do you notice a difference in terms of volunteer recruitment between rural and urban volunteers? What are the barriers and challenges that we should maybe be including in our report that sort of balances the challenges if there are any?
Ms. Boyles: Two things: I used to be the national government relations vice-president for all the colleges and institutes in Canada. In our work, we are always looking at what the impacts were, particularly in rural, remote and northern areas and that the volunteers in those areas are often called on to be volunteers across a multiplicity of organizations, whether it’s the rec board, their community library, their not-for-profit or social enterprises that we recognize. It’s a real challenge, just being stretched. That’s compounded by their accountabilities and their worries in terms of their fiduciary responsibilities in particular.
Mr. Maidment: I would say, anecdotally, at least in the Ontario Association of Food Banks, it is easier for those rural food banks to attract volunteers. Many of the food banks, in rural Ontario at least, are run solely by volunteers. I think we still see some of the same patterns that many of us discussed. Those volunteers skew older. I do think, at least anecdotally, in rural Ontario and rural Canada, it is easier to attract volunteers.
Mr. Chater: With Big Brothers Big Sisters, I agree that we see a number of volunteers who are coming to our organizations to give back to the community from a service perspective. I know many of our organizations struggle on the governance side to attract the individuals who can govern the organization.
We’re undertaking a piece of work to understand the landscape of rural and remote communities, particularly for young people. We know the population of young people within rural and remote communities may be going down but the needs are going up. How does mentorship address that? We are undertaking that project right now with the support of some corporate sponsors.
Senator R. Black: When will that report be ready?
Mr. Chater: We’re early in the process. It’s a two-year piece of work, but we’ll have early findings along the way.
Miville Mercier, President of the Provincial Association of Blood Donation Volunteers, Héma-Québec: As for us, we are represented by 13 chapters in the Quebec. It is easier for us to recruit volunteers in cities like Sherbrooke, Montreal and Quebec City. However, in Lac-Saint-Jean, for example, and on the Lower North Shore and Gaspé Peninsula, the distances are significant, and it becomes more expensive to train and bring chapter members together. So we are investing more energy in cities than in the regions right now because of a lack of money.
Mr. Boucher: I have two points. We are fairly rural; Calabogie has difficulty in attracting volunteers because it has such a small base of people and some skill sets are required. There is some difficulty getting volunteers about an hour and 15 minutes outside of Ottawa. On the other side, because they are in a small community, they have a lot less difficulty attracting companies within the community to donate to the program. So it’s a double-edged sword. They could probably get more money, but they need more people to expand their base.
Ms. Fournier: In fact, I told you earlier that the average number of volunteer hours in Quebec is 10 hours per month. The study allowed us to draw a portrait of each of the administrative regions, and it was found that the further away the region is from a major centre, the higher the number of volunteer hours, as well as the number of years people remain volunteers. Conversely, the same survey involved non-volunteers, and the closer people lived to suburbs or major centres, the more they said lack of time was their reason not to volunteer.
I agree that the problem of long distances makes gatherings more difficult, but coming from a small community would encourage people to get more involved, often because if they don’t, the activity won’t be able to take place. This could explain this situation.
Ms. Langlais: I’ve been involved in recruitment for several years, and it is always difficult everywhere for the Red Cross, whether in rural or urban environments, because of the particular style of volunteers we need. People who volunteer for the Red Cross must be ready to get up in the middle of the night, in winter, without knowing the conditions under which they will work. It isn’t for everyone, and that’s understandable.
I would say that we have many young people on our team; however, we have to ask ourselves the question—and I don’t have an answer—and determine if it is really volunteer work, because often it falls into the category of volunteer hours that must be done through a particular program. This isn’t a criticism, on the contrary, because often these people become true volunteers later on, regardless of the organization.
That’s why, as I told you earlier, the Red Cross has partnered with companies like Bombardier and others to try to attract volunteers. Because of the increasing number of disasters, there is a real need for volunteers. Of course, most of the time, it is older people who are willing to volunteer, and that’s really where we recruit most often. As Mr. Boucher said, there are people who have families, children, who have a lot of responsibilities; that’s where we have the most difficulty recruiting, and we understand very well why.
The Chair: Thank you very much.
Senator R. Black: Second question, just in general terms: How easy is it to get together to converse, to dialogue, to network with your umbrella Canadian organizations if in fact there are some? Do you often get together or is it just once a year? How easy is it to share resources, learnings, understandings, with your like-minded organizations across the country?
Mr. Boucher: For the most part, it is a once-a-year get-together. We have a pre-course where most of the people on the board get together to discuss what’s going on for next year, but we have representatives on all of the national boards. Much is done by teleconferencing. Five or six years ago, there was very little interface between the local organizations and national. That’s changed incredibly to where they are becoming very supportive between the two. It is getting much better.
Ms. Boyles: In terms of the voluntary sector for the boards in the B.C. context, it’s actually very limited. Board Voice itself does have a provincial conference. Our members scrape together pennies to get maybe one person there. If we’re fortunate, we might be able to convince Imagine Canada, for example, to bring one of their meetings out to B.C. around the same time we have our conference so we can get that input.
Some of our organizations have connections to the national organizations. We try to bring that to bear when we can but it’s very limited. It is very limited at the provincial level and almost non-existent nationally.
Mr. Mercier: As for us, the association meets twice a year, in November and May, with three representatives from each chapter, to hold its general assembly and elect the new board of directors. Each chapter meets two to three times a year and holds a general meeting to appoint its president and board of directors. The executive committee meets once a month in Montreal. The association even meets with Ms. Allard, Director of Operations, about every two or three days, depending on Héma-Québec’s demands, to promote blood donations or for future donors.
Ms. Fournier: The Réseau d’action bénévole du Québec has 28 organizational groups and, yes, there is an exchange at the provincial chapter. In addition, starting in 2020, we will hold regional forums in each administrative region for all volunteer supervisors, regardless of which organization they are from, to create a community and share best practices. However, we have no official link with any other organization similar to ours elsewhere in Canada.
I am sure we aren’t the only provincial organization that plays the role we do. It would be very interesting, indeed, to build bridges between these different provincial associations.
Mr. Maidment: I would describe food banks across the country as working in a loose federated model. There are 10 provincial associations and they are members of the national organization called Food Banks Canada. There is a lot of information sharing. Food, food safety and regulations and the sharing of food provincially drives a lot of that membership, but there is a lot of resource development, resource sharing and information sharing. Food Banks Canada is developing a national tool that would house best practices, information sharing, regulations, all those types of things. That has been under development. Then there are provincial conferences annually and biannually, as well as a national conference.
Lastly, there are six large food banks in Canada that deliver food. About 80 per cent of the people in Canada who visit a food bank receive food through one of these six organizations in the largest cities across the country. Ottawa is one of those six. We have an informal information sharing as well because we’re of a larger scale. You go from our organization that serves 37,000 people a month all the way down to a rural food bank that may serve 100. The six have an association as well where we meet and share information.
Ms. Pomilia Gauthier: I can speak to the youth council for Big Brothers Big Sisters. We have representation from almost every province. I think we’re missing a couple from the east, but we’re trying to recruit more youth. We often meet once or twice a year depending on the events. You may have heard about Youth in Office, one of our big events where all the youth meet together in Ottawa and then we have a regional or national conventions. Other than that, we also use a lot of technology. However, the trouble with that is that we often miss time frames and if people get busy it gets trickier. Generally, we like to meet in person but there are alternatives that we try to use.
Ms. Langlais: This is the Canadian Red Cross we are talking about. When I arrived at the Red Cross, the structure was more compartmentalized. Today, there seems to be a desire to centralize. Whether it is for intervention, training, governance or funding, the provinces are represented on the committees. I live in Quebec and, in every province, very often, meetings are held to meet volunteers and permanent employees from all over the province. Now, decisions tend to be made on a Canadian basis.
Mr. Chater: Within Big Brothers Big Sisters of Canada, we have monthly town halls where all our agencies come together, and we can share things that are happening across the federation. Karine spoke to our regional conventions that happen every other year, as well as our national conventions that happen each year. Across the mentoring space, Big Brothers Big Sisters, in partnership with the Alberta Mentoring Partnership and the Ontario Mentoring Coalition, represent over 320 organizations across Canada. We’re working on that pan-Canadian mentoring strategy to be able to share best practices around recruiting and supporting mentors and then sharing research and knowledge as well across those organizations. That work is under way through the Canadian Mentoring Partnership.
We also have a group of national youth serving organizations that come together twice a year to share quality practices as well. Big Brothers Big Sisters, from a sector perspective and as a sector champion within Imagine Canada, has benefited from coming to their meetings as well.
Senator Duffy: Thank you all for coming here today.
I’ve listened with interest to what you have to say and I have a couple of general questions.
First, Mr. Mercier, are you aware, and others involved in blood donation, of Senate Bill S-252, in the works now and proposed by Senator Pamela Wallin, which would outlaw payment for blood donations in Canada? That is, clinics — I think there are some in Saskatchewan and some in New Brunswick, maybe elsewhere — where blood donors are paid.
How do you feel paying people for their blood?
Ms. Allard: Yes. We’ve thought about that.
We’ve given it a lot of thought. For the time being, we think it’s extremely important that the donation be voluntary and not paid. As with volunteering, if it were paid, it would no longer be volunteering. We are opposed to paying donors. One day, the pressure may be greater to move in this direction, and we will have to reconsider this possibility. However, for the moment, we are able to convince people, in different ways, to give without being paid, in the same way that we are able to find volunteers without paying them.
The Chair: I think that’s what we’d hear from the Canadian Blood Services if they were here as well. Héma-Québec and Canadian Blood Services are usually on the same page.
Ms. Allard: The practice is more common in the United States and donors are paid. Some places in Europe offer incentives that increasingly resemble a monetary benefit. The trend is really very strong in the United States. Many blood donation companies, and other donations as well, have adopted a business-like approach.
Senator Duffy: In Canada, there are already clinics in Saskatchewan, and I believe there’s a proposal to open pay-for-blood in New Brunswick. My fear is that when you start paying people, then the voluntary donations will drop off. One of the great success stories of Canada is our national blood system, which depends on volunteers. I congratulate you all who work in that sector.
Second, we’ve heard from all of our witnesses over the last few months that there is a growing crunch as young people don’t seem to have time or to make time for volunteerism. There is the whole question of philanthropy and younger donors, how much money they give, if they give at all, and how they’re motivated to give.
We’ve heard about spectacular events like the tragedy in Humboldt, Saskatchewan, where millions of dollars are raised overnight. Yet, long-term donations needed to provide for continuing services don’t have the same appeal for the new generation.
As people who work in the system, do you believe that it would be to the advantage of the voluntary sector to have a champion in the federal government? That is, a minister responsible for charities who would be an advocate for charities and who would serve as a public ambassador going across the country, trying to encourage young people and speak in schools? The possibilities are endless in terms of finding people who appeal to youth so that we can try to build up interest in this area, where it has been falling off.
If you have any comments I’d like to hear them.
Ms. Allard: We are trying to recruit volunteers as we have always done. As we know, young people are digital media enthusiasts. You have to approach them in a different way to motivate them. There are several ways to do this. You have to evolve with them. Recruiting young people must be done differently from the way volunteers have always been recruited. There are several other solutions, and I can come back to them. We really need to transform the way we recruit volunteers, but also the way we retain them.
Ms. Fournier: I fully agree with Ms. Allard. Volunteering has changed. Would it be a good idea to have a representative or department on volunteerism or the charitable sector? Certainly.
Indeed, it must be considered that in Quebec, 57 per cent of youth aged 18 to 35 are not volunteers because they don’t know where to go or have not had the opportunity to volunteer. This is what emerged from Statistics Canada’s latest survey on social participation and donation. Almost 50 per cent of people are not volunteers because they haven’t been asked. They need to be aware of the opportunities and benefits of volunteering. In addition, there are few or no volunteers among young adults. We may not have the right organizations around the table for this purpose. Volunteering follows life cycles. If you are in your 30s and have children, it is very likely that you will volunteer at your children’s school or in sports and leisure activities. In Quebec, the majority of sports and leisure volunteers are between 35 and 50 years old, probably because they follow their children during their activities. We need to find a new way to approach volunteers, but also adapt our message to the generation of volunteers we want to reach. Volunteer Canada has conducted a very interesting study on the different generations of volunteers, what interests them and what they see as barriers to volunteering for different age groups. It is a very interesting resource for our colleagues in other organizations.
The Chair: We missed you in the last round, Ms. Boyles. I apologize for that.
Ms. Boyles: I want to reaffirm that I was speaking through the lens of the volunteer members of the board of directors on your earlier question. I’m the chair of the board of Family Services of Greater Vancouver, our CEO sits on the national board of the Family Service Canada. We do have some of the national volunteers at the staff level but not at the governance level, which is what I was addressing.
On the question of a national charities directorate, or including non-profits that are not yet charities but may soon be with changes in the regulations, I would say there would be strong support from the members of the boards in B.C. We have been calling for a social policy framework for B.C. itself. There is such an incongruence in equities among the various government departments, including at the federal level. My former work with the federal government and the ways to be able to apply common lenses. A social lens to all the programs, including youth engagement, would be very valuable.
Ms. Pomilia Gauthier: From a youth perspective, I can tell you that we do often pass it off as being too busy or having to go to work or school, that we should be making money instead, and we see volunteering almost as a luxury. Something our parents and grandparents have time to do but our lives are so busy. That comes down to whether or not we’ve seen people volunteer while we were growing up. I was lucky to have my big sister. She was a big volunteer in her community and I grew up with that same mindset, thinking that it doesn’t matter if I have to go to work or school, I can always make time. We decide what we do with our time. I think that is what is key in increasing youth mentoring and volunteering, especially among young professionals, to make it more accessible and visible. Maybe having a minister of volunteerism would be an interesting path to follow because it would make volunteering a lot more visible. I wrote down here that we often don’t volunteer if no one around us is volunteering. Volunteers come together in little groups. Most of my friends volunteer. If we see people volunteering at high levels, it might encourage us to follow the same.
Mr. Maidment: It is an interesting idea and a really interesting question. I spoke earlier about a gap in volunteers between 18 and 35, I’ve certainly experienced that. I don’t believe it’s around the technique of how we communicate with that group. We communicate with our donors electronically and we’ve seen that grow exponentially, so it’s not necessarily around the tools.
I can’t help but think there is a correlation in the culture of our young people. I grew up in a small town in Newfoundland and as part of a church community. I now work at a food bank. Before there was a food bank there was a church community. We cooked for the neighbour who lost a loved one, or someone who lost a job, or the firefighters fighting a forest fire. I grew up in my grandmother’s kitchen watching her do that. We’ve seen a cultural shift, and churches shrink and close. There was a report on how many churches are expected to be closed and sold in Canada over the next several years. We’re seeing a shift. Senator R. Black, your question about volunteers in rural communities and volunteers in urban communities, that’s also connected to this. I think we need to be aware of the shift we are seeing in Canada and potentially attracting younger people and making it appeal to them. If you think, based on your question, senator, what portion of the GDP non-profits contribute in Canada, I think there is a significant enough case to make that this is an initiative we should look at.
The Chair: Ladies and gentlemen, I want to thank you all for being here. It has been a very interesting session. It was a large group. We wanted to have you all here because you all have backgrounds in volunteers and volunteering that we thought was important for the committee to hear as we are coming to the end of the hearing part of our study. Then the hard work, and we give that to the two analysts from the Library of Parliament to help us write the report. I can assure you that your testimony today will hopefully be reflected somewhat in the report. I look forward to us publishing that relatively soon. Again, thank you for being here, but, more importantly, thank you for what you do in the community. We’re a better place because of your work.
This afternoon, we have assembled legal scholars for a regulatory and legal round table. The format of this panel is going to be different from what we usually do, colleagues, so we all know, and I think you have been briefed on this. Each of the panellists has been given a series of questions, and I propose we address each question at a time and allow each witness to provide comment on the question if they choose. Senators may feel free to ask questions when they wish, although I would suggest it might be more efficient to hear the responses from the panellists before asking your own questions. We shall begin.
We have with us today Susan Manwaring, Partner and Leader, Social Impact Group, Miller Thomson LLP; Adam Parachin, Associate Professor, Osgoode Hall Law School, York University; from Drache Aptowitzer LLP, we have Adam Aptowitzer, Lawyer, Charities and Not-for-Profits; Karen Cooper, Legal Counsel, Drache Aptowitzer LLP; and from Oyler Consulting, Mr. David Oyler, who is from Halifax, which is always good news.
Thank you for accepting our invitation to appear.
You see the questions. We can go question by question if you like or we can do a random search of the various questions. The first question would be on the question of Canada’s anti-spam legislation. To what extent, if at all, are concerns shared by other members of the non-profit sector about spam and its possible negative effect? What steps, if any, could the federal government take to address the respondent’s concerns?
Susan Manwaring, Partner and Leader, Social Impact Group, Miller Thomson LLP, as an individual: Not because I have a lot to say on this topic, but it struck me in looking at this question if there are charity-like organizations that are not being treated the same as charities, then from a policy perspective, it would make sense to treat them like charities. I think the question is how you determine which other organizations are charity-like, and I think that would require some review.
I’m not sure that charities necessarily know that these organizations aren’t being treated the same because they do not realize it. The people who raised it, like a government agency or an agent of the Crown, might have raised it. Registered charities probably don’t know that those other organizations aren’t being treated the same, and I suspect that because of that it’s not high on their radar.
Having a policy treatment that makes it consistent would seem to me to make the most sense. Whether you look at qualified donees and say they should maybe apply not only to all registered charities, but all qualified donees. I don’t know if that’s the right solution. You’d have to go through carefully from a policy perspective to check it.
The Chair: Anybody else? Not everyone has to comment on everything. That’s the best part of today.
The second question was about the Canada Not-for-profit Corporations Act. In evidence given at this committee, Cliff Goldfarb discussed the Canada Not-for-profit Corporations Act and recommended that certain changes be made when the Act is reviewed in 2020. 2020 is not that far away. I think it’s next year if my mathematics is correct.
To what extent, if at all, are amendments to the Canada Not-for-profit Corporations Act required in order to better support the non-profit sector? If you could, provide comments or have examples. To what extent, if at all, do you consider that reform of the Canada Not-for-profit Corporations Act should be prioritized by this committee? Any comments?
Karen Cooper, Legal Counsel, Drache Aptowitzer LLP: I think changes to the act are essential. It’s been in force for a sufficient length of time for people to have experience and to be able to make recommendations. I know that the CBA section has prepared a list of 20 recommendations that it is submitting directly to Corporations Canada, so I would say that, with no disrespect to Cliff Goldfarb, there is a process and a mechanism. The Canadian Bar Association and lawyers with experience with the statute are actively engaged in providing recommendations. It is highly technical.
Ms. Manwaring: Just to say that Mr. Goldfarb is the one organizing the CBA submission. It is being dealt with. I think Ms. Cooper is right.
Senator R. Black: A second question, should it be a priority of this committee or is it going to happen anyway? Do we save that space for something else, if you know what I mean?
Ms. Manwaring: I would think the details are not a priority. I think there are other regulatory issues which are topics that you have in these questions which would be higher. I think suggesting, if you can, as a committee, that the submissions be looked at carefully by Corporations Canada and considered appropriate.
Adam Aptowitzer, Lawyer, Charities and Not-for-Profits, Drache Aptowitzer LLP: The CNCA superseded an act that was 80-plus years old. I think it has a lot of good qualities, a lot that speaks to it. I think it’s entirely appropriate that a review of the law and making some technical changes that are clearly there, but, on the whole, I think there are more fundamental issues that affect the sector that could use this committee’s review.
Senator Omidvar: To any of you who would care to weigh in, we have heard a number of witnesses weigh in on the fact that the not-for-profit sector is as diverse and as confusing as is the charity sector, and that maybe it is time to reflect and to bring some discipline to that sector. Discipline in terms of dividing the sector into public benefit and private benefit not-for-profits. That would be a major change. Could any of you weigh in on that?
Ms. Manwaring: That is something which would require a lot of careful consideration. I would ask back, do you mean from a tax perspective? Do you mean from a corporate law perspective? It’s that distinct and different. The way it is today reflects the fact that there is such diversity and there are so many different categories, whether it be in the Income Tax Act or other places. The corporate law is trying to work for all categories as it is. It’s not a bad question, to ask if that is the best way to do it. At this point, I’m not sure we have enough background to have — I don’t feel I can answer that, as to which way to go.
Senator Omidvar: It’s time to consider it but not —
Ms. Manwaring: Yes. It’s something that might have to be considered and take research and information that I’ve never seen in one place.
Adam Parachin, Associate Professor, Osgoode Hall Law School, York University, as an individual: One response to that question is that we already do draw that distinction and we call that the distinction between charity and not-for-profit. We could substitute the terms used to describe those phenomena, but public benefit is the domain of the charitable sector and the not-for-profit sector is something else that is, you’re quite right, a diverse sector. One of the subsequent questions will probably morph into a discussion about what one might describe as an underdeveloped regulatory, both on the administrative and legislative front, dealing with non-charitable not-for-profits because the questions aren’t identical. I don’t approach this topic as one of needing a new taxonomy. I think it might be an exercise of adding additional detail to the existing framework of charitable or not-for-profits. I don’t see it as a new taxonomy or new categorical distinction.
Senator Duffy: To follow up on that, are you telling us this is kind of like equalization? Highly technical, only a few people understand it and we’re probably better off not to jump into that swimming pool at the moment? We have other things that are easier to accomplish?
Ms. Cooper: Exactly. My morning was attempting to write a primer on HST. You’ve got tax definitions and you’ve got excise tax definitions, and legislation tries to define who’s in and who’s out on multi-layers. It’s anti-spam, it’s corporate — you name the regulatory regime, and there’s an attempt at who is in and who’s out. You have this taxonomy that’s getting more and more complex.
My view is if there’s an area where there’s perceived abuse, you’re almost better carving that out than trying to create big baskets because there is always going to be exceptions. If you’ve heard evidence where there are areas that shouldn’t get the kinds of benefits that the other organizations get, then if you’re going to approach it, it would be far better to try to identify what those are and then carve them out.
The problem there, of course, is that you are singling groups out and focusing attention on it. Otherwise, with these great big classifications, we have enough of them already that we spend many legal dollars defining.
Mr. Aptowitzer: I’m not sure that the division of the question, in terms of taxonomy or areas of practice of the various not-for-profits or charities necessarily get us very far.
One issue that I think is very fundamental, which my esteemed colleagues here have heard me say many times, is the fact that fundamentally, regulation of benevolent charitable organizations is a provincial jurisdiction under the Constitution. If you really want to get at the idea of functional rules that can regulate down to the sub sector or look at various types of taxonomical groups and say this group needs this regulation versus that, you really need to bring to the table the people who have the constitutional authority to legislate on the area. That is a big project. It’s easy to understand, of course. The people who have the authority are the ones who need to be at the table.
Part of the difficulty with what we have now is that cramming some of this stuff into the Income Tax Act is subject to the constitutional limitations of the federal government in doing so. Some of the difficulties that we see are very fundamental with fundamental solutions.
The Chair: Thank you. In evidence submitted to this committee by the Pemsel Foundation, they made the following recommendation:
. . . we believe that the three statutory categories of registered charity — which are the charitable organization, the public foundation and the private foundation — should be consolidated and classed into two on whether the charity is closely held or widely and more publicly held, with the appropriate degree of regulation turning primarily on the closely or widely held nature of those criteria.
What is your assessment of this view? Mr. Parachin, please.
Mr. Parachin: I’ll preface my comment by suggesting to you, if I may, what my value-added is for a committee like this because I’m no longer a practising lawyer in the trenches with day-to-day clients. But what I do have, given the luxury of my academic work as a law teacher and law scholar, is the time to stand back from legal systems and try to source where confusion comes from. So that’s my engagement with practical problem-solving. When you look at a body of law, where is it going off the rails? Where are the difficult questions that are leading us astray coming from? I can’t think of a better example than this one and the activities and purposes distinction where the status quo has led us fundamentally astray. This is clearly a source of confusion.
The good news is that it’s a self-inflicted wound and can be easily fixed. It’s easy to illustrate the problem. The current categories of charity in the act rest on a false dichotomy. We have two fundamentals, charitable foundations, which need to be established and operated for charitable purposes; and charitable organizations, which have to devote their resources to charitable activities. That sounds like two distinct things, but given the way that the common law characterizes activities with reference to their purposes, it actually turns out there are two distinct ways of saying the same thing.
To be established and operated for exclusively charitable purposes is to engage in activities that further those purposes, which is to say that further charitable ends. To be established for exclusively charitable activities is to do the very same thing, to engage in activities that further charitable purposes. If that sounds relatively simple, it’s because it is.
Where that falls off the rails is once the act introduces the idea to courts and regulators that these are two distinct things, the dutiful regulator or court has to try and make sense of the distinction. So we end up being drawn down in inane conversations about what makes a charitable activity a charitable activity. In the context of the last 30 years, we’ve seen that create inordinate confusion with reference to any number of activities, including political activities, business activities, direction and control activities. All of those big picture problems morph out of this one distinction.
There’s more to be said about that, but I would wholeheartedly endorse the recommendation made by the Pemsel Foundation. As a statement of principle you can summarize it quickly, which is that our categories of charities should be based on the unique regulatory challenges that different kinds of charities raise. In getting at that with reference to the closely held versus more disparately managed charity, or the public versus private charity, is a much better of getting at the problem than the organization’s activities versus foundation’s purposes distinction, which I don’t think has solved any problems and only raised unanswerable questions.
Ms. Manwaring: Thank you. I wholeheartedly agree with Mr. Parachin. I wanted to note the history.
Just the way the section evolved, we had provisions around what I call the funders or the banks, which were the charities that gave money away. We had provisions around the doers, the charities that do things. Over time, the distinction in those provisions or the way the provisions have applied to both have basically become the same except for, as Mr. Parachin mentioned, the closely held versus the public. This would be simply bringing all the provisions to where they are now except for a couple of minor changes. It would be great to clarify the act this way.
Ms. Cooper: I would like to echo Adam and Susan’s remarks on this. I think it’s an excellent recommendation. I thought long and hard about the factual situations where it would make sense to still have the three, and for the life of me I could not come up with a single fact situation where, oh, that’s why they would retain that kind of a rule. It just adds to more confusion.
It does sort of take you to the very next question. Once you get rid of the purposes, foundations are registered because they have charitable purposes and charitable organizations, the focus is on carrying on activities. Once you get rid of that distinction, then you can focus on where the real, everyday day-to-day confusion lies and that’s, “What the heck is a charitable activity and why is there such a focus on charitable activities?”
The Chair: Thank you. In the course of the committee’s hearings, several witnesses recommended that the government remove the capital gains tax on private company shares and real estate when the proceeds of the sale of these assets are donated to a charity. While proponents of such measures believe it would increase charitable donation, others have suggested that it would primarily benefit hospitals and universities, not community-based organizations. Although, I want to say that universities and hospitals are community-based and they, number one, function in the communities, employ people in communities, buy things in communities, generate activities in communities. I come from a town that has five institutions, so universities are important to the economy of my city.
What are the potential advantages and risks of removing the capital gains tax on charitable donations of private company shares and real estate?
Mr. Aptowitzer: I think there are certain obvious difficulties, but they present themselves depending on the mechanism that the act uses to incentivize these kinds of donations. I spoke about this in my last appearance before this committee, so I’ll be brief.
Fundamentally, the difficulties in donating shares of a private corporation relate to the valuation of those shares when donated to, particularly, a private foundation or a non-arm’s length body from the donor. And the second ongoing issue involves the control of the corporation using those shares by a non-arm’s length entity, usually a private foundation.
There are different mechanisms that can be used to deal with these two issues. The one currently in the act involves the fact that the individual does not get a receipt until those shares are no longer what we call non-qualifying security, so effectively they’ve gone public or the company has been sold to some other arm’s length person. So there are mechanisms already in place to deal with these kinds of issues in the act, which is one of the reasons why I found the proposals made in 2015 so confusing, in that it attempted to solve a problem that had already been solved in the act. I’m in favour of the current mechanisms, perhaps with some fine-tuning, but as they relate to the donation of private shares. The only real question is at what rate do you want to tax the disposition? It’s easy to change that rate without necessarily changing the entire mechanism to deal with the fault lines.
Senator Omidvar: For those of us who are non-lawyers here, I see this rather simply. You have privately held securities. They have gained in value. They’re not public yet. By donating them to a charity, if this law is passed, you can get a number of benefits. One is you don’t have to pay capital gains on them. The second is you get a charitable deduction for their donation and the third is you have control over those shares until you sell. Am I right in understanding these benefits to the donor in this way?
Mr. Aptowitzer: You say, “if this law is passed.” Which law are we discussing?
Senator Omidvar: The proposal before us is to enable donations of privately held securities and real estate to also qualify for a charitable deduction in the same way as donations of publicly held securities.
Mr. Aptowitzer: Under the current system, one does not get a receipt unless those shares — using your facts — one would not get that receipt if they are still able to exercise control over those shares. That’s fundamentally the way the system is designed to work. In other words, the shares have gone public, so the individual has little control or the company has been sold to some outside party, in which case, again, the control issue goes away. What happens is you have a five-year time limit for the shares to cease being non-qualifying and if you get that receipt within five years then you can use it to offset the tax owing when you made the gift and disposed of the shares to the charity.
I think it’s a functional system. I think there is probably some fine-tuning to do. But fundamentally there is no policy reason that is readily apparent to distinguish between the donation of shares of public corporations and shares of privately held corporations.
Senator Omidvar: In other words, you would support the proposal just on a fairness level; that if you can donate shares of publicly held securities, you should be able to donate shares of privately held securities as well.
Mr. Aptowitzer: I think fairness is one way to look at it. It is also a giant reservoir of untapped wealth that would be made available to the charitable sector.
Senator Omidvar: May I pursue this line of questioning?
The Chair: Others on the panel wanted to respond. Let’s go to Ms. Manwaring.
Ms. Manwaring: I would broaden it a little bit to focus on the 2015 proposals, which were that you would be able to get the exemption from tax on the capital gain if the shares were monetized within a particular period. Adam is talking about the existing rules, which actually give a five-year period for them to either become public shares or be sold. In the 2015 proposal, they actually said if you could sell them right away basically it would be like a gift of cash because you’re going to sell right away, and the only thing would be that evening of the playing field between the public and private shares. To my mind, monetization to get the tax receipt is critical on the private company shares, and that was also the suggestion for real estate in the 2015 proposals and the issue there is getting the money directly into the charity.
Mr. Parachin: To provide a bit of context, there are some objections to the proposal, one of which is the one that has already been alluded to, which is the valuation question. These are the kinds of assets that don’t avail themselves of a readily accessible market, such as publicly listed securities, but the remedy for that is the one that has been put on the table, which is to require the donor to liquidate the asset to an arm’s length purchaser and donate the sale proceeds within a specified period of time, whether 30 days or some other number of days, which significantly diminishes if not eliminates concerns over valuation. The other concern is we would be saddling charities with illiquid assets, minority positions in privately held corporations with no ready market or land with no readily available market, but the monetizing solution actually also addresses that. If the donor has converted the asset into cash and donates the cash that needs to be a transaction meeting certain transactions, an arm’s length transaction that gives us a proxy for fair market value. If the donor then donates the cash, we have also dealt with that concern.
There is a long-standing argument against this kind of donation incentive that it’s inequitable, it will disproportionately benefit wealthy donors, and we need to acknowledge that’s true. But I don’t think that’s a reason not to back the measure. And the reason I say that is charity tax concessions are to one degree or another inherently regressive and it inheres in the nature of the enterprise of voluntary sharing. The people who have more are going to share more. They have more to share and I don’t think we should frustrate voluntary wealth redistribution on the premise that it’s wealth redistribution, on the premise that it’s disproportionately the wealthy doing it. I don’t think that is a fatal objection.
I generally support this proposal, subject to one caveat. When I stand back at donation incentives, the ideal donation incentive has at least two attributes; one, it attracts donations. If it’s not attracting donations then why do we have it? Two, it attracts donations without attracting the same degree of government scrutiny that would accompany a direct state transfer. If we wanted the kind of regulatory oversight that direct state grants carry with them, we know exactly how to do that and that’s through direct state grants. We fund charities through donations incentives in order to not have government intervention and I worry that there is a tipping point at which donation incentives get too generous for the sector’s own good. What I mean by that is at a certain level excessively generous donation incentives invite the kind of state oversight that we don’t want in the sector. I’m not saying this would necessarily put us there because we’re already doing this already with publicly listed securities, but it’s a concern that should be reflected in the report at some level.
The Chair: Thank you.
Ms. Cooper: To address the last bullet, certainly you heard my answer to the question the last time I was here and I understand that the Nature Conservancy of Canada has also made a written submission on the issue. I will perhaps use an example for Senator Mercer’s benefit. Farley Mowat, a good Canadian writer, environmentalist, big supporter of the University College at the University of Toronto and large contributor of a very significant stretch of the Cabot Trail.
The problem with no capital gains on gifts of real estate is that you take away the incentive from Mr. Mowat to have given that land to the Nova Scotia Nature Trust. If the land had gone to the University of Toronto, they would have been obliged to sell it at the highest best price.
So I will repeat: The reason why the capital gains exemption is there for gifts of real estate is because it is an incentive for protection of privately held ecologically sensitive land. It comes entirely from environmental protection policy. Great big swaths of southern Ontario are under huge pressures for development and if it was going to the highest bidder, it would not be protected. That’s the reason for that incentive. To remove that incentive, what would the impact be? There’s no way of knowing, but certainly, you’re not going to be encouraging that land to be going to organizations that will protect it in perpetuity.
The Chair: I will speak on behalf of almost one million Nova Scotians and tell you the Cabot Trail is not for sale, but we do encourage everyone to visit.
Ms. Manwaring: The only observation I was going to make is that the piece of real estate that most Canadians own, your house, is already exempt from tax when it is sold. This potential incentive would be mostly available for non-principal residence type real estate that is held by Canadians. Again, the proposal from 2015 was it was to be liquidated not retained, and I think Karen’s point is an excellent one. The policy around eco-gifts is to direct something to conservation, and this would be counter to that.
The Chair: What other approaches to incentivize the charitable donation of private company shares and real estate, if any, could be considered?
Mr. Aptowitzer: Well, the issue is not — and I don’t think anyone is proposing removing the eco-gift incentive program. I think the problem is it gets undermined when the donation of real estate to any other body has the same type of treatment.
The obvious answer is if you were to create a program to incentivize the donation of real estate, you make it less rich, perhaps far less rich, than the donation of environmental property. The current program requires the individual and the charity together to have the property certified as being of environmental value and then being donated only to certain organizations. Beyond the fact that you don’t have to have a program which incentivizes regular real estate as richly, you don’t want to have barriers or create barriers to the donation of environmental property which makes it more of a hassle. I would suggest if the committee is considering a recommendation to incentivize the donation of real estate, to be wary of not undermining either the value or the ease of the echo gifts program in doing so.
Senator Omidvar: We’ve heard conflicting evidence here on this panel regarding the result of the charitable incentive from the donation of publicly held securities and we’re waiting to get definitive evidence from the Ministry of Finance.
The proponents of the proposal talk about the millions of dollars that were raised and distributed, I will maintain and argue with Senator Mercer that there is a difference between small community-based organizations and universities and hospitals. They all serve the people, but they live in different realities.
There is one possibility that we have not discussed here enough: Is it possible that by creating an added incentive avenue for people with privately held securities, second homes and cottages, obviously people who are well off — I agree with your point, Mr. Parachin, the statute is structured to serve people who have wealth that they can distribute.
Is it possible that individuals are simply shifting the route of donation as opposed to the actual amount of money that they give? So they are now giving to publicly held securities but not through direct charitable donations. Is that a possibility?
Ms. Manwaring: I think the answer has to be yes. I would not suggest that just because it’s a different source it is not additional. It might be more, though, because the cost of a donation when you don’t have to pay tax on the capital gain goes down. I would say that my experience with clients is that they will show donors that if you give us $100,000 in cash it will give you this kind of benefit on your tax calculation, but if it’s securities that are worth $100,000, and you’re not paying tax on the gain and you get to use the receipt against other income, it will cost this much less so you get more benefit.
I will be fascinated if you get the financial information and I hope it gets to be shared publicly because it’s a question we have always wanted to know. I would think that it has some impact, but it’s not necessarily that it’s all in addition to what are otherwise cash donations.
Ms. Cooper: From a practical perspective, when does this discussion come up? It comes up usually with a wealthier person, not quite at retirement but close to, and the conversation is, what do I do with these assets upon my death and just prior to death? And the standard script is, what are they? You go through asset by asset, and it’s a very deliberate exercise to minimize tax and come up with plans to deal with assets and to minimize tax so that the most liquid is left for your heirs and for others and, we always hope, for philanthropy.
Once again, the numbers will bear out, but that is indeed the exercise. To go through the assets and try to deal with them in order to minimize tax. As soon as one group of assets gets a more favourable tax treatment if it is gifted, then you tend to focus the plan in that direction.
Senator Duffy: I wanted to ask for a little more detail if we have it. You made some reference, Mr. Aptowitzer to a pool of capital. If we are into this transfer of shares in private corporations, you say there is an untapped pool of capital there. Do we have any idea of how much capital we might be freeing up?
Mr. Aptowitzer: I do not have a clue.
Ms. Manwaring: I was going to say the same thing. We’ve been talking about that untapped pool of capital for many years and I’m not sure there is any way of knowing.
Senator Duffy: Is it worth the hassle?
Ms. Manwaring: I think the idea is that as a certain generation gets older, there will be a transfer of wealth and we know there are significant private businesses in this country that are in that category, but in actual numbers, I don’t know.
Mr. Aptowitzer: If you take an anecdotal view and walk down the street and see the small mom-and-pop shops, there are large private corporations operating next door and people have private investment companies, you know that there are huge numbers of private corporations in every city, in every province across the country.
That is the pool of capital we’re talking about, these private corporations that have built businesses of some value.
I would like to go back to the other question about whether or not an incentive such as this would increase the total donations or is it simply a question of donating from one pot versus another. You would have to look at the mechanism and overall picture of the individual. One of the problems with the 2015 proposals was that you had to sell the shares and then donate the cash within 30 days. The difficulty is that a lot of small businesses have a five-year arrangements for the payment of the total funds of the sale. On a practical level, people don’t necessarily have the money available to donate within 30 days and will not be able to take advantage of the incentive program and therefore not be able to donate. They are related questions.
Senator Omidvar: Previously, when finance considered new proposals to incent charitable giving, they said, “We’ll do it for a number of years, observe it and think about it.” We’re a risk-averse country. We like to go slowly. Should we apply that caution to the same proposal?
My second question is the one that I ask every panel. This is a proposal that will benefit largely wealthier, middle-class donors. Is there a counter proposal that you can think about that would benefit small donors so they, too, are incentivized to give more to charitable organizations and causes? This committee is, to some extent, interested in increasing awareness of the good of charitable organizations, the incentives and the donations that go to them. Can you think of something that would help us to balance the audience here with an audience there?
David Oyler, Oyler Consulting: Larger charities seem to be the only ones that would benefit from this concept, perhaps, because, if we’re talking about large sums of money, small charities are exempted from that because they don’t have a need for six or seven figures. I’m sure they do —
Senator Omidvar: They do.
Mr. Oyler: Yes, but that may be the reason why they are not viewed as the possible beneficiaries of it. I’m wondering if there is an option for one of these transactions to be distributed among multiple charities. Logistically, could that be an option to present to potential donors?
Senator Omidvar: Like a trial period.
Mr. Parachin: As for the trial period, we can take for granted that’s a given. Income tax law is under a continual state of evolution. It’s clear what finance and Parliament do when they have a result they don’t like because they amend the act immediately to the tune of several hundred pages a year.
I think that comes with the territory. One of the frustrations of being a tax lawyer, as any tax lawyer will tell you, is that your knowledge is never complete.
As I alluded to, a certain taxpayer profile would disproportionately claim this kind of tax concession. It is a push back on whether or not that’s best framed as a benefit relative to the status quo. It’s a benefit. There is a tendency about this kind of tax concession to conflate the distinction between something like a principal residence exemption and a charity tax concession because people are giving property away. The tax credit is less than 100 per cent, so you’re always left out of pocket. Some advocates might say we’d be removing a penalty. Right now, there is a tax penalty on donating certain kinds of securities and properties and we’re equalizing the treatment. To some extent, we’ve already made the decision to do this, so why confine it to publicly listed securities? I don’t disagree a certain kind of taxpayer will claim this, but I’m not sure it’s a tax benefit in the same way as other tax concessions.
The Chair: You talked about the frustrations of being a tax lawyer.
What about the frustration of the legislators that end up looking at those 500 pages? Many of us are not trained as lawyers. That’s a rhetorical question.
Ms. Manwaring: I’ve lost a bit of the train of thought about the two questions, Senator Omidvar.
Senator Omidvar: Small charities and trial periods.
Ms. Manwaring: Regarding trial periods, I think Mr. Parachin is right, the act is always subject to review. However, I don’t think identifying a trial period, as they did with publicly listed securities and the DQ, is harmful because it requires someone to go back and look at it. Whereas if it’s not obviously making a change one way or the other, they might not do it. There is nothing wrong there.
The first time donations super tax credit introduced a number of years ago was probably removed because they looked at it and didn’t find it was much of an incentive or wasn’t giving them enough of an incentive. That was a situation where they tried to incent giving.
On the smaller charities, you could give publicly listed securities to small charities. If they go through CanadaHelps, and that sort of thing, there are mechanisms to do that. Education is huge in this area. I think they could get the benefits if people understood what they had to do. It is the largest organizations that have the staff and sophistication to speak to their donors about it who are able to do so. If smaller charities had that knowledge, it would help to level that playing field.
Mr. Aptowitzer: With respect to the trial period, I agree that an identified period of review makes sense if for no other reason than it will certainly focus the mind of the sector on making the best use of that provision.
I wrote a paper on the topic for the C.D. Howe Institute where I suggested both a trial period and a trial rate. It’s not necessarily true that the government has to say the donation of private securities is completely eliminated from tax in the first iteration of law. They could say we’re going to make it 50 per cent taxable or 50 per cent of the capital gain taxable and see what the effect is on the tax revenues and what the way forward may be. I suggest both of those things be looked at as trials.
With respect to the issue of small charities — and this goes to Senator Mercer’s point and Mr. Parachin’s point — forget about the tax lawyers and the legislators. What about the poor taxpayers that have to deal with an immensely complicated act? The act is not currently designed in such a way as to improve the benefits of giving the lower your income is. In other words, the tax credit available on the donation is equalized because the credit is given at the highest marginal rate.
While I fully understand where you’re coming from, the difficulty is that it would complicate the act to improve the incentive for a smaller giver so as to give them a super incentive for the donation of those types of securities. It could be done — it’s just a question of math — but it introduces a certain level of complexity into the administration of the act.
The Chair: When we talk about de-incentivizing the major donor, I’m concerned that if we take the major donor out of the picture, we’ve taken a lot of money out of the picture. Whether or not we like the fact that there are rich benefiting from the incentive, that’s secondary. Let’s look at the benefit of that money. If we don’t raise the money from those wealthy Canadians, where does it come from? It only works if you’re going to substitute that with a massive increase in donations at the lower end of the scale. I’ve always been a big believer that I want $100 from one donor as opposed to $100,000 from a corporate donor because the corporate donor is giving it to me for one reason or another, whereas the $100 donor gives it to me because he or she believes in my cause. That’s worth a lot more than money.
Ms. Cooper: On the time period question, I completely agree with Susan. I was going to make the point that Adam made about the rate.
If you remember the history for gifts of cultural property, eco-gifts and private securities, it started with a smaller capital gains exemption and then went the whole hog. I would never think that’s a good idea for real estate but certainly private corporation shares, I wouldn’t be opposed.
With respect to smaller charities, thinking about tax incentives is perhaps not the way to go. That’s because of the experience had with the first-time donors tax credit. I think that for smaller charities, it’s also unfair to focus on donors with fewer means, because the smaller charities would just as much like to have the donors with more means, and the gap is one of education and access to technology.
I was always struck by the mandate of this committee, which is innovation. I think that measures that would enable smaller organizations to raise more money, if it’s through cause marketing or the phone thing, the funding for creating those kinds of mechanisms is how you’re going to address the needs of smaller organizations to attract the dollars from more affluent donors.
The Chair: I’m going to do something that I’ve always watched lawyers do and wondered how they got to this point. I got to this point by accident because I read the documents in front of me. I’m going to ask a question quoting one of you.
Ms. Manwaring, in your testimony before the committee, you said.
. . . it’s time to permit a charity to carry on any type of revenue-generating activity so long as the proceeds are used to further its charitable purpose. This would mean the focus would be on the use to which the funds are put, not on how it raises the money.
Can somebody please explain your understanding of the destination of funds test? How could a destination of funds test be incorporated in the Canadian federal regulatory environment?
Ms. Manwaring, I suppose I should give you the first crack at this since I was mean enough to quote you.
Ms. Manwaring: I don’t mind that you quoted me. The concept of destination of funds goes back, in my thinking, to the premise in the Income Tax Act that is critical to both registered charities and also to non-profits that aren’t registered charities. That is that the wealth or the profits that are generated within the organization are not there to then be paid out to the owners and to increase personal wealth, but they’re being generated for the purpose for which the organization is established.
The destination of funds concept takes that and recognizes that you’re able to make money from an activity within your charity and you’re successful at it. If you’re an education charity, it may be fixing cars because it happens that you have a shop in a school and somehow you’ve been able to generate a very positive income stream. As long as you use that profit for the charitable purpose, why do we care that you’re doing that without paying tax?
I think that over the years, my view is that the corporate world has been very successful at saying: “No, that’s unfair competition.” I’ve always found that striking because I think, in fact, it’s not. The charity wants to make as much as they can from that and will charge the same thing that the local gas station will charge if they can do it, because then it helps them carry on their purpose more. It’s the idea that the destination of that profit is for the charitable mission.
I know this question gets asked, so I’m going to jump into it. In Australia, there was a decision in the High Court in the Word Investments case. They’re Bible translators; it’s a registered charity and they had a funeral business. The court held that as long as those profits were being used in the charitable activity of the registered charity and they were furthering that purpose, that was okay. The world hasn’t fallen apart in Australia, and that’s really the concept.
I want to make one more comment, and then I’ll stop. I do think there’s something to be said about ensuring the purpose is being furthered by the activity and that it’s probably subordinate to the charitable activity, but that it’s not the only thing that happens.
The Chair: Not only did you generate a question from me, but you’ve generated three comments from your fellow panellists.
Mr. Parachin: I think the obvious lines of discussion here are some of which have already been alluded to. Would this contribute to a problem with competitive neutrality with charities competing at unfair terms? The response to that is that charities can already operate through a for-profit and donate the proceeds and, thereby, achieve an effective tax rate that would itself achieve a functionally similar thing.
Another issue is: Are we willing to live with both the big hits and the big misses in the sector that will inevitably follow? We always have this conversation from the perspective that there will be profits to actually distribute. There’s going to be a range of hits and misses. I think that’s something we need to be mindful of.
Would this contribute to mission drift? For-profits already debate whether to pay dividends or reinvest in the business. Charities would be balancing incommensurable things. Do we relieve poverty or invest in the business? I’m not putting to you that I have settled answers, but I do think those are things that we would want to think about.
I want to circle back as a big-picture guy: What is it that we’re investing in with registered charities? Is it just the goods and services that charities supply? If the answer to that question is yes, then, to quote a famous tax phrase — a buck is a buck is a buck — we shouldn’t care about whether the buck originates from a donation or a business activity if we just care about the goods and services being supplied. A lot of economists have said that the charitable sector is simply a remedy for government and private market failure.
I don’t believe that, frankly. I think that part of what we’re investing in with charities is a culture of giving. I think it’s not just the goods and services that charities provide. I think there’s something profound in us collectively validating, celebrating and recognizing the choice to share and that choice to share through a donation is itself intrinsically important, independently of the goods and services supplied by charities.
I think we should worry about preserving that. Market transactions with charities may fund charitable goods and services, but it’s not the same thing as the choice to share. I worry about us crowding that out as a defining feature of the sector.
The Chair: We seem to assume that everything charities do is successful, and that’s not true. Take the lotteries that charities sometimes get involved in. People assume those lotteries are all successful. Some are very successful, but there are some that are huge drains on the charity because they’ve engaged in the lottery but they had no idea what they were doing. They ended up losing money and had to follow through on the laws of the lottery, which means giving away whatever the prize was, but they didn’t make any money in the process. So we shouldn’t assume that.
Mr. Oyler: My first thought when business activity comes to mind is always that I think everybody agrees that businesses have risk. What is a practical way to assess and possibly avoid that risk? The answer seems to be that the current rule is that you would set up a separate corporate entity, hold the money-generating operation in a separate corporate entity and pay some taxes. It sounds like most of it can be contributed to a charity and, at the end of the day, the charity would get a substantial amount of money if the business is profitable.
The example in Australia that’s alluded to sounds like a similar kind of set up in that there is a distinct corporate entity. In this case, it’s a separate registered charity that the business operation is taking care of. In my mind, I’m not quite sure if that means the separate charitable entity has been separately financed and, therefore, it’s not using any charitable assets such as donations and funding to put towards the business or, in the case of a loss that takes place, that it’s using donations and funding.
I think that is potentially a model that could be looked at, but that still brings up one of the drawbacks that the current rules have in place. That is that a charity — specifically a small one — perhaps doesn’t have the capacity to set up a distinct corporate entity and that would cut into their capacity. I think the Australian model would have the same sort of concerns or issues, in that you’d have to set up a distinct corporate entity and another registered charity with a separate board. At the end of the day, perhaps that’s a model that could be viewed with those stipulations.
Ms. Cooper: I’m actually going to pass. I think Adam Parachin said it better than I could. Beyond indicating in a hierarchy, I think there are other ways to deal with this issue, so this isn’t on my top three list of where some work needs to be done.
Ms. Manwaring: I don’t want to sound problematic. I find some of the reasons that people object to the destination of funds test to be a little paternalistic. I totally agree there’s risk in every kind of program, every new program that charities start. Charities do research and experiment. There’s a lot of risk. The fact that they might generate revenues from some other activities, or might find an opportunity to generate revenues from some other activities that can support their activities, you’re right, there could be risk. But I also think with education and providing a system, we could use the destination of funds to solve some of the problems that charities have as far as funding, without requiring them to put in place complicated corporate structures.
Clients who come to me with revenue-generating opportunities where they are questioning this are organizations that are doing things like training people to work in catering or restaurants. They realize they can operate a revenue-generating business or some kind of activity that relates similar to what they’re doing, but it’s purely to support their activity and allow them to make extra money. Destination of funds allows us to work with them and allow them to access this.
There are a lot of concerns that are valid for-profits or not-for-profits. I think in the for-profits, we don’t restrict them. They get a lot of tax incentives and benefits from the government to do things in certain ways, write-offs and that sort of thing, but nobody questions which business line they go down. I sometimes get concerned when we start doing that with charities.
Senator Omidvar: Should a review of the destination of funds test, related and unrelated business activities, should this be a priority for the CRA advisory panel?
Ms. Manwaring: It could be. The purpose activity question brings up, if you go to purposes and we adopt purposes, there then comes a question of what kind of things do we want to limit in some way? I’m going to call it revenue generation and not business on purpose. Revenue generation is one of those. We have to come up with a solution for what, if any, limits there are on revenue generation in the context of going with the purposes proposal. I think it is something that needs to be considered and reviewed.
In Australia, if you look hard, it has not been a negative. The world hasn’t stopped there, it’s not a real disaster, so maybe there’s something to look at.
Mr. Aptowitzer: I would certainly agree. In my practice, the destination of funds adoption would make life easier for a lot of charities. The difficulty again comes down to the regulation of the particular nature of charities getting involved in these kinds of business and revenue-generation activities. Charities, for example, can keep receiving the use of donations for a losing cause and continue that until such time as they throw in the towel or donors throw in the towel. There are certain concerns related to the sector getting involved in unrelated business activity.
I go back to my original comment about the jurisdiction to regulate charities at all. It’s a fundamental problem if you don’t have the people who can regulate these activities and look at these issues at the table. Arguably, the related business rules within the Income Tax Act are unconstitutional because it doesn’t have a direct bearing on the collection of an income tax. So the authority of Parliament is questionable, I would think.
The concern I have is in popping the lid off the bottle and then not having the mechanism in place to regulate it. I’m not sure what the situation is in Australia or if the government has looked at the specific concerns of charities getting involved in these areas, but I would suggest the issues are intertwined. Not that the destination of funds is a bad thing. It’s certainly not. It’s intertwined with how the charities themselves are regulated and getting involved in these businesses.
Mr. Parachin: You asked whether or not there should be further study of this discrete topic. I feel like, having sat through a number of these conversations over the years, I would abstract your question one big step further out because I think there’s a prior question we need to ask and think about before we answer your question, which is what’s the point of charity regulation under the Income Tax Act. What is it that we’re trying to achieve? Are you trying to preserve assets? Are you trying to economize a tax expenditure or are you trying to vindicate some idea or trade about legal charity? Depending on how you answer that question, you’re going to go in any number of different directions in the act.
My own bias is we’ve landed on the common law of charity. The common law of charity is incredibly enabling, and from time to time questions arise as to whether or not the Income Tax Act should supplement that for tax purposes only, either by including more things in the category of charity or limiting them. That’s normally done, in my view, to vindicate some idea of charity, which is why I have some reservations about business activities. People can agree to disagree on that. We’re never going to agree on the right answer without a defined target.
Mr. Oyler: I just want to make a comment about competition. It is brought up quite often whether there is unfair competition. I’m not quite sure there’s a great understanding that charities can charge fees in their charitable programs, which is I think separate from what we’re discussing here. We’re not talking about a car-fixing business. We’re talking about maybe the YMCA or an accessible transportation system. In my mind, any complaints about competition should be rendered moot, as clearly those charitable activities are meeting a community need, that is not being met in the private or public sector.
Where unfair competition can be brought up is if in the car-fixing business, whether the charity financed that car-fixing business by getting donations in place in order to purchase a garage, then I think the garage down the road would have perhaps a reasonable argument about competition.
If there’s going to be a further review of this then perhaps the current rules as they are and all of the different revenue-generation activities — I’ve counted four very distinct ones — are clarified and perhaps the CRA policy is clarified to charities. I certainly get a lot of questions about exactly what we’re talking about in terms of business activity and distinguishing that from charitable activity.
The Chair: I’m going to move on to a new question. Do you think the minimum disbursement rate for charities should remain at 3.5 per cent? If not, at what rate should it be fixed?
Ms. Cooper: You skipped one, direction and control.
The Chair: I didn’t, actually. I read the question and I thought I might get a little different debate on this one. I may go back. I haven’t finished. This is the benefit of being the chairman. I can skip around. Go ahead on the disbursement question.
Ms. Cooper: Absolutely no position on that one.
The Chair: Ms. Manwaring?
Ms. Manwaring: The only thing that I would remind all of us — and this is thanks to Mr. Wyatt, who I think is sitting behind me, whom I spoke to about this question — the disbursement quota used to be 4.5 per cent. Some years ago it was reduced to 3.5 per cent, but that was done after a careful and considered review of the investment returns and disbursement rates and how organizations did over quite a lengthy period, perhaps 20 years. When it was reduced, Canada Saving Bonds were still higher than 3.5 per cent. It was reduced below the Canada Savings Bond rate.
I don’t see a reason necessarily to change it, but I think Canada Savings Bonds are now at 2.5 per cent. If you’re following the theory that they changed it but it was below, you might reduce it rather than increase it.
In any event, I think it’s a complicated question that really requires careful review. It does fit a little bit into one of Mr. Aptowitzer’s comments here that constitutionally and in charitable law, gifts can be subject to restriction on payouts and you can only pay out income and not capital. You couldn’t change that under the Income Tax Act.
Senator Omidvar: To any of you, probably more to Susan, because I know she has a point of view on this, why is the disbursement rate embedded in the Income Tax Act as opposed to in regulations?
Ms. Manwaring: I’m not sure.
Senator Omidvar: Should it be in the act? We deal with enough legislation here that we’ve come to experience there are certain things you put in regulation to enable flexibility, timeliness because it’s all transparent, but you leave that out.
Ms. Manwaring: Many prescribed rates are in the regulation. That may stand for “you can put it into regulation.” My only caution would be doing that doesn’t mean it should change a lot because I think it’s a very complex question as to what the right rate is based on how gifts are structured and how returns are. We’ve come out of a very low rate of return environment.
Mr. Parachin: I think the answer to that question depends again on what you are trying to achieve with the disbursement quota. One of the points Susan made that needs to be kept in mind is that income tax law exists alongside an accessory body of private law that donors are availing themselves of, in many instances to establish an asset lock that only the annual yields, the annual income can be spent down.
Having regard to that, I’ve always construed the 3.5 per cent disbursement quota as a mechanism for requiring payout of annual returns. If I’m right in positing that, then I would think it would be an amount prescribed by regulation that corresponds with changing rates of return from time to time. It is odd that it’s embedded in the act.
Senator Omidvar: Could you help us understand, because I don’t remember, what Australia does with regard to disbursement rates or the U.K.? Is it in legislation? Is it in the regulations? Do they have a disbursement quota?
The Chair: Nobody is taking you up on that, Senator Omidvar. But I am going to take direction from the panel and go backward so I don’t get chastised again. I actually didn’t like the question; that is why I avoided it.
Many witnesses discussed the Canada Revenue Agency’s guidance on direction and control, which specifies that charities must undertake their own activities. In considering alternatives to the direction and control approach, Ms. Eakin noted that other countries use an expenditure responsibility test that holds the charity accountable for their funding decisions without requiring the charity to do it all themselves.
How, if at all, could an expenditure responsibility test be incorporated into the Canadian federal regulatory environment? The second question is: What are the potential advantages and disadvantages of an expenditure responsibility test?
Mr. Parachin: My colleagues will have more to say on this than me. I just want to highlight one point, which is the fact that the question only arises because the Income Tax Act, for reasons that I’m not sure anyone really fully understands, requires charitable organizations to further their own activities, to carry on charitable purposes through their own activities. That’s the context for why activities carried on abroad through partners raises this question. Whatever discussion is going to follow from this, the genesis of this is an ill-conceived reference to charitable activities in the Income Tax Act. I’ll leave it to my colleagues to resolve a better answer.
But it’s important to highlight that. You don’t like the question and I don’t think the sector likes the question either, but it originates to drafting something subpar in the act.
The Chair: Something subpar? You heard it here first, folks. We appreciate your diplomacy.
Ms. Cooper: Part of why I was disappointed that we skipped it is because this is an issue in my top three. Its roots are back in that whole activities thing, as Adam just explained. And they’ve conflated a requirement to carry on your own activities into a complex, oftentimes — I’ll say it — shell game to comply with requirements that CRA has made up, and I’ll say it respectfully, to fill a vacuum. What does “carry on own activities” mean? Many people try to transfer resources out to other entities to do the work. We need to put a frame around how that is done. It has created a whole regime that I spend way too much time on, trying to get organizations to comply, the reporting requirements, the drafting.
If you flipped it, instead of a requirement to carry on your own activities to a requirement to simply be accountable for how those monies are spent — you transfer the funds to the other organization to engage in the activity — your accountability is simply to ensure and to be able to demonstrate that the funds were spent well, that they were properly spent on the activities that you intended to have them spent on rather than creating a perception that somehow this other entity is doing the work on your behalf.
It’s one of the issues that causes organizations to circle around and around. I’m regularly on the phone with American, English, Scottish, Irish counsel trying to explain how backward our rules are in this regard compared to the rules in other jurisdictions. You understand from whence the rule comes, but it really is an over conflation of a tiny little requirement.
The Chair: We may be the biggest country in the world but it doesn’t mean we have the greatest writers of legislation in the world.
Ms. Manwaring: I agree with Karen and the comments being made about this. One point is that it’s often brought up in the international space. And certainly in the international space, if you speak with Global Affairs Canada or others, the notion that we would try to direct and control the parties being supported in some of the countries in the world is seen on the ground as being offensive by them. It really is a game that we are CRA is trying to show something on the ground — the organizations couldn’t even begin to suggest they have that kind of thing. It would be considered offensive.
The other point I want to make about this, and it comes up in a later question, these rules apply and this issue is applicable every time a charity works with a non-charity on a project. These issues come up in Canada, often when Canadian organizations are working in the North or with Indigenous groups that are not normally registered charities. They have their own different categories, but they may not be qualified as a donee. It’s an important issue not only for the group of registered charities working in the international development world, but also for organizations working on the ground here and supporting organizations and people in Canada through organizations that are not a registered charity.
The Chair: I should declare my conflict because my son and daughter-in-law both have master’s degrees in international development.
Ms. Manwaring: You hear about this.
The Chair: No, I don’t, actually.
Ms. Manwaring: One last point I would raise is we have a significant client who has described for us the amounts of money they spend annually on the administration, trying to prove direction and control. Out of a funding bucket of $1 million they may end up spending, through all the different organizations, with staff time and everything, almost up to 10 per cent in just trying to make this work and it seems like it’s a poor expenditure of resources.
The Chair: We’re at the end of this study here and coming into this study this was an area I wanted to explore and I kept waiting for witnesses to take me down that road and no one did. It is an issue.
Ms. Manwaring: I think we all thought someone else was doing it. As Karen suggested, it is a top priority across all witnesses.
I do want to make one more statement. I think the expenditure responsibility type regime has worked for other countries for many years. Ours is the outlier. I don’t believe this is something new and different that we’re recommending here.
Mr. Aptowitzer: At the risk of echoing my colleagues’ comments, I think I know the guy who wrote that own activities bit though I’m not sure that he would agree with us about subpar.
One element of the control and direction test which has proven useful is the idea of explaining the fact that the federal government, by virtue of the donation tax credit, is effectively subsidizing donations. So the idea that really gets underlined is accountability has to be inherent into the spending of the money.
I’m not in favour of the control and direction test. As my colleagues suggest, in some cases it’s a bit of a farce to suggest that Canadian involvement in an international project at a minority level should have control over the project. It’s simply unworkable in many circumstances. It’s certainly offensive in many circumstances, and it doesn’t do Canada any favours.
Whatever test does replace it, as I hope this committee will suggest, does both accentuate the idea that Canadians are accountable for spending of the funds but also portrays to the Canadian government that the funds are being spent as they were originally intended.
Ms. Manwaring: The first question here — and I think this goes a little, Senator Mercer, to what you were saying, that you were waiting to hear about this — is I realize we didn’t make a recommendation as to what could be done.
There are two key things to understand here. First off, the words “direction and control” are not in the Income Tax Act. They came out of case law and my colleagues are right, it really was driven by the definition of charitable organization and the concepts of charitable activities carried on by it. Assuming you pick up the recommendation about purposes and activities and changing those definitions, that piece would fall away to a certain degree and give CRA the ability to move to an expenditure responsibility regime.
The second thing is in their wisdom the government added a prohibition in the Income Tax Act about registered charities making grants to non-qualified donees, and that would have to come out if we were going to go the expenditure responsibility route because in effect you would be making grants to non-Canadian charities. You would just be getting expenditure reports that would show you they’re being spent for their charitable purposes. The provisions that are in the act that say you cannot make those grants to non-qualified donees would have to be removed from the act.
The Chair: I would contend there is a need to audit the demands of the CRA on all information that’s requested and demanded from charities to see the benefit, not just from a cost point of view but a benefit to regulating. Charities give the government all this data. Is it of any use to them on an ongoing basis? If it is not any use why are they demanding that charities provide it and then analyze how much it costs for charities to produce it? So there would be a strain on the sector of spending money to produce information that no one needs on an ongoing basis.
It’s not very often that a non-lawyer gets to sit here and question five lawyers on an ongoing basis and they can’t leave. I’ve got them; or as Kevin pointed out, or charge me.
Senator Omidvar: I’ve worked in charities and foundations my entire life before I became a senator, so I understand really well what direction and control mean. I also understand and I can imagine the loosening of the constraints if we were to go to an expenditure responsibility test.
One of our challenges is we always legislate for the main, not for the avenues or the tiny paths on the side of the highway, but there are risks.
Could you advise us on how we manage those risks? Because it is possible that in certain circumstances substituting direction and control for expenditure responsibility test could see charitable funds being used for purposes and activities that are not for charity. Is there some limitation? Is there some caution you would exercise?
Ms. Cooper: I think you manage the risk by replacing it with expenditure responsibility. Because the risk is that the funds will be spent wrongly. The risk is there is a certain current of concern with respect to terrorist financing. At its core, expenditure responsibility is just simply ensuring that the charity is held accountable for how the money is spent.
I don’t know necessarily that there will be that fewer books and records that will have to be kept. It’s just you’re not going to be proving a fiction, you’re not going to have to be proving that it was your activity. I would think they are still going to have to account for how the funds were spent.
With respect to the financial transactions, a good measure of that risk is already being managed through our FINTRAC and other financial regulation systems.
Senator Omidvar: It serves to be raised although I think they are all on one side with this.
Ms. Manwaring: I think the difference in the reporting is you can take the reporting from the organization rather than saying it’s your own books and records.
I’m throwing this out there and might get some looks from my peers, but a while back we introduced intermediate sanctions into to Income Tax Act for charities, which means there are certain circumstances where rather than the charity losing its charitable status it can be penalized and those penalties, if they are in fact applied, can be satisfied by making a grant to another charity. You don’t have to pay money to the government. It’s actually not a horrific system but there may be something that says if you’re not getting the appropriate books and records in a system like this that at some level there could be some kind of sanction, so that there would be a disincentive for the charity.
Mr. Aptowitzer: I would suggest that there are a range of options for control and direction, depending on the nature of the activity undertaken by the charity. Under further thought, we may say that the nature of the control necessary on the distribution of alms for the poor in some part of the world is different from the nature of the control and direction we would expect or a large multinational organization, engaging in some other activity elsewhere in the world.
I would suggest that the fact that these rules are not codified in the Income Tax Act gives us a little bit of power to sit down and say, well, assuming that it’s some other kind of a test, what does it get replaced with? We should give thought to the fact that there is room for nuance, depending on the nature of the various activities being undertaken by the charities, wherever that might be. It may be that charities are involved in multiple activities and so they have different burdens to ensure accountability. We don’t necessarily have to have a one-size-fits-all kind of a test.
The Chair: Thank you. Since I was chastised for skipping a question earlier, I want to remind people that there are five questions I haven’t covered yet.
Under the current rules, the required annual disbursement to qualified donees by foundations is applicable at the sponsoring foundation level, not at the donor-advised fund level. During the hearings, some witnesses expressed concerns about the absence of reporting requirements on the activities of donor-advised funds and recommended that measures be taken to require or incentivize distributions from donor-advised funds to charities.
I have three questions: What measures, if any, should the federal government take to require or incentivize distributions from donor-advised funds to charities? Do you support the introduction of a disbursement quota for individual donor-advised funds? And what steps, if any, could the federal government take to improve the transparency of donor-advised funds?
Mr. Oyler: Just so everyone knows, I am actually the only non-lawyer on the panel. Perhaps you noticed my deferring many of the topics to them to handle very well. I will offer a non-legal opinion, and I’m sure in spirit everyone will agree, but I’m sure they will want to handle this in their respective professional manners.
I think everyone in the room would agree you would like to see the money being distributed at the donor-advised fund level. That would be my opinion, so I am in support of moving towards that, looking at the logistics and how to handle that.
Mr. Parachin: I think the essential question raised here is how much ongoing control donors should have after the moment of gift. That’s the essential question. One of the arguments in favour of donor-advised funds is that donors are at liberty to establish their own private foundation and if they did that, they would, through the board level of a private foundation, have ongoing control. The question then becomes: What’s the problem?
There are a few responses to that in terms of framing the issues, one of which is, at least, the legal issue of whether a gift has been made if you have not surrendered control over the donated property. There is a genuine legal issue as to whether it’s a receiptable transaction if, for all practical purposes, you have control over distribution of the funds moving forward. That’s a live question there.
There are some complicated policy issues related to whether allowing donors continuing control over funds is an invitation to mischief. The analogy at some level to the private foundation is imperfect because we can regulate private foundations as private foundations. If you have got one foundation housing 300 donor-advised funds, that poses some different regulatory hurdles to ensure funds are being appropriately spent down.
By way of providing context, the common law already provides donors extraordinary measures of control over donated property. You can impose, with the imprimatur and enforcements of law, specific, granular purposes for which the funds have to be used.
You can, in perpetuity, which means what it says, require that the capital be held and that only income distributions be made. Where we’ve drawn the bright line is at that point of gift, that’s where the control is supposed to sever. When I look at this and stand back as a legal analyst, I’m left to ask why that is inadequate for donors. Why do they have to have ongoing control beyond the point of the donation? I’m sure that people that deal with donors on a daily basis have an answer, but I think it’s at least a worthy question.
Ms. Manwaring: In the interests of time, because I think there are arguments to respond to everything that Mr. Parachin and Mr. Oyler have said, I think there is so much in this area that we don’t know. There is a lot of speculation, and I don’t want to sound repetitive, but I think this is something that needs to be carefully studied. Implications of saying it should be by fund basis or there should be disclosure is something that could have far-reaching implications in many charities beyond the benefit.
Similar to what Senator Mercer was saying earlier, is the cost of trying to do something worth the benefit you get from it? I’m not sure. There are a lot of small donor-advised funds that have been set up by families in community foundations and others that aren’t there for any nefarious reason except it worked.
I would encourage us to study that before making concrete recommendations.
Senator Omidvar: We heard from one witness, and I think it was the Vancouver Foundation, who said they have a policy at their community foundation. They hold many hundreds of donor-advised funds. They have a minimum disbursement policy for each individual donor-advised fund. Here’s an institution that has been proactive and taken a step that others could follow.
Is this something we should leave up to the community foundations of the world? I notice there are $3.5 billion in donor-advised funds in Canada today. It’s the fastest-growing market in a way. Do we do a bit of both?
Mr. Parachin: The rate of the payout strikes me as not the difficult question. I want to be clear that my comments weren’t directed at the obviousness of the answers so much as pointing out the difficulty of the questions. I’m not sure what the answer to this is. I don’t think the rate of the payout is the concern. As it is, the Income Tax Act requires modest payouts. I don’t know why we would get more concerned about that in a donor-advised context than in other contexts. I think the concern is the ongoing influence over how the amounts paid out is spent, not the amount of the payout.
Senator Omidvar: I have looked at this because it made me a little uncomfortable that there is a huge amount of money that is basically in a parking lot. The money has been receipted. The donor has received the deduction, but there is no requirement to pay out from the fund as long as it’s in an aggregate, like in a community foundation where there are hundreds of funds. If one fund pays out 10 per cent, it equalizes everyone else, and there is the concern.
I think there is an issue about getting charitably receipted dollars to charities to do the good work that they are set up to do, as opposed to parking it in a bank somewhere.
Ms. Cooper: My initial inclination was to respond to this question that this is not one of my primary concerns. It is because, in part, as Adam says, it is so complex. What is a donor-advised fund? In my view, a fund where no income can be paid out may not be a gift in the first place because there is too much donor control.
The concern underlying all of this is that we’re absolutely seeing a multiplication of those donor-advised funds. As a lawyer, I’m not sure how many of them should have been receipted in the first place. So it’s a rabbit hole that takes much more study than you can do at this point. I suspect you might be coming up with a solution that is almost too simple. It’s almost too simple to say that X per cent out of every donor-advised funds should now be spent when I think the source is in fact a lot of these gifts aren’t being structured correctly in the first place.
Senator Omidvar: In other words, it’s important for someone — the government — and that’s, perhaps, a recommendation that we should consider. That is, maybe the CRA advisory panel should study the context of donor-advised funds before we go down a particular path.
Mr. Aptowitzer: Certainly more study can’t hurt. Before you’re going to put together a set of solutions for one subsector of the charity community, you will have to be very knowledgeable about what it is you’re legislating.
If you’re going to get to that point and look at the distribution of the funds from donor-advised funds and the control issues, you’re going to draw in the idea of private foundations — certainly on the control side; perhaps less so on the expenditure side. They didn’t have to put it into a community foundation, which, I would suggest by its very nature, is interested in spending the money on the community rather than a private foundation, which does not necessarily have that same focus.
If you’re concerned about those issues, I suggest you’re concerned about more than donor-advised funds.
Mr. Parachin: The fact that the money is parked in a foundation is, in my judgment, a red herring vis-à-vis donor-advised funds. I’m not saying it’s not a live issue, but that circles back to the disbursement quota rate. Either 3.5 per cent is the right number or it’s too low. I can see a community foundation saying we met the minimum payout. That’s not where my concern lies. My concern goes to Karen’s point. I wonder whether some of these arrangements are creating agency relationships more so than tax receiptable gifts. I don’t know that for a fact, but when I hear what it starts to sound like in my legal mind, I would characterize that as a non-gift. I don’t see it as a payout issue.
The Chair: We have five minutes left and we have the next panel sitting at the back of the room, ready to take your seat. I’m looking for a question that will help.
I will go to the final question. Throughout the study, several witnesses expressed concern about the Canada Revenue Agency’s technical interpretation on “surplus income” held by non-profit organizations. These rules have been described as raising the level of risk for not-for-profit organizations by establishing a higher standard, or benchmark, for the not-for-profit organizations to meet to avoid taxation on any surplus of income over expenditures. What measures, if any, should the federal government take to address, clarify or amend the rules governing surplus income held by NPOs?
Mr. Aptowitzer: This is a difficult question. The fundamental problem is that we don’t have good data, at least not in the hands of the Canada Revenue Agency, about the extent of the not-for-profit world. For many years, these organizations did not have to file tax returns. It was only fairly recently that the Canada Revenue Agency, realizing the paucity of information, started enforcing the requirement and collecting the data. Even the part not-for-profits were required to file was not enforced. We were left with a general lack of information.
For many years, the rule was that not-for-profit organizations could have one year of operating revenue. Realizing this was a one-size-fits-all approach, the CRA’s current approach is a lot more reasonable in trying to suggest that there are variances among different areas of the not-for-profit world.
I think one of the things the CRA advisory committee may want to do is undertake a deeper review of this area, as one concrete suggestion.
Over and above that, the problem that exists for these organizations from a technical perspective is the idea that if they have amassed too much money, that’s suggestive of the idea that they are not really a not-for-profit organization. They are doing something, which is amassing money, subject only to a windfall game, which happens from time to time. I would suggest this is not necessarily a logical conclusion to draw from the fact that they have money in the bank. It is not necessarily a bad thing that they have money in the bank even if they are charging a below market value fee for a service that they may provide. Even if it’s taken up by a large number of organizations or customers, it’s not necessarily true that they’re operating for the purpose of a profit. It just so happens they have done well in a particular year or with a particular project. Perhaps the right thing to do is go back to a destination of funds test, or something like that, for the not-for-profit world as well and look at the options available to us.
The Chair: Thank you very much. I have room for one response from Ms. Manwaring, and then we will have to adjourn for the next panel.
Ms. Manwaring: Non-profit organizations in this question are the non-registered charity non-profit organizations, to clarify that’s what I’m talking about, and I’m sure that’s what Adam was talking about, too.
This ran well for a long time, until CRA rulings somehow got a hold of it and went on a bit of a tangent. I think they’ve come back and we seem to be in a better place. That’s not to say that the question of whether non-profit organizations that are not charities should be tax exempt could not be looked at. In fact, the Department of Finance was about to release a consultation paper, I think in 2012 or 2013, on this topic. After James Flaherty resigned as finance minister, it was shelved. A study on this area could be helpful. I don’t think surpluses are the damaging piece. It’s really a much bigger question than that.
The Chair: I am going to make a suggestion. You have a list of the questions. Questions 10, 11 and 12 are questions that we didn’t get to in any detail. We would welcome your response in writing, if you are so inclined.
We are tremendously grateful for your time today, particularly given that we have four eminent lawyers and someone else who has added a lot of good opinions to the debate. We thank you for that. We hope that some of your comments will be reflected in our final report for your edification. This is the last series of meetings that we are having. We will meet with another group in a few moments, and then the hard work goes to these ladies to my right from the Library of Parliament to start writing the report, then review it on an ongoing basis with us, trying to reflect what we’ve heard. You can be assured what, whatever the final report is, you have had a major effect on it, so thank you.
Today we’re doing something different. This is our final day of public hearings, and many of you have been witnesses already. What we wanted to do was have a round table to have a bit of a final discussion to make sure that we haven’t missed anything. We wanted to review some questions with you. You should have all received copies of the questions. We’re going to try to get through those questions and have a discussion among yourselves with senators interjecting on occasion with a question for clarification or to stimulate the discussion.
It’s not a normal fashion where we’re going to sit here and actually ask you questions. We’re going to propose the questions and prod a bit, but we’re also interested in hearing your answers as you respond to each other. That will add a good deal to the debate.
Let me review who we have here. From the Muttart Foundation, Bob Wyatt, Executive Director; from Philanthropic Foundations Canada, Hilary Pearson, President; from Volunteer Canada, Paula Speevak, President and Chief Executive Officer; from the Community Foundations of Canada, Andrew Chunilall, Chief Executive Officer; from the Association of Fundraising Professionals, Andrea McManus; from Imagine Canada, Bruce MacDonald, President and Chief Executive Officer; and from United Way Canada, Dan Clement, Acting President and Chief Executive Officer. There’s one other person on the list, but she’s not here yet.
As I say, you’ve seen the questions. The last panel held my feet to the fire. I tried to skip a question and they didn’t particularly care for it. They caught me.
Anyway, the first question is on recruitment and retention of volunteers.
Officials from Statistics Canada reported on the changing demographics of volunteering, with an increasing proportion of older Canadians engaged in this work. Other witnesses described the challenges of attracting and retaining younger volunteers and still others identified the need for the promotion of volunteerism. There are a series of questions that go with this. I’ll pose them all so we can get it all on the table here.
How can the federal government most efficiently promote volunteerism? Would you support the introduction of a tax credit for volunteers? If so, what administrative challenges might this impose? What role, if any, would you recommend for the Canada Service Corps in encouraging younger Canadians to volunteer? How can the federal government best equip charitable and non-profit organizations to take advantage of the new platforms and other technology innovations that can support volunteer recruitment? What role could the federal government play in encouraging broader recognition of the contribution of volunteers?
No small questions there. Who would like to begin? Ms. Speevak.
Paula Speevak, President and Chief Executive Officer, Volunteer Canada: Hello. First of all, happy National Volunteer Week to everyone. We’re celebrating the 12.7 million Canadians volunteering, so it’s a pretty exciting week for us.
I wanted to start by responding to the framing of the question. I know I’ve participated in some of the sessions before. When we say that there is a larger proportion of older adults volunteering, that’s simply because the population is aging. I want to clarify that this does not mean that youth are not volunteering. In fact, youth have the highest volunteer rate among all ages. That preceded any kind of mandatory community service program in high school. Young volunteers, 66 to 70 per cent, depending on the —
Senator Duffy: We misunderstood that, so that’s a good clarification.
Ms. Speevak: Yes. The reason I make that clarification is that I’m sensitive to us acknowledging and recognizing the amazing passion and contributions that youth are making to volunteering. That doesn’t mean there aren’t barriers. I think we’ve looked at some of those, but I think it needs to be said.
The second thing is that the nature of volunteering is changing. While we often count formal volunteering — someone taking a role within an organization — we also know that people are doing great things outside of organizations. People are raising funds through various platforms for a neighbour to renovate their van because they have a child who’s disabled or following a tragedy, people are mobilizing people around issues and causes, organizing events. These are happening outside of organizations, and they’re also having great results.
One of the things that we are looking at in Volunteer Canada, and I know you have looked at in the committee, is the notion of the changing nature of volunteering. Statistics Canada has now added a module for the 2018 survey on informal volunteering. So pretty soon we will have some of those results. The challenge for us within organizations is not to say that that doesn’t count and that volunteering is decreasing, but to really think about how we make space in our organizations and support and recognize all the volunteering that’s happening. I wanted to raise that before getting into some of the specifics. I don’t know if any of my colleagues have any comments about that.
You asked a couple of questions about support. One of the things I think has been really useful is the relationship with Statistics Canada and the Canada Social Survey — Giving, Volunteering and Participating, the fact that that’s continued through many changes. I think many people in the sector are appreciative of having the information, being able to identify barriers, motivations, what people are learning through volunteering, what people’s inclinations are. I think that’s really important. I think we could feel good about the fact that’s continued and hope it should continue.
The second thing that I would mention in terms of the role of the federal government is the system with respect to screening volunteers. That includes a whole range of activities, including vulnerable sector checks and police record checks. I think many of you are familiar with some of the systems in Australia and in Northern Ireland and Scotland, where there’s a streamlined process that does not frustrate volunteers or organizations, but also balances social inclusion with safety. I think that’s another thing is looking at revamping that system.
The third thing would be to recognize the infrastructure that’s needed in all ways to support volunteers. That could be anything from human resources to technology and other things.
Then you had a specific question about the Canada Service Corps. I want to say I have a vested interest. Some of you know that Volunteer Canada is a partner in that program. We have looked at the 220 local volunteer centres across the country, each of whom has their own separate volunteer matching system and created a hub to be able to draw from that. Youth anywhere in the country are able to search for volunteer opportunities.
In terms of what can be done to support through that program would be to recognize that youth are already contributing a lot and so not to create the myth or to perpetuate the idea that the Canada Service Corps is there because youth are not volunteering, It is simply there to make it more meaningful, to help people draw from their experiences and reflect upon them as they develop their sense of citizenship and identity. I’ll leave it at that for now and maybe come back to it as the conversation goes.
Bob Wyatt, Executive Director, Muttart Foundation: I’m going to address two of the items. Let me segue off something my colleague just said.
If the federal government wants to encourage the use of volunteerism, then in its grants and contribution agreements it should recognize that volunteer managers and access to the technology are critical components of making that work, rather than trying to build them into an overall too small percentage of administrative costs. Let’s accept the fact that’s a direct cost to a voluntary organization, to recruit and support their volunteers.
The other question, I know it is close to your heart, senator, is the question of a tax credit for volunteering. You have pointed out in the past that there have been some introduced for volunteer firefighters. That’s a great policy decision. The idea about widespread volunteer tax credit would in my view create an administrative and regulatory nightmare. Simply tracking it, trying to value the volunteerism, issuing the receipts and then CRA’s requirement to audit for fraud I think will offset any good that it does and is going to require more resources of an organization to administer than they’ll benefit from.
I think there are ways that you can find to encourage volunteers. So there are already in policy provisions so that volunteers who make legitimate disbursements can receive a receipt for that without the old exchange of cheques thing.
The Chair: There was a very recent witness we had who made a suggestion that we hadn’t heard before. It was with respect to young people that they wanted to either volunteer or I think the context in which he put the proposal was incentivizing young people to work for not-for-profits and for charities was the potential forgiveness of part of their student loan. I think it was an interesting thing and much easier to manage than your final comment.
How does that fit into the process? It would be an incentive for charities to hire young people, give them work experience in the sector and the incentive that they would have not only of doing good work, working in the sector. It would be, number one, experience; number two, reducing their sizeable debt to someone for their student loans.
Mr. Wyatt: There have been discussions about that going back 20 years or more at least. My recollection — subject to check — there have been a couple of U.S. states that have introduced that model. I haven’t seen any evaluation adjudicating how successful they are. My colleagues and I can certainly check and refer the committee to literature, if we can find any.
The Chair: Any other comments?
Bruce MacDonald, President and Chief Executive Officer, Imagine Canada: Just a couple of things. As we look at the companion tax credit for giving and the impact on young people, and witnessing a decline of younger people claiming that on their income tax, our feeling is that it’s not a suggestion that young people are not generous. It’s the fact that their economic starting point is so fundamentally different and not having the income where a tax credit might benefit.
I’m curious whether there might be some similar thinking here, that having a tax deduction for volunteerism when you don’t have enough income for it to make a difference on your income tax. I just muse out loud as to whether that might be something.
The other thing — I pose this question to Paula — is whether Volunteer Canada has noted any correlation between volunteerism and this kind of incentive and whether you think this would actually drive volunteerism on a larger scale?
Andrew Chunilall, Chief Executive Officer, Community Foundations of Canada: I would build on Bruce’s idea of asking a question. The one that comes to mind is: What does altruistic action look like in the context of the 21st century?
Volunteerism has a long legacy in this country, but we also know that young people — if young people are the ones we are talking about — are exercising new ways of having an impact. Ultimately, that is what drives volunteerism.
We see that young people are creating new businesses and new sectors, whether it’s social entrepreneurship, an impact economy or hybrid of for-profit and non-profit businesses that have a primary aim of doing good while also earning income.
This might be the new way. This might be the new form of volunteerism, which really isn’t recognized in any way in our legislative frameworks, that fragment or silo out for profit and other organizations. I think they themselves are creating a new sector through their actions, which aren’t readily accommodated by the infrastructure that we currently have.
I also agree with Paula that young people are volunteering, but their definition and orientation around volunteering may not be what we might situate as volunteering around this particular table.
Dan Clement, Acting President and Chief Executive Officer, United Way Canada: Just a couple of reinforcing points. I think we’re in the era of engaged exchange. If we look at charitable giving, the number of donors, the age profile of donors, fewer individuals giving more, but fewer donors overall, and generationally that is declining. We’re not going to be replacing the donors of today with donors of the future without a highly committed approach to this idea of engaged exchange, which means that we want people to participate first. I suspect that their giving will follow in terms of building their spirit of philanthropy.
It was mentioned a couple of times that for United Way in the workplace, there is no shortage of individuals who want to participate. Sometimes you can only paint the wall in the agency so many times. In fact, the hardest thing that we have is actually having the capacity to find, mobilize and match. That is actually infrastructure, whether it’s a volunteer centre, United Way or other philanthropic organizations.
I think we’re under-invested in our capacity to find and create those opportunities, and that is partly because charitable organizations are often challenged on where do they spend money, on what, and what are the administrative costs? We have to look at this as actually a significant value added to our Canadian societies. That means we have to think about what it takes to invest in that work and infrastructure, because you’re not going to create those volunteer opportunities without that infrastructure.
That infrastructure is sorely tested, certainly within the community services sector. There is a ton of demand. Sometimes it places more burden on those organizations than it does on value, because they don’t have the infrastructure to manage it. We are perhaps supporting a physical plant improvement, but not necessarily an improvement in their strategic direction. Again, focus in on things like skills-based matching.
In order to get more volunteerism, we’re going to have to invest in it and the community sector to enable it. There is a ton of opportunity, but we don’t often have that infrastructure and support.
The Chair: Any other comments? We’ll move on to the next question. Witnesses told the committee that recruitment and retention of staff in the charitable and non-profit sector is made particularly challenging because of generally lower salaries than those available in the public and private sector. Short-term funding makes employment especially precarious for staff in charitable and non-profit organizations, and the sector has been unable to offer long-term employees retirement income security.
Have longer-term funding arrangements assisted in recruiting and retaining staff in the sector? If not, why not?
To what extent, if any, does funding of pilot projects rather than ongoing programs by governments make recruiting and retaining staff challenging?
To what extent, if any, does low or no funding for administration in grants and contribution agreements contribute to the challenge in recruiting and retaining staff?
To what extent, if any, do recent offerings in retirement income benefits for employees in the sector organizations contribute to increased recruitment and retention of staff?
Finally, what role, if any, can the federal government play in supporting recruitment and retention of staff in charitable and non-profit sector employees?
Very easy questions. I’m sure someone can give us the answers.
Mr. MacDonald: Similar to Paula’s approach, I wanted to invite another thought in terms of the framing of this.
As we look at our sector’s ability to be an employer of choice and hire, attract and retain the best and brightest, it’s our belief, at least at Imagine Canada, that this is going to get more difficult and problematic in the future.
If you look at any of the national or global data around labour market shortages and the private sector’s ability to attract and retain talent, they’re ramping up their ability to be able to find and keep good staff. For a sector that has always been a bit behind the curve in terms of our ability to pay competitively and offer competitive benefits programs, we don’t offer many of the same options that the private sector does. It’s our belief that our gap, in terms of being able to be that employer of choice, is about to widen.
I think some of these questions here are really important to be talking about, because for organizations that are potentially surviving on short-term agreements, the ability to have some longer-term stability might start to be able to make their offerings to employees or prospective employees a bit more attractive.
I think this is a broader question than just our sector. This is the economic environment in which we’re operating.
Ms. Speevak: One of the things to note about this question is simply the impact it has on governance volunteers who often struggle to attract and keep talent. When you look at the support that boards of directors need sometimes when going through a hiring process or when there’s destabilization because of staff changes because of the shorter-term funding, it has an impact on the ability for board members to stay active.
That is something we’re hearing at Volunteer Canada, the need for that support when they become the continuity in the organization, more so than traditionally where it was staff members who were providing the continuity and stability.
Mr. Wyatt: You’re going to get a lot of anecdotal evidence on this question. To answer the last part of the question, the way to get around that is to reinstate funding for the HR Council for the Voluntary Sector.
We benefited significantly during the decade that we had the HR resource council, the human resource sector council, and as a result of the elimination of the sector council program, the HR Council for the Voluntary Sector was gone. We need it back. We need to be able to answer these questions. We need to be able to do the broad-based research that none of us can do individually.
The other point I would make is, and this is going to be anecdotal, is that those of you who have worked in the sector or been on boards of the sector will recognize it immediately: We’re approaching the middle of April. There are a number of charities whose funding under government contracts ended March 31 and still have no idea whether their funding will continue.
It is a traditional thing that each January or December when the CEO of the charity comes to the board and says, “I don’t know if we’re going to have money, so I have to issue layoff notices to our staff for that project now.” And not surprisingly, those staff then have to start looking for other jobs. Then in mid-April when you find out the money is going to come, you now need to do a recruitment effort to replace the people who have left and we start all over again. And we’ve lost the experience of whatever we have done.
You heard from Treasury Board a week or two ago that they are moving to multi-year agreements, not fast enough. Government endorsed the Blue Ribbon Panel’s report in 2006. It’s now 2019. That program should already be operating across government and it’s not.
The Chair: Ms. McManus, I will get you in two seconds. I would first like to introduce Kayla Smith, Student, Faculty of Law at the University of Windsor who has joined us. Thank you for accepting our invitation.
Senator Duffy: I was wondering if I could ask Mr. Wyatt one short question. Where was that HR council housed?
Mr. Wyatt: Initially it was through Employment and Social Development Canada, as it then was. It was a program for a variety of industries. This was set up for the voluntary sector. For some of the construction sectors, it was something they had taken for granted. For us, this was brand new and incredibly welcome and produced some very good material.
Andrea McManus, Association of Fundraising Professionals: At the risk of providing anecdotal information — but I totally agree with Bob about reinstating the HR counsel —the sector doesn’t only compete with the private sector for talent and to be able to recruit the talent that we need, but we also compete vigorously within our own sector. The organizations in the non-profit and charitable world are small organizations that may have a staff of one or none or five, to universities and hospitals that have significant staff components. They have a lot of benefits and perks, and good medical health plans, things that smaller organizations can’t compete with.
I know we talk about salaries being low, and they are, but nowhere so low as they are when you get into human services and some of those other organizations. We’re competing across the board and anything our organizations do that would try to compete with those benefits and recruitment and retention of staff, which is huge in the private sector world now, goes to the overhead line.
That’s where the problem lies, is it going to overhead and administrative costs, and we shouldn’t be doing that as charities in Canada.
Mr. Clement: Just building on that theme — and sorry to be blunt but especially in human services — our human service community organizations have become the agents of service delivery on behalf of the public sector. Why? Because it’s less expensive and cheaper. We can do short-term funding, we don’t have to pay the same wages, we don’t have to pay the same benefits. It’s less burden.
I think if you want to answer the question, certainly in human services, a lot of the revenue is coming from the public sector. The question is: What is a fair wage to pay for the benefits being generated by those service delivery organizations and their employees in terms of fair wages, benefits, access to retirement benefits that often don’t exist? And these are people that are mission-driven. There are real answers here, but they are saying yes to a number of questions, which is not short-term funding, long-term funding and recognizing that those organizations are delivering public benefit. If it’s less expensive than doing it in-house in the public service, what does it mean to establish fair wage guidelines and-benefit expectations? And build that into the granting infrastructure. That will go a long way because you will give the organization stability and you can start to set some expectations in terms of wages.
Kayla Smith, Student, Faculty of Law, University of Windsor, as an individual: Let me apologize for being late. I was in the wrong building, but thank you for having me. To my understanding, we’re discussing question two about recruitment and retention of staff. I would like to speak from the perspective of a young person interested in the sector and the idea that when we’re looking at the current state of underemployment and unemployment of youth, I think stable funding in the charitable sector is important for young people to consider entering into the sector for professional reasons. When they think about the private and public sector, they know the stability is there. But when it comes to the voluntary sector at large, young people are not entirely sure if the competitiveness is there in terms of benefits and salaries. Stability of funding would definitely help to increase the recruitment and retention for staff when it comes to young people.
Ms. McManus: I would like to add to what Kayla said. Wouldn’t it be great if we could recruit Kayla to come and work in the non-profit sector and provide her with a career path that included professional development, which took into account building the team, provided things you can get in a lot of places in the private sector and kept her in the sector? She doesn’t have to go outside the sector to make a career and life for herself; we could capture that commitment to the community and keep it within the sector, but it costs money to do that and we have to invest in our talent.
Mr. Chunilall: I believe there is a provision in the Income Tax Act that calls for charities to spend substantially all of their resources on “charitable activities,” which are defined. And the technical definition around that is roughly 90 per cent. Whether you’re in the for-profit world or in government, you would be hard-pressed to find an organization that would spend 90 per cent or more of its assets outward as opposed to building its own internal capacities for retention and recruitment. So I think that particular provision within the Income Tax Act, or at least its interpretation, would need further augmentation to allow charities to invest in its capacities to retain people but also creates more meaning in the work.
When people work in our sector, they are more interested in making an impact. Beyond pay and benefits, if you are unable to realize that impact or have a growing sentiment of frustration around achieving that impact, this will create difficulties in terms of retention and recruitment. So if we can truly emerge as an impact sector, that goes a long way above and beyond compensation and retirement benefits.
The Chair: And there was a comment that industry consistently reinvests in their own human infrastructure, to keep them and train them, and bring them closer to the goals and become more successful.
Mr. MacDonald: To pick up on Andrew’s point and going back to the point he made about the private sector, it’s interesting that this idea of working for purpose, mission or cause, which has traditionally been a competitive advantage for the charitable sector, we believe that will be reduced. As more and more young people are defining that the place they want to spend their career in, has to have some meaning to it and to a certain degree, because of labour market shortages — and they will be in the driver’s seat as boomers move into retirement — we’re starting to witness more and more private sector firms who are doubling down on making sure they are environmentally responsible, have ethical supply chains and are connected to the community.
In terms of the ability of this sector to attract and retain staff, that’s why we feel this challenge could be getting more acute. Because, to a certain degree, the traditional competitive advantage we’ve had is being eroded by companies who are saying they had better be doing this or the workforce of tomorrow won’t want to work for them. I want to reiterate Bob’s point around re-examining many of those recommendations out of the Blue Ribbon Panel, because whether it’s multi-year funding, timely payment, covering costs such as employee benefits, these are the kinds of things that could make us a competitive employer.
Senator Omidvar: My question is for Ms. Pearson as one of the two; congratulations to both of you, Mr. MacDonald and Ms. Pearson, for being appointed as vice-chairs of the advisory panel. You will be working in the sector and we’re talking about this sector and this question and others, so you will forgive me for asking you to overlay on your reflections: Is it possible to talk about a sector? It is so big, it is so diverse. Are we able to look at policy solutions through one lens or should we engage in some differentiation?
Hilary Pearson, President, Philanthropic Foundations Canada: That’s a great question. Andrea started to talk about that. There isn’t one sector, no. I think that the charitable sector or the voluntary sector, if we want to use different terminology to try to capture a sector, those things only pin point one aspect of a large group of organizations that are very diverse in size, employees, means, business models and operating models. To try to boil it down, it is probably fairer I think — and Andrea I think you were suggesting this — is that we look at two parts of the non-profit sector. One of which would be the larger organizations. Many of them are publicly funded and/or have a business model that allows them to charge a revenue stream that allows them to fund themselves, or another least do the investing in human resources that we’ve been talking about.
The other part of the sector is the one that, again, Andrea hinted at too, and it’s the one where you have many small organizations. Dan mentioned this too. Social service organizations that tend to have more volunteers depend more on people who are willing to be paid less to work in conditions that are difficult because they care about the mission.
It is important when the government is thinking about framing its policies that it should take this into account. There are some infrastructural things. Bob mentioned the HR council. The HR council could continue to look at the whole sector and take into account these different types of organizations, but I think other sorts of policies that the government is thinking about, should be framed by taking into account that there are very different sets of organizations here. That’s particularly true for funding. I know that’s the next question that we’re coming to. There are different challenges around financing the sector depending on which part of the sector you’re looking at. I think that is something we should all explore. It does make a difference.
Senator Omidvar: Different strokes for different folks.
Ms. Pearson: In a sense.
Senator Omidvar: I wish you well as you taking this challenge.
Ms. Pearson: Congratulations might not be quite the right word.
The Chair: We’ll move on to the next question, financing the sector. Officials from Statistics Canada provided testimony on declining numbers of tax filers claiming the charitable tax credits available to them. Other witnesses noted that this decline has resulted in an increasing reliance on smaller numbers of individual donors and on high-net worth and corporate donors. While some testimony indicated that increasing the tax benefit associated with charitable donations would not make a substantial difference in the number of donors or the amount of their donations, other witnesses suggested modifying or increasing the benefit to achieve that goal.
What changes, if any, would you recommend to the tax benefits provided to donors to charities?
Mr. Chunilall: We’ve done some research, particularly in the U.S. market, and we see some similar phenomenon in Canada where younger donors in particular are opting to exercise their charity or philanthropic measures outside of the charitable regime. The way they view it is that they are willing to sacrifice the charitable tax credit for additional flexibility or more tools to achieve impact. In the charitable sector, we operate in a fairly permissive-based environment. We’re allowed to do particular things in order to achieve our mission. When you go outside the charitable realm, it’s not permissive-based. It’s due within the context of not doing anything illegal, immoral or unethical. You can choose to pursue your impact with different tools and flexibility. So a 15 to 30 per cent premium to achieve more tools to have impact is something a lot of younger people are opting to do. Perhaps it isn’t a question of how we look at the charitable tax credit per se, but more around how we give the sector — however we want to define it — more tools and abilities to achieve impact, which would further bring in resources to charities in Canada.
Ms. McManus: The Association of Fundraising Professionals has submitted over a number of years continued support for the tax on gifts of private assets, and particularly real estate. I personally have done a lot of work in the homeless and affordable housing sectors. I can tell you from my experience that if we had this as a tool in our toolkit - it’s such a direct connection, homelessness and affordable housing is an issue across the country. It would go a long way to filling some of those gaps in the continuum which has many different spots on it.
I don’t know about the first-time tax credit. In our view, it wasn’t that successful. It wasn’t well communicated or around very long. I think the collective could have done a better job at communicating that and demonstrating the importance of it. Then again, it was only around for a few years. I think those kinds of things have potential to make a difference, and often they make a difference in triggering a first-time gift. A charity can then work with that donor and it can lead to the lifetime value of a gift which becomes much more valuable to them.
Mr. Clement: My comments are not on tax tools. Today there is a growing number of private sector, venture-funded organizations that are capturing a growing slice of charitable giving for profit. They’re enabling it through investments in new technology tools. That is good for them. My point here is that they are mobilizing entirely different types of capital to support innovation. They’re going to venture capitalists to get capital dollars to build technology tools, which allow them to identify a slice of the philanthropic pie where they can facilitate that transaction using new technology and generate a profit. Increasingly, charities will have to engage with those tools.
My main point is we don’t have tools to allow the charitable sector to invest in and develop solutions that allow them to compete in a world where they are not competing with charities with the same barriers. They’re competing with purpose-based, for-profit organizations. There’s nothing wrong with that, but the tool box we have is different than what you have in the private sector.
There is an opportunity, when we think about innovation, to say if the Government of Canada is investing in industry innovation because they want to generate benefit in the economy, where is the innovation investment in the charitable sector to give us the capital tools we need to build our organizational capacity and invest in new tools and technologies? I don’t think we’re on the same level playing field. This is a real opportunity to think of the charitable sector as an important part of the economy that generates employment; it actually generates tons of public good, but it is increasingly going to be destabilized by growing competition with private sector organizations that have a different pool of capital to draw from.
We’re challenged to make those investments. We’re making them off of charitable dollars. The public asks, “Where are you spending that money? What does that do for your cost-revenue ratio?” That becomes a barrier and disincentive to be able to make the necessary investments in the sector’s capacity.
There is an interesting opportunity for the public sector and the government to think about what an investment strategy could look like; one that provides capital resources into the charitable sector, develop new tools for volunteer engagement and strengthen capacity to use technology. The other side is this: Is our talent oriented toward making use of new digital communications tools? Again, that costs money.
There are the tax tools, but if we think about the sector as a sector that contributes to the economy and good, where are the opportunities to make strategic pools of capital available for building our capacity? Because we don’t have access to those in the same way that others do.
Mr. MacDonald: I know you’ve heard from our chief economist, who has talked with you about the work he has done on the social deficit. We are projecting this gap between rising demand and the ability of society to pay for it, which he’s projecting that by 2026 it will look something like $25 billion. Philanthropy is a tool that can be used to help reduce that social deficit. Tax tools or tax instruments are one thing in that tool box.
The 30 Years of Giving study, which we had the good fortune of participating in with the Rideau Hall Foundation, was also showing this concentration of giving in older Canadians, with 30 per cent coming from people who are already in their 70s, 80s and 90s, and a doubling of concentration in 1 per cent of tax filers. It seems to me that instruments like the extension of favourable capital gains treatment to donations of real estate in private company shares is a good idea, especially in the short term. Because as we continue to have wealthy or older adults thinking about legacy gifts and contributions, the ability to take advantage of those types of tax instruments would likely be beneficial to the sector.
We also need to acknowledge that we live in a country that has one of the most generous tax regimes in the world. We consider that very fortunate. However, if there is an opportunity to be looking at targeted instruments that will incent giving, particularly with demographics that have the capacity to give, those are likely good things to do.
Ms. Smith: Some of the research around why people give suggests that younger donors aren’t giving to charities and non-profits because of the tax benefits. A lot of young people don’t know what the benefits are and how it works. When thinking about the giving capacity of younger donors, who don’t have as much to give, I think we should be broadening our understanding of volunteerism as a whole, how we understand what it means to be a volunteer. Young people don’t necessarily have the capacity to give financially, but then they don’t benefit in return from the tax benefits.
I wanted to point out that — again, from the perspective of somebody a bit younger — we are not necessarily giving to charities because of the tax benefits. It shows that it’s because we align with the values of the charity organization as to why we are giving. It doesn’t necessarily answer the question as to recommendations for changes to the tax benefit, but it offers a broader understanding of why people do give.
Ms. Pearson: The question of financing in the sector brings together a number of threads we discussed in the two earlier questions around volunteer capacity and staff capacity. If you have the money, you are able to hire, pay and retain the staff. It comes down to a question of funding.
I also want to come back to the point made earlier about the great differences between very large organizations, like universities, hospitals and cultural institutions, and the very small or mid-sized charities.
I was struck by the fact that in these questions around financing the sector, you talk about tax benefits for donors, philanthropy and government grants and contributions, but not about what actually most small- to medium-sized charities are looking at, which is earned revenue, earned income.
There was discussion in the previous panel around ways in which it could be made easier for charities to earn more revenue on a sustainable basis. I want to support the things said by the previous panel. I think a destination of funds test would be extremely helpful. I think looking at the question of activities versus purposes, and actually really regulating for purposes and not nitpicking on activities, would help a lot.
I think the government could do a number of things at the federal level — and this builds on what Dan was saying — to support the access of small- and medium-sized charities to IT investments, getting rural charities to connect to the Internet. Giving them grants for that kind of technological capacity would go a long way. Programs that the federal government runs for small and mid-sized businesses can easily be repurposed for small and mid-sized charities. We’ve been talking about this for years. This has been going on since the voluntary sector initiative over 10 years ago.
The solutions are there. I think the question is how to think about these organizations not as charities that need philanthropy, or not as voluntary sector organizations run entirely or mostly by volunteers — and I’m not saying that to be at all critical of volunteers. When you look at it one dimensionally in this way, you don’t get the full picture of what it takes for those small and mid-sized organizations to do what they do effectively. They could be supported by government in ways that go well beyond tax credits and different conditions around grants and contributions, as important as I think it would be to develop.
Senator R. Black: This is just a comment. Your comment about giving rural charities access to the Internet, that’s absolutely wonderful if the infrastructure is available. We know that now it’s not available across Canada, and so we can’t do it. That’s unfortunate for those small and medium-sized organizations that work in rural Canada.
Ms. McManus: It is true that younger donors give because they have a value set, but we can apply that across the board with donors. I have never met a donor in my entire life who gave because he or she got a tax credit. Where the tax tool may come into play is the size of the gift, if it’s part of their tax planning.
The vast majority of people give because the organization is doing something that they think is important. They want to pay it forward. They want to pay it back. They want to contribute to community. Those three things outstrip everything else. There is a values fit with them. How we can increase and grow that kind of revenue and the image of the non-profit sector, charities in particular, is by valuing work of the sector. It’s about being a recognized and trusted partner with government of all levels, as well as the donors and stakeholders that we’re working with.
We’re the only sector where we focus totally on expenses. No other sector, sub-sector or whatever focuses totally on expenses. “What does it cost to do that?” “How much are you spending to do that?” “Where’s that money going?” and “How do I know you spent it where it was supposed to go and none of it went to administration, salaries or overhead?”
You don’t do that in the private sector. In the private sector, risk is a good thing, because risk is how you grow and innovate. Risk is not possible in the non-profit sector, because it’s a misuse an unwise expenditure of funds, or it’s not going to the people we’re serving. It’s a very narrow perspective on that.
We have to raise and broaden the perceived value of the sector across the board.
The Chair: That preoccupation with expenses emanates throughout the whole sector, whether it be from the media watching the sector or from volunteers in the sector.
I can relate an incident from a zillion years ago, I went to do a contract for a charity, and I insisted on doing my work inside the charity — physically being there. I was there for a couple of days, and I overhear a volunteer asking the executive director, “How much money has that guy raised for us so far?” I barely knew where the washroom was, and one of the volunteers was questioning how much money I raised at that point. No fundraiser goes in and is able to instantly raise money. If he or she is, they’re probably the donor.
Ms. Speevak: Getting back to the question of tax receipts — and I know we were talking about this earlier with respect to tax receipts for volunteering — Kayla was saying about how people at different stages of their lives give in a way that makes sense for them. One of the options is to consider tax receipts not for volunteer time — because I think I agree with what Mr. Wyatt said about the burden on organizations and how you would calculate that — but a tax receipt for volunteer expenses. That could be things like attendant care, baby-sitting and transportation. Sometimes volunteers are paying for their own vulnerable sector cheques and whatnot. In the same way what medical expenses and other expenses can be considered, something to think about is whether volunteer expenses would make that easier or be a form of recognizing that investment, aside from the time.
Mr. Wyatt: Before getting to my point, I’m just going to comment on Ms. Speevak’s point. We can already do that. It’s not necessarily well-known, but the policy already allows that. If there’s an actual disbursement, the volunteer can file an expense claim. At the bottom of it, it says rather than paying me back, issue a receipt. We used to have to do the exchange of cheques thing. We no longer have to do that, so we can handle those sorts of things.
Part of it is that the sector doesn’t necessarily know what it can and can’t do.
On the topic of infrastructure — and I’m not going to disagree with anything my colleagues have said, whether it’s expertise or patient capital — but I also want it noted that this is not only government that’s not providing the funding; my colleagues in the funding community are not providing the funding either. There are precious few foundations, community or private, that are funding sector infrastructure, and we, more than anyone, should come to understand that this is critical.
If the committee wants to put a challenge out to the philanthropic community as well as government, I’m okay with that, because we should be picking up some of this stuff.
The Chair: Applications to the Muttart Foundation will be happening tomorrow.
Testimony also focused on the federal government’s increasing reliance on contribution agreements rather than grants, and the government’s reluctance to fund either administrative costs associated with projects or operating costs for organizations, more generally. The committee also heard that some contribution agreements with the federal government are for more than one year period but that few agreements provide the funding stability organizations need.
What impacts, if any, have changes to the duration of contribution agreements assisted the management of sector organizations? Are you aware of contribution agreements that cover administrative costs associated with project funding? If so, how are administrative costs calculated?
Would a standardized set of categories for reporting, like Australia’s National Standard Chart of Accounts, help with meeting reporting requirements? If so, would you recommend that they be adopted by provincial and territorial governments as well as the federal government? Finally, how, if at all, would you recommend that administrative costs associated with project funding be calculated and administered?
Who wants to have the first go at that? Come on now.
Mr. Wyatt: Let me start at the bottom. Find out what it costs to deliver a program and pay those costs — not 80 per cent of the cost, not 90 per cent of the cost but 100 per cent of the cost. Because we don’t do any fundraising in our foundation, I can say some things that my colleagues may not want to say out loud, which is that all of this attention paid to administrative overhead is absolute nonsense. The numbers are absolutely meaningless and tell you absolutely nothing.
Every year or every two years, before physicians entered into contracts with provincial governments over fee arrangements, they will say, “Well, the amounts aren’t that high because 50 per cent of the fee covers overhead.” I don’t know of anyone who selects their doctor based on the overhead the doctor has in place.
The same thing is true of the voluntary sector. If their overhead, however calculated, is different than somebody else’s, I am more interested in what they are accomplishing. What public benefits are they providing and to whom? That’s going to drive my donation behaviour.
It is really easy to pick numbers off a T3010, divide one by the other and say it tells you everything you need to know. It tells you nothing you need to know, and the sooner we realize that, the sooner we debunk that theory, and the sooner we have government and private funders saying, “Ignore those numbers, because they do not tell you anything,” the better it’s going to be.
Senator Duffy: Mr. Wyatt, how much of this focus on overhead is the result of urban myths, that somehow charities are taking the funds that people give them and wasting them? Anybody who has ever had anything to do with a charity knows just how bare bones everything is, yet there is this thing that seems to be looming. Is this politics?
Mr. Wyatt: I don’t think it’s politics.
Senator Duffy: Is it one or two bad apples years ago that created a situation that people saw, and people assumed it applied across the board?
Mr. Wyatt: As far as I can go back — and one of the problems, senator, being around as long as I have, is that you’ve seen too many things too many times.
Senator Duffy: I’m in that boat.
Mr. Wyatt: We can relate.
It seems to me that it had its start when some people did not like a certain type of organization and so started using this as ammunition. It has now turned into a whole industry. We now have whole publications that do nothing but allegedly report on administrative overhead. Whereas if I go in to buy an automobile, I have no idea how much each widget costs. I accept the fact that the cost includes all of the cost of building that car and delivering it to me. It’s not clear to me why community organizations should be regarded any differently.
Ms. Pearson: I support what Bob has just said, and I do think that private funders have to come together more effectively to discuss standards for supporting so-called overhead or administrative costs. Full-cost accounting by organizations in the sector would certainly help, and funders could ask for that and also support that, give grants to support the work that charities do in trying to understand their own business models and their own finances.
A standard chart of accounts idea is very important, and I think the Australians have given us a very interesting model that I think should definitely be pursued. That would certainly help private funders and public funders.
I go back to my point about there being different kinds of organizations, in fact at least two different sectors. When you think about universities which consider themselves to be charities, they are also turning around and charging costs to private funders. So if you enter into a donor agreement with the university — I know this is true because in our organization a number of our members have complained about this — a foundation that’s being asked to give a grant to a university will find out only when the donor agreement is presented to them that they actually have to put in at least another 30 to 40 per cent to cover the overhead charge. So universities are definitely passing on these charges to donors.
I think it’s definitely reasonable to recognize that there is a cost to doing the work that you do, and that should include salaries of the people administering the programs. I think in the private sector you have standards around what is reasonably considered to be the cost of delivering a program that you’re engaged in. I think it’s absolutely necessary for funders to recognize that, government and private funders. We have many models to look at. So recommendations to that effect would be very important for us.
Mr. MacDonald: To pick up on the theme, I think one of the other things that we need to think about is actual program quality and outcomes. Study after study shows that organizations that are not adequately resourced deliver poor programs. I spent most of my career working for service delivery organizations. I don’t have research at my fingertips to prove it, but I can tell you that we know when we had the dollars to deliver on program quality and outcomes, we could do it. When we were scrimping and under-resourced, the same kind of quality wasn’t there.
So I think this reframing of the conversation, if we’re talking about tax dollars here, around what it is that is actually delivering for citizens and that we want the highest quality programs in order for those citizens to take advantage of. Let’s invest in ensuring that the organizations have the tools to do it and stop focusing on the singular and wrong metric.
I’ve always said: Are questions about cost fair? Absolutely, because good organizations welcome accountability and transparency. But by themselves, they paint an incomplete picture of the work that the sector does and doesn’t allow us to raise or earn the dollars necessary to deliver the program quality that Canadians expect.
Ms. McManus: I want to speak to this from a fundraiser’s perspective because that’s why I’m here. Fundraising is often the whipping post when we’re talking about sector administrative costs. It often comes down to the fundraising costs.
If Bruce gave my organization $100,000, and I took $20,000 of that and raised another $250,000 with that $20,000 — math and percentages are not my strong suit but somebody can figure it out — that’s a pretty impressive return on investment. But if out of that $250,000 I raised, using Bruce’s $100,000 gift, I am now housing six more families, I am now getting 25 people off the street into at least affordable housing with supports or transition housing. That is actually making a significant contribution to the betterment of the community. But we never think of it that way, and we don’t ourselves.
I think we need to do a better job of that because we are so focused on how much it costs to raise that money, not what that money does and not our ability to leverage a portion of your philanthropic gift which, by the way, the raising of philanthropic money is not a charitable purpose, which has always seemed kind of strange to me because we’re raising philanthropic dollars for the charitable purpose but the raising of it is not.
It’s a different way to look at it. It’s looking at it from a return on investment as opposed to a cost perspective, which is more in line with the public sector and the private sector.
The Chair: It’s the constant argument that the money paid to raise the money is somehow illegitimate; but try to survive without it.
Mr. MacDonald: For me, it’s an odd narrative because a University of Calgary professor came out with a study about a year ago that showed the federal government was investing about $3 billion to the tax system in the charitable sector, which we seem to spend a lot of time talking about. Yet at the same time there was about $14.3 billion being invested through the tax system in the private sector and there doesn’t seem to be a lot of questions. I’m not suggesting we shouldn’t invest in the private sector that way, but the difference is one seems to be viewed as an investment and the other as a cost.
I think it would be nice if this sector and the delivery of the programs — and Dan framed it quite nicely in terms of how this sector is delivering programs for citizens — is actually viewed as an investment in society rather than a cost to society. It’s a different starting point.
The Chair: This is not a new argument. I’ve been in the sector for almost 50 years, and it’s the same argument that I had the first time I entered the sector.
Mr. Wyatt: If I can add, senator, about the standard chart of accounts. I don’t think we can emphasize too much the potential of those accounts. You’ve all written funding requests and you’ve all had to report on grants, and every one of them has a different format for the budget. What information does it need to be put in? Is it put in over the whole course or monthly? What is it?
Imagine, if you will, every department and agency of the federal government accepting the same format for the budget and accepting the same format for reporting. Imagine too that every time you enter that information in, it has meta tags so that you can then manipulate it whatever way you want to get the information you need for your particular agency. We would save hundreds of thousands of dollars a year of staff time if we adopted something like the standard chart of accounts. That means Treasury Board has to adopt it and make it the standard, and the Minister of National Revenue needs to prescribe it as the method for reporting on the T3010, but you would get huge cheers from anybody who has ever had to apply for or account for a grant.
Senator Omidvar: Mr. Wyatt, would this also mean that the government would agree to having a line item of administrative overhead? Could you stretch it that far so the Treasury Board and the CRA would accept the fact that administrative overhead is in fact an essential part of running a good not-for-profit and charity?
Mr. Wyatt: Senator Omidvar, I think we’ve got two different issues there. There’s certainly the ability to determine what the numbers are for administrative overhead, but in fact under that, there would probably be 20 or 30 different categories.
In Australia, once the Queensland University of Technology developed the chart of accounts and were testing it with the Queensland government, it was a software developer that does bookmaking software that then came and said, “We can do a program for that.” So the charity bought an off-the-shelf product, ran their general ledgers the way they would normally do it and then fed it up into the standard chart of accounts.
Yes, you can see administrative overhead, but the issue of accepting that there’s administrative overhead is something that needs to be understood within government and within the public. There have been periods in recent history when the biggest complaints about administrative overhead were from within government, and the government should know better.
Senator Omidvar: What I’m trying to suggest is maybe we could skin the cat in one way and accomplish two objectives.
The Chair: It’s interesting, Mr. Wyatt. I think you may have struck on something that may be formulated as a recommendation, and it seems like such a simple one. Mr. Chunilall, you’re next.
Mr. Chunilall: Thank you. In addition to the comments already made, within frameworks of contribution agreement, there typically is a requirement for evaluation, monitoring and measurement of the outcomes that are to be delivered on. Oftentimes the provisions to do that work are simply not enough. What I mean by that, charities typically don’t have that type of infrastructure for the type of ongoing monitoring and evaluation that the government would like. It’s not uncommon to see that charities would dip into unrestricted resources to ensure they can comply with large contribution agreements from government.
There’s an additional consideration of how we ensure accountability within contribution agreements that don’t handcuff the charity or cause it to build out a different type of infrastructure to meet those demands that they don’t necessarily have inherently within the organization.
The Chair: Thank you. We have 35 minutes left, so I want to make sure we get a chance to have a crack at a few of the other questions posed to you.
Many witnesses acknowledged efforts by the Canada Revenue Agency to offer clear guidance and support to organizations seeking charitable status or already having status as charities or as qualified donees for charitable contributions.
Further, in the government’s response to the Report of the Consultation Panel on the Political Activities of Charities, the Minister of National Revenue noted that the CRA has launched the Charities Education Program, that other methods of communication with the sector would be explored and that its web pages would be reviewed and updated.
How could the Charities Education Program best support existing charities? How could it best support applicants? What other methods of communication would be most useful to the charitable and non-profit sector? What changes should be made to the CRA web pages? Look at the hands pop up here. These are riveting questions that I’ve asked you.
Mr. Chunilall: I have a quick comment, and my colleagues will be familiar with this because I’ve raised it before. When you go on to the CRA website, to locate where charities are, you have to go across the web page about eight or nine different sections to the right, click on a tab and go all the way to the bottom of that tab under which there are 10 items, and charities are the last one. So we’re over on the right and down at the bottom to find information on charity, whether it’s a T3010 filing, et cetera. I think that inherently sends a signal, at least within the context of that web page, that we’re not that important. It certainly makes it difficult to find out any information on a charity when you have to go through those measures.
The other idea that’s been brought up in previous conversations is having a home for the sector. I would encourage that when and if that happens, charities would have a dedicated web page in as few clicks as possible so the public can find out information on us.
The Chair: I really like that recommendation. Mark me down as yes. Mr. MacDonald.
Mr. MacDonald: Just a couple of thoughts here. In terms of the Charities Education Program, if the resources were available to the Charities Directorate making it possible for charities to request visits through the education program would help to ensure they’re onside in their operation and reduce the likelihood of future compliance issues.
We understand the Charities Directorate is looking at reinstating road shows, regional workshops they used to hold to provide an education to charities. We think this would be strongly welcomed by organizations. I think there’s a real starting point that organizations want to be onside, so ensuring they actually have the knowledge to do so.
There’s obviously cost — and this is a very large country to do in-person stuff, so increased use of video conference, webinars and other technologies to be able to provide proactive opportunities for organizations to continually educate their staff and their board in these areas would be very helpful.
Ms. Smith: To my understanding, the Charities Education Program works off of a selection process, so I would be considering a report as to, out of the visits, which charities are being selected and why because perhaps there are some charities that are not being selected and they can’t request the visit themselves and that could be an issue. I know they were considering an on-demand service.
I just want to ensure that charities have access to this resource and it’s not disproportionate in terms of why they’re being selected and why they aren’t. Without that access, they won’t have the information they may need to comply with their obligations. I know it’s about 500 visits per year. Just wondering again why they being selected and how that process works.
The Chair: It’s almost viewed as a negative thing that they’ve been selected because they assume your guilt in this process without any evidence. Someone may have complained, or if there is random selection, the random selection is not clear.
Mr. Wyatt: We need to be careful that we don’t mix up the education program with the audit program. The education program, which I understand is designed for newer charities primarily after they have been around for a couple of years to make sure their books and records are the way they’re supposed to be. I think it’s a great concept. If there can be more, great. I fully concur with Mr. MacDonald’s comments about using the technology.
The announcement of the road shows was greeted with great excitement across the country because they were always sold out, but they are an expensive proposition.
We need to be cognizant. Let’s remember that 80 per cent of all registered charities in the country have annual revenue of less than $250,000 a year. We’ve all been through that situation where the change of officers means one person handing a shoebox of receipts to the next person and then it going into the garage.
We need to make sure that, not only are we answering their questions before they get into problems, but that they know where those answers are. There have been some changes in recent years. CRA and the Charities Directorate decided it would no longer give preapproval on draft objects. I’m not sure what the workload was, but that’s a huge issue for a small charity that has to hold a general meeting and may inadvertently approve something that will mean they can’t get registered. We need to find ways to deal with the demographics of the sector as we now have it.
The Chair: The objective should be to help charities get out of the shoebox business and into some modern record keeping so that the transfer of records from one executive to another is smooth and professional.
Mr. Wyatt: Something like the standard chart of accounts?
The Chair: What a novel idea. Here we go again, coming up with ideas that will work. We had better cut that out.
Many witnesses from within and without government described the importance of the effective relationship to the delivery of government-mandated services and in supporting the sector more generally. Many witnesses suggested that the sector needs a home in the federal administration outside the auspices of the tax regulator, Canada Revenue Agency. What department or agencies are best suited to act as a home for the sector? Two, how would such a home benefit the sector? Three, what role if any might a standing committee of the House of Commons, the Senate or joint, play in supporting the sector at the federal level?
Ms. Speevak: There are many suitable places that could become the hub for the sector. One that comes to mind is within Employment and Social Development Canada, the branch that has the mandate to promote volunteerism but also social financing and the capacity of the sector. If we look at a number of different instruments and places and mechanisms that would go together, you could have an administrative group within Employment and Social Development Canada that would do the interdepartmental work and convene the interdepartmental committee related to the volunteerism sector. You could also have a joint mechanism, as suggested here, to bring together people from the sector and from governments to deal with the relationship, as well as a federal-provincial-territorial table to deal in a more cohesive way with the issues that really belong in the provinces and territories.
There may be a secretariat hub in Employment and Social Development Canada that could resource these other mechanisms so that you’re not just dealing with regulatory, monitoring and funding relationships.
Mr. Wyatt: I take a different view. I think it would be a mistake to put the sector within a department. If there is to be a home for the sector, it needs to be one of the central agencies so it has a pan-government mandate to look at issues.
The Chair: Such as?
Mr. Wyatt: PCO, probably. Going back to the time of the voluntary sector initiative, there were some departments that did not want to play nice, to appoint people to the joint tables that had been established. It wasn’t until the then clerk had a breakfast with the deputies and said, you need to understand that the Prime Minister has made this one of your objectives for the next year. Then some deputies started playing along. Without that weight, I think we will lose a lot of problems. Even ESDC is yet another department going to the Department of Finance. That looks different than PCO phoning the Department of Finance.
We can look at that. I fully agree with the idea that getting something on an FPT conference table would be magnificent. The Australian National Standard Chart of Accounts was adopted at a meeting of first ministers of the Commonwealth and states.
I don’t remember any time that an issue related to charities has been on a first ministers’ agenda in Canada. I would like to change that.
Mr. MacDonald: I want to start with how such a home would benefit the sector. It goes back to Senator Omidvar’s question around “what is the sector?” If you think about this, we have these constructs of charities and non-profits and emerging groups of social entrepreneurs, a whole swath of social finance instruments that fits in there.
We’re seeking a place where social good can thrive in this country, a place where a holistic enabling look is taken when government thinks about this work. One of the challenges with CRA is that its role is not to create enabling policy. It is there, in a sense, to monitor the policy that is set or the rules put in place for them.
We seek a place to have a conversation so that the economic strength of this sector, the ability to thrive community by community, to evolve and adapt, continues. We need a home. Whether that’s PCO or ESDC, that’s open for conversation, but this nation is less rich as a nation if we don’t look after the health and well-being of this sector. I would argue that most Canadians don’t think about these services until they need them and they have come around to expect and enjoy the privilege of having those services. We have to find a home in there so that when government is thinking of policies, they proactively think about the impact of social good.
Ms. Pearson: Bruce and I are co-chairs of a committee, but that doesn’t necessarily mean we agree. I want to address this question and turn it on its head. I’m not sure I agree that there can be a single home within government for the sector. I would like to challenge that idea. The recent paper written by the Mowat Centre called “Breaking the Inertia” talks about the different roles in relation to this sector. That is a starting point.
You can’t really, in my view, house all of those roles of the federal government in one place. The regulator, CRA, has to continue to do its regulatory job. One could argue about whether regulation could be done inside or outside government but that is one function. You have research, data, data collection — which we haven’t talked about. That could be done in a different part of government. Policy and policy development work happen issue by issue, department by department, across government.
Funding and the structures and rules around funding, perhaps through grants and contributions, could be housed in Treasury Board as it is now. It would be difficult to think about one home within government. Government can certainly help in creating stronger homes in the sector.
To come back to a point made earlier, the sector’s infrastructure is in desperate need of funding. The sector can’t engage in these conversations with government. You could set up a hub inside government. There would be no one on the outside to try to talk to, except us in our very under-resourced organizations. To take another Commonwealth example, in the early 2000s, the U.K. government launched a series of coordinated efforts to build and support infrastructure within the sector. They were setting up an organization to do capacity building for organizations in the sector that provide social service delivery for government: “What works” centres, evidence-building centres to support policy work in the sector and in government, data collection, supporting all of us to do what we do better, advocacy, and policy development work on behalf of the sector as a whole.
I think the government should be thinking that way. How do we build homes for the sector in the sector and not within government alone?
That is just a suggestion in terms of thinking about that. It’s something that would be a very helpful recommendation for us.
The Chair: I’m encouraged that both you and Mr. MacDonald will have a good discussion and start the process. I hope the discussions continue.
Mr. Clement: It’s not an either/or answer. That is the point. First of all, I would ask the question: Are there a lot of conversations going on inside government within the various ministries as they are developing new strategic initiatives that say: Does this relate to the charitable sector? Should we build them into the program and spend hundreds of billions of dollars on infrastructure? Is anybody thinking about the opportunity in terms of building social capital?
If that conversation is not happening, you need a strong voice outside government to shape that conversation but you also need change on the inside. You need a representative voice who is paying attention and having a conversation to say that, actually, as a government and a series of departments, we’re not paying attention to an entire sector of the economy that could be creating a significant opportunity.
I like the idea of doing both: that is, having a place inside government where you have change agents who are profiling the value and the importance the charitable sector across departments that are asking the questions that likely aren’t being asked because no one is a champion.
I think it would be a little bit better if we can do both.
The Chair: You’re making Senator Duffy happy.
Mr. Wyatt: There is a reference to a joint committee. I want to suggest an alternative to the joint committee and that’s a caucus of parliamentarians concerned about the voluntary sector across benches in the House of Commons and Senate. Invite people from the sector to talk about current issues. This committee had its immediate impetus from such a caucus meeting.
The senators and members are then in a position to go to the various committees on which they sit and are questioning the departments that they’re involved in on issues affecting the charitable sector, so we get some of what Don is talking about. If departments appearing before the House of Commons and Senate committees know there is likely to be one member who is asking about the impact of the program on the voluntary sector at every meeting, you’re going to start getting answers and will start getting that attention. You’ll become part of the thinking process.
The Chair: You’re absolutely right, although I would add that the workload of members of Parliament and senators is significant. It is not that we can’t do other things, it’s the efficiency of these meetings. If you have a meeting that is a caucus on the charitable sector and it’s voluntary to go, it’s on your agenda but on your way to that meeting, another item could pop up. It’s bumped off the agenda too easily.
I’m more anxious to have it in a structure where I have to go to this meeting because I’m on this committee or I have this responsibility. I’m on four committees and those four committees get my priority, but there are a whole bunch of other things going on that I want to go to. I don’t have time to do it. I manage them out of my life because I only have a limited amount of time and physically it becomes demanding because you get here at eight o’clock in the morning. It is now 5:15. I’m not out of here yet, and this is Monday, and that is the easiest day of the week or us.
I don’t disagree with that being a good place to start, but I wouldn’t look for it to be the answer. It may be a good place to generate discussion.
The government’s response to the Report of the Consultation Panel on the Political Activities of Charities announced the creation of a permanent advisory committee on the charitable sector. The ACCS will provide a recommendation sent to the Minister of National Revenue and the Commissioner of the CRA on important and emerging issues facing the charities and qualified donees on an ongoing basis.
The committee would be co-chaired by two sector representatives — I don’t know who they would be, but they would probably be very good people — as well as CRA’s Assistant Commissioner of the Legislative Policy and Regulatory Affairs branch and 12 other members from the sector and the federal government.
Does this advisory committee constitute a sufficient home in government for the charitable and non-profit sector? What additional federal government representation would most meet the sector’s need in its relationship with the government?
Ms. McManus: With all due respect to Hillary and Bruce, who are formidable, I would offer an unqualified no. The advisory committee would report through finance and I think that just furthers the connection to the Income Tax Act and compliance and regulatory affairs and would make the whole opportunity to build capacity in the sector subsumed to that.
Ms. Smith: I’m also of the view that it’s more considered an inn and not a home, and I think that is something that I heard Bruce from Imagine Canada say. It is a great start, but I don’t think it’s sufficient as a home.
Going back to the last question talking about the benefits of having that home in the federal government, I think the centralization, transparency, accountability and efficiency of having something more permanent in the federal government is really important.
I think it speaks a lot more to the sense of priority the government is putting on the charitable sector and what can be done.
The vast majority of all these recommendations we’re talking about cannot be done through this advisory committee. I think something more robust is really important.
The Chair: My opinion is that the election of the co-chairs has been an important step in the right direction because of the quality and the seniority of the co-chairs in the sector. The next part is just as important, if not more so, and that is the selection of the rest of the panel. That’s where we’ll get down to the places where the problems are. We need the leadership.
Senator Omidvar: I’m going to ask a question related to political activities. When we started our work, we were burdened with the question about political activities and that worry passed from us because the federal government made a policy decision. We know how the story unfolds from there.
I’ve heard a lot of concerns that it is, in fact, the directive that the CRA will issue to respond to the policy that is still not clear. People are very worried that that CRA will again embrace its role as the regulator to come down with guidelines, especially on direct versus indirect partisanship, in a way that muddies the water and is of great concern, obviously, to them.
Is this something you will keep your eye on? Is this part of your mandate? Do you have a mandate?
Ms. Pearson: I think we are still talking to the Canada Revenue Agency about the mandate. There is a very general statement, and I think Tony Manconi and his colleague Sharmila Khare from CRA talked about this last week. The mandate is framed at a very high level and I think it’s our job as a group of sector representatives to try to get more specific about that mandate and what it will include.
Hopefully, the fact that it is framed very broadly right now as being advisory to the agency on issues affecting the sector is a good thing because it hasn’t taken anything off the table. Bruce and I have had this conversation and we are of the view that the committee should take on a broad range of issues, but should also be guided by what organizations and people in the sector want to convey to the regulator.
We understand that this is within the framework of regulation and it isn’t able to, I don’t believe, at this point, talk about some of the very broad policy issues we have been talking about today. I think there is room in the mandate for us to push forward. I do believe this is a two-way channel, so it’s a committee of people who will advise the regulator, but I also believe we can go back to the sector and provide information to the sector in a way that we have not been able to do recently.
Again, going back in history, going back to 2005, one of the things that was clear at that point was that we needed this kind of permanent channel in order to be able to have these ongoing conversations with the regulator without us having to be supplicants or stand at the door, knocking on it and hoping the door would open. A committee was set up and unfortunately was de-funded when the Conservative government came in. However, we’re trying again and it’s important for us to see this as an ongoing conversation with the regulator.
Senator Omidvar: Mr. MacDonald, could you respond to the specific question about aligning direction and interpretation of guidelines with the policy ethos? There is always a dissonance and how do we address that?
Mr. MacDonald: Whether that falls into the purview of the advisory committee is yet to be determined. However, looking at the consequences of the ripple effect of that decision is definitely within the mandate of Imagine Canada. That’s part of the work we do with and on behalf of the sector. We will be looking to see. This was not unanimous among even sectoral leaders around this decision. Most sector people were strongly in favour, but there were vocal advocates who were saying the sky will fall.
It’s important for us to look at the implications of the decision. There was data out of Australia and New Zealand that showed a number of advocacy organizations went down after a similar decision, yet there were people saying you will have interest groups trying to get charitable status. This is part of our ongoing role at Imagine Canada and it may or may not fit into the overall role of the advisory committee.
The Chair: I want to say something to you two in particular. You see who is around the table. You’ve seen the witnesses we’ve had and heard the testimony. This is a sector that is hungry for change and hungry to be heard. If you read nothing into our report, read that there’s a cry for help. We have been extremely impressed as a committee with the quality of presentations that we have had from big organizations, small organizations, from people we knew would come to talk to us and people who we were surprised came to talk to us. Our testimony is there. I would commend the testimony from all of our committee meetings to you and subsequently to your panel when it’s assembled.
One of the problems we’ve always had in the sector is we haven’t had a body of research. Well, we’re about to provide you with a body of research. We hope it is of some help and if nothing comes of this committee report, other than the fact that we give you some of the information you need to do your job, that will be a success. However, there are specific recommendations we will be making that we hope the government acts on. We would also hope that once we make our report, as your panel gets established, you will want to comment on those, to whomever you will be making comments. We encourage you to do that.
Colleagues, this has been a tremendous session today. We’ve had two long panels this afternoon. It has been worthwhile and it was a different style of meeting. Those of you who have been here before will know that we have testimony and then we ask questions. This was a method where we hoped to generate some discussion — not necessarily debate but discussion — about questions that have arisen.
I want to thank you for participating. It has been very useful to us. And we also hope that it has been useful to all of you, but particularly Ms. Pearson and Mr. MacDonald. I can assure you, and I think I speak on behalf of committee members, we are available for any consultation after you get going if you so desire. More importantly, we hope that you get to work quickly because the sector, as I said, has been saying we want a change and we want to do this quickly. There will be some recommendations that we hope if government responds quickly that may help along the way.
We didn’t touch the last two questions. If you get a chance to read those two questions and have particular comments, please respond by sending a note to the clerk. And there is a small technical aspect of our closure. We’d like to take a picture with everyone tonight, over against that wall. Someone will organize that but I will not, although I will be in the picture.