Proceedings of the Standing Senate Committee on
Issue 21 - Evidence - June 6, 2012 (afternoon meeting)
OTTAWA, Wednesday, June 6, 2012
The Standing Senate Committee on National Finance met this day at 2 p.m.
to examine the subject matter of all of Bill C-38, An Act to implement
certain provisions of the budget tabled in Parliament on March 29, 2012, and
other measures introduced in the House of Commons on April 26, 2012.
Senator Joseph A. Day (Chair) in the chair.
The Chair: Honourable senators, I call this meeting of the
Standing Senate Committee on National Finance to order.
Honourable senators, today we are continuing our study of the subject
matter of all of Bill C-38, an Act to implement certain provisions of the
budget tabled in Parliament on March 29, 2012 and other measures.
Honourable senators, this is our twelfth meeting on the subject matter of
Bill C-38. This afternoon, we will be hearing from witnesses with respect to
the proposed amendments to the Income Tax Act, a related act, and the Income
Tax Regulations contained in Part 1 of the bill, specifically as relating to
This afternoon, we welcome Vivian Krause, who is a Vancouver-based
researcher and commentator on Canadian public policy issues. Welcome. We
also welcome Marcel Lauzière, President and CEO of Imagine Canada, a
national umbrella for charities and non-profits here in Canada.
I understand each of you have some introductory remarks. You know we are
dealing with the entire bill. Our primary focus is on charities but, if
there is any other part of the bill that relates to charities directly or
indirectly, we would be pleased to hear from you in that regard.
Colleagues, I am at page 6 of Bill C-38, clause 7, which I believe is the
area we are starting to focus on.
Ms. Krause, you have the floor.
Vivian Krause, as an individual: Thank you, sir. I believe I have
roughly five minutes for opening remarks.
The Chair: If you take six, I would not chastise you.
Ms. Krause: That would be appreciated.
I would like to make my comments in English, but I will be happy to
answer questions in English or French afterwards.
My name is Vivian Krause. I have a Master's of Science and for 10 years
during the 1990s I worked with the United Nations Children's Fund in
Guatemala and Indonesia. I have seen firsthand the positive potential of
international philanthropy. I have also seen how it is sometimes used as an
instrument of foreign policy. During 2002 and 2003, about 10 years ago, I
worked in the salmon farming industry in British Columbia, so I am well
aware of the environmental campaign against that industry.
Over the past few years, I have written a series of papers and articles
published in the Financial Post about the science and the funding of
environmental campaigns, particularly against the aquaculture industry and
against Canadian oil. I find that, in both cases, environmental activism is
being funded as part of a marketing strategy in favour of American
The campaign against farmed salmon, and farmed fish in general, has been
funded as part of a $90 million market intervention strategy to prop up the
demand for wild fish from commercial fisheries that are deemed sustainable.
By scaring consumers and retailers away from farmed salmon, as environmental
organizations have been doing, they have swayed market share back towards
wild salmon, most of which is Alaskan. This has not helped to mitigate the
real environmental impacts of salmon farming, but it has helped to soften
the market impacts of aquaculture on commercial fisheries.
Our country has the largest coastline in the world and we are right next
door to the single largest seafood market in the world. If aquaculture were
to thrive in Canada, it would pose fierce competition to the Alaskan
commercial fishing industry and the communities who depend on it for their
livelihood and their traditional lifestyle. By funding the campaign to
thwart aquaculture in Canada, Americans foundations have helped to protect
the market for Alaskan commercial fisheries.
I have no doubt that the people who are on the front lines of
environmental campaigns care profoundly about the environment and that the
American foundations that fund their campaigns do too, but there is more to
it than that. There are economic and trade interests at play.
The campaign against Alberta oil is being funded as part of a massive
campaign to foster the renewable energy industry in the United States. The
renewable energy industry is domestic energy. It is local, not imported.
When you invest in renewable energy, you increase the energy security, the
energy independence and the national security of the United States.
Americans spend over $1 billion a day on imported foreign oil. That is money
that is not going to create jobs in the United States. That creates jobs
here in Canada and in other countries from which the Americans import oil.
The Americans are now well aware of this, and that is one of the reasons
they are so determined to develop the renewable energy industry. It is
because it is domestic, not imported.
The role of American charitable foundations in creating the renewable
energy industry is described in a strategy paper called "Designed to Win.
Incidentally, this is also one of the touchstone papers of the U.S.
presidential climate change project to create the climate legacy of
President Barack Obama. This paper clearly notes that voter and consumer
education campaigns are funded as a way to drive massive investment flow
from so-called dirty energy, which refers to coal and Canadian oil, oil in
general, and toward clean energy, which refers primarily to solar and wind.
Earlier this year, a document from the Rockefeller Brothers Fund was
unearthed by Sun News, in which their tar sands campaign against Canadian
oil is described. According to this document, the Rockefeller Brothers, the
Hewlett Foundation and the Tides Foundation are spending roughly $7 million
per year on a coordinated campaign involving leading environmental
organizations — the World Wildlife Fund, Greenpeace, Sierra Club, Forest
Ethics, the Pembina Institute and others.
The first goal of this campaign is to stop or limit pipelines and
refinery expansions. The pipelines that the Rockefeller Brothers are
concerned about are listed in this document. They are the Mackenzie pipeline
and the northern gateway pipeline.
This campaign seeks to block oil tanker traffic, but only on the
strategic coast of British Columbia and in the far North. Never mind the
dozens of tankers that bring oil into the United States on a daily basis,
the only tankers that the Rockefellers are funding a multi-million dollar
campaign against are the tankers that would allow Canadian oil to be
exported to Asia.
The way that the Rockefeller Brothers intend to stop pipelines and oil
tanker traffic is specifically listed in this document — by raising the
negatives, raising the costs, slowing down and stopping infrastructure
development and involving key decision makers.
One of the reasons that this campaign concerns me is that I believe that
we need environmental activists. We need them to keep government and
industry on their toes, but we also need them to play the role of honest
broker. I do not see how they can do that at the same time that they are
participating in the Rockefeller Brothers' multi-million dollar tar sands
campaign that aims to raise the negatives and choke one of our country's
most important industries. I can see how a campaign to prop up Alaskan
fisheries and a campaign to bolster American energy security provides a
tangible benefit to the American people, but I do not see how it benefits
Canada when Canadian environmental organizations lend themselves to an
American campaign against a Canadian industry.
From a Canadian standpoint, these campaigns do not appear to be
exclusively charitable, which is what the activities of Canadian charities
are supposed to be. To be considered charitable, the Canada Revenue Agency
says that an educational activity must be reasonably objective, based on
factual information that is fully and fairly analyzed. Some of what
environmental activists are saying is false. A classic example of this is
David Suzuki's false claim about farmed salmon being heavily contaminated
with PCBs and other toxins. The truth is that farmed salmon are actually low
in contaminants and higher in Omega-3 fatty acids than any other commonly
eaten fish. Another false claim is that oil sands operations are degrading
an area the size of England or Florida. England is 130,000 square
kilometres; Florida is 170,000. The Alberta oil sands operate on
approximately 600 square kilometres.
I am also concerned because in the U.S. tax returns for some Canadian
charitable tax foundations that I have reviewed, I have found surprisingly
high salaries, million-dollar payrolls, millions of dollars of payments to
consultants and relatively large payments to the spouses of directors that
are involved. I see questionable payments made by charities to PR firms and
investment firms, where the directors of the charities are involved.
Twenty years ago environmental activists had virtually no money. That has
changed. Multimillion-dollar campaigns are now being funded by
billion-dollar foundations. With more money comes more responsibility. My
hope for the future of the environmental movement in Canada is that as it
comes to age, it will rise to the challenge of meeting public expectations
for the basic fundamentals of honesty, integrity, transparency, fairness and
accountability. Environmental activists expect no less from government and
industry. It is fair to expect this from them.
As someone who is currently a director of a federally registered charity,
I know that Canadians are generous and trusting of the charitable sector. It
is important that this trust is kept. On that note, I support the budget
allocation that will allow the CRA to increase is the transparency and
accountability of charities, particularly those that are both politically
active and foreign funded.
I also believe that Canadians deserve access to sufficient publicly
available information so that Canadians can judge charities for themselves.
My hope is that in time the CRA will make publicly available roughly the
same information as the IRS with respect to the names and compensation of
the highest paid directors, employees, contractors and the programs funded
by charitable organizations.
In closing, thank you for the invitation to testify today.
The Chair: Thank you very much, Ms. Krause.
We will now hear from Mr. Lauzière.
Marcel Lauzière, President and Chief Executive Officer, Imagine
Canada: Thank you for the invitation to appear before the Standing
Senate Committee on National Finance. I am the president of Imagine Canada,
an umbrella organization for charities in Canada. Our primary mandate is to
work to strengthen charitable organizations so that they can better serve
Canadians and communities here and around the world.
The federal budget announced new disclosure measures for political
activity by charities. There are three things happening: First, there will
be some new questions on the T3010 form, which is the annual form that
charities send into the Canada Revenue Agency; second, particular
foundations will not be required to report differently on that 10 per cent;
and, finally, there will be what CRA calls intermediate sanctions that may
be applied in the case of inaccurate reporting. That will touch political
activity but any type of inaccurate reporting from charities.
I am pleased that these measures in no way change the 10 per cent rule
for political activity, a rule that has been in place for many years and
that has been working quite well. Charities can still do political activity
that is essential as defined by the Canada Revenue Agency just as before.
The changes are in how we will need to report on these activities.
With respect to the practical impact on these changes, we will have to
see what the new questions are on the new T3010 form and how they will be
applied. As always, the devil will be in the details. We have been in
communication with the Canada Revenue Agency and the discussions have been
productive. Our hope is that the reporting burden will be kept to a minimum
so that any new questions will not add to the reporting of charities to the
extent of preventing them from fulfilling their mission. We must remember
that the new measures will add to that reporting burden, which means added
compliance and overhead costs.
Canadians want charities to keep costs as low as possible. During the
hearings on charitable giving, the House of Commons Finance Committee
commented on the need to keep administrative costs as low as possible. It
will be imperative that the burden be kept reasonable and that the cost does
not outweigh the public policy benefits.
All of this said our real concern regarding political activity has been
recent language used by ministers and some senators. That has, to be frank,
created real uncertainties in the charitable sector and beyond the
environmental sector. Many have told us that they are worried that they
should not engage in public policy at all. This goes well beyond
environmental charities. I am talking about charities involved in social
services, in poverty alleviation, in the arts, in health, in education and
in service to people with disabilities. People from those types of
organizations have all told us that they do not get it and that they no
longer know what is happening. They are worried about participating in the
public policy process. Whether intended or not, this debate and the language
used has really impacted the entire sector. That is the main message I would
like to put forward today: I am hearing that a number of volunteer board
members from across Canada are expressing worry as to whether they can
appear before a parliamentary committee such as this Senate committee today.
Charities have a long and proud history of working with government on all
levels on crucial policy issues. This has served us well as a country and
has been valued by Canadians by governments for good reasons: Charities work
at the coal face of most of our intractable social, economic, cultural and
environmental issues, dealing with individuals, communities and our economy.
As a result, they bring a knowledge base that is crucial and complementary
to the knowledge and the data that government can bring. That is a good
thing. It creates debate often and creates questioning. That is also a good
thing. Good public policy comes from bringing to the table a variety of
different perspectives. As a country we have benefited from this perspective
and I cannot imagine why we would want to put this in jeopardy. I think the
chill that is being created right now is putting that in jeopardy. In fact,
many of my colleagues around the world are envious of Canada and the
strength, resiliency and vibrancy of its civil society organizations.
Anything we do, we must do in terms of supporting the work that they are
doing. They are working with governments. No legislation, no decision goes
forward unless a government has decided to go forward. The last word is the
government's word, not the word of the charitable organizations.
Who can argue against what governments and charities have achieved
together? Smoke-free workplaces were seen as radical 25 years ago and
unlikely for many Canadians. I think about measures to fight drinking and
driving. We have seen the success of those. The National Child Benefit has
made a real dent in child poverty in Canada. There is the Canada-U.S. acid
rain treaty, which came from the environmental sector; and better access to
medically necessary drugs that often governments were not interested in
moving forward with but finally did decide to do so after hearing what
charities had to say about it. The recent Disabilities Registered Savings
Plan launched by this government has been a huge support to persons with
disabilities and, more recently, the Maternal Infant Health Strategy that
was put forward at the G8 and the G20 in Toronto and is now on the agenda of
all countries. Canada has played a leadership role on that front.
What all of these achievements have in common is that none of them would
have been possible without the leadership of so many charities and the
millions of people that support them in one way or another, and none of this
would have been possible without a strong relationship and partnership
between charities and government. It is important not to jeopardize that.
My hope is that we can begin to celebrate the work of charities in a way
that will make us all proud and that we start looking at how charities will
resource themselves in times of austerity to support Canadians in the best
possible way. For me that would be the most helpful conversation.
In closing, I will say that contrary to some statements that have been
made, charities in Canada may not be perfect but they are committed to
transparency and disclosure. Imagine Canada, the umbrella for charities
across the country, just launched, with the support of the charitable
sector, a new world leading standards program that exists in few countries
around the world. This is an accreditation program for charities. We are
encouraging charities to come through that program and there is a lot of
support for it. That, I think, is a program to continue to build trust and
confidence in our work because we need to do that.
Working with the Canada Revenue Agency, we launched CharityFocus, a
citizen-focused, one-stop portal for all 85,000 charities in the country. We
felt that the information that is on the charities' directorate website
around the CRA information is public but it is difficult for Canadians to
access all the information that they need. We created this new portal to
make it easier so that all Canadians can have that information.
All of the data that is brought to the Canada Revenue Agency, including
the foreign funding they receive, is on that portal. It is up and running
now. It has been running for two months now. We are encouraging charities to
add additional information to that because, in our view, it is really for
Canadians to be able to make their own decision on who they want to support.
To do that, they have to have the right information. There has to be
transparency and disclosure. On this front, I think we are moving in the
right direction. For me, that is the type of engagement and support that
will benefit all Canadians.
The Chair: Thank you very much, Mr. Lauzière. We will now open it
up to questions and comments from senators. We will begin with Senator Buth,
Senator Buth: Ms. Krause, you talked about some of the charities
using market strategies essentially in the same vein as political
activities. You essentially indicated your support for the changes to this
legislation in terms of greater transparency.
Have you had any feedback from the general public in terms of how they
perceive these proposed changes to legislation? We know that an Angus Reid
poll showed that 80 per cent of Canadians were supportive after Budget 2012
was announced, but is there any other information in terms of how Canadians
are feeling about this legislation?
Ms. Krause: Specifically about the legislation? Yes. To be honest,
I get a couple of emails every day from someone just out of the blue. Since
I started my blog, which is called Fair Questions, I think about
80,000 people have read it, and about 15,000 of them have come back more
than once, so there is obviously some interest. I have received hundreds of
emails from people just appreciative of the information and saying that this
should be available in Canada and we should not have to go to American tax
returns to get answers to the questions I have been trying to raise.
Senator Buth: Mr. Lauzière, you made the comment that one part of
the focus should be on how government can work with charities to figure out
how they support themselves in times of austerity. I wonder about a little
background before I ask another question of you. How have charities been
surviving in terms of the last couple of years or the last four years since
we saw the market issues in 2008?
Mr. Lauzière: It is difficult, no doubt. It is difficult for every
segment of society. It is difficult for business and difficult for
government and difficult for charities also. Essentially, charities have
three sources of funding.
The first one, in no order of priority, is governments. That will be
difficult in the years ahead because of deficit situations, and also because
many governments are rethinking the role they want to play. That will be a
challenge in the years ahead, and it already is.
The second one is philanthropy and donations. We are not in a crisis
situation on that front, and Canadians are still extremely generous, but we
are seeing a slow erosion of donors in Canada. We have been pushing
something called the stretch tax credit that would actually encourage
Canadians of all walks of life to give and continue to give more. We really
feel that over the next 10, 15 or 20 years our charities will be in very
difficult situations unless we do something to challenge Canadians to engage
The third is what we generally call earned income, that is, fees,
programs and products that you deliver.
There has been a lot of talk, and the government has put forward in this
budget this year and the year before, of moving forward more boldly around
looking at social finance and new ways to access new forms of capital for
charities. We do have to move on that, and we have to move more quickly than
we have. A variety of things need to happen.
It is difficult right now, not only for charities but for Canadians
generally. We have to work on all of these fronts, but particularly on the
philanthropic side of things and on the earned income, which is where we
need to be putting a lot of our emphasis. It is not to support charities to
support charities; it is to support charities so that they can, in turn,
support Canadians and communities.
Senator Buth: The importance of charities is clear to all of us,
and I appreciate your comments in terms of overall support of the proposed
legislation because of the transparency. Do you think the charities under
your umbrella group are aware of the 10 per cent rule?
Mr. Lauzière: Charities are well aware of the 10 per cent rule. A
lot more education can be done, and there is no doubt. That being said,
there is only a small minority of organizations that really get into
political activity. That is the 10 per cent. Organizations can do education
and advocacy and push ideas for it, and that is not part of the 10 per cent.
They cannot do anything that is partisan or appears to be. That is for sure.
The 10 per cent is around political activity, which is a call to action, to
change legislation or to support legislation. Organizations do have to
report that to the CRA, on the T3010 form.
What will happen following this budget will be more questions probing
into that a bit more. That is what we are looking at with the Canada Revenue
Agency, to ensure that those questions are the best possible questions and
make sense and do not add too much burden on organizations.
Of course, there is education to be done in terms of that 10 per cent at
all levels. Overall, it is a small percentage of organizations that actually
get involved in that political activity piece. It has been important. The
Canadian Cancer Society in the 1980s did a lot of that around tobacco. The
examples I gave were all part at one point of a call either to change
legislation or to bring in new legislation.
Senator Buth: Are you working closely with CRA now in terms of
Mr. Lauzière: We are. There is a very good relationship with the
Charities Directorate at Canada Revenue Agency. They are a strong regulator,
as they should be. We would not want to be working in an environment where
there is not a strong regulator because if the regulator is not strong, then
the rogue charities out there will paint the whole sector with a bad brush.
We are very supportive of the work that the Canada Revenue Agency needs to
do in terms of ensuring. CRA has and has always deregistered charities if
they go over the line, and they will continue to do that. That is my sense,
anyhow. You would need to speak to them, but it would be my sense that that
will continue. If organizations go over the 10 per cent or over any other
rule that is part of what regulates charities, then the CRA needs to come
Senator Ringuette: I had not realized that I had put my hand up,
but I certainly have questions in relation to transparency and
accountability and the issue of facts.
Mr. Lauzière, I very much appreciate your comments. Your member
organizations must be very proud of the fact that you aim to ensure that the
work of charities in Canada is transparent and based on a standard.
However, we also have to respect the fact that many charitable
organizations have a social and economic mission. In order to make progress
on certain issues, organizations have to engage in political action. So, I
would like to express my sincere appreciation, Mr. Lauzière, for your
comments. They certainly met our expectations.
Ms. Krause, you were talking very fast in your opening statement. I have
tried to recapture what you were saying. You emphasized that facts should be
easily accessible and that there should be transparency and accountability.
Do you have the facts to give the clerk of this committee in order to
sustain the examples that you have given us? I would like to read about
Ms. Krause: I would love to provide you whatever you would like to
read. Some of what I have written is published in the Financial Post.
Senator Ringuette: I am saying that in your opening statement you
put an emphasis on facts. You have given us a few examples. I would like to
have the facts to back up the examples that you have been telling us about.
Is that possible?
Ms. Krause: Yes.
Senator Ringuette: Could you direct that to the clerk so that
every member of the committee will have access to that?
Ms. Krause: I am not sure which particular point you want me to
provide further information about.
Senator Ringuette: Maybe you can reread your statement and provide
us the background and facts about the issues you have put in front of us.
Ms. Krause: I would be glad to provide whatever further
information I can.
Senator Ringuette: I am looking at facts versus anecdotes.
You seem also to put a lot of emphasis on U.S. influence in our
charitable organizations in Canada. Are you also familiar with U.S.
influence in regard to the lobbyist community in Canada?
Ms. Krause: I think I am well aware that certainly lobbying is
part of business. I am glad you raise the point because I would like to say
that as a director of a charity myself, I have been involved in the
charitable sector for probably since I was a child fundraising. I think the
concerns that I have been raising pertain to a very small segment of the
overall Canadian charitable sector. I am concerned that the problems and the
concerns over a small number of charities should not reflect on the entire
charitable sector because, as has been said, so much good work is being
done; I would not want that to be jeopardized.
Senator Ringuette: I am going back again to my specific question
and looking for a specific answer. I am saying that there is probably U.S.
finance lobbying being done in Canada for the business community. Would you
know about that? Would you have facts about that? That would pretty much
outweigh, to any extent — probably overwhelmingly — whatever little U.S.
donation is given to a charity in Canada. Would you know the flip side of
the argument here?
Ms. Krause: I think the fact that American influence or lobbyists
are involved in some way in Canada not only from the United States but also
from other countries in no way makes it correct for Canada to be receiving
tens of millions of dollars of what is essentially foreign aid.
Senator Ringuette: It is okay, then, in your perspective, for
lobbyists in the business community to have millions of dollars in order to
lobby the Government of Canada on a specific issue or on specific issues or
sector but it is not okay for charities to have some money to give facts to
the Canadian population?
Ms. Krause: I think the difference is transparency.
Senator Ringuette: Yes, I certainly do agree with you because the
lobbyist community are not transparent in regard to the salary of the CEO,
the salary of the lobbyist and how much money they get from the U.S. There
are many issues there in regard to transparency and accountability.
When we look at issues, I certainly would like to see the whole thing. If
we want to discuss the U.S. influence in Canada through charitable
organizations, we also must look at the U.S. influence in Canada in regard
to the billions of dollars that lobbyists have on a yearly basis in Canada.
We see them every day on Parliament Hill.
Ms. Krause: I see it as a bit of an apples versus oranges issue.
The companies and the business sector do not have the same tax privileges
that go along with —
Senator Ringuette: Oh, yes, they do.
Senator Mitchell: They write it off. They get tax deductions.
Ms. Krause: They also pay taxes.
The Chair: One at a time, please.
Ms. Krause: Right now American foundations are contributing
roughly $50 million a year at least to Canadian charities. That puts us on
track to receive half a billion dollars over the next 10 years of what is
essentially American foreign aid from the philanthropic sector.
Having worked overseas myself and seen the real need around the world for
expertise and resources, I believe that money should be spent in countries
far more needy than Canada. Canada should fund our own charities and should
be on the giving end of foreign aid and philanthropy, not on the receiving
Senator Ringuette: Chair, I believe in a balanced approach in just
about everything, so I will put myself on the list for a second round of
questions. Thank you.
The Chair: Thank you very much for that. I am trying to keep both
questions and answers for each senator to around 10 minutes. That is what we
have been doing.
Senator Eaton: Thank you, Mr. Lauzière and Ms. Krause. Picking up
on where everyone has been going, transparency, which is what my inquiry is
all about in the Senate, tell me how you both feel. I would very much like
to see donors tagged. From the first donor to the last recipient, think of
it as the fish. I want to follow that fish from the first donor to the last
recipient. If the fish originates in the U.K., or the U.S., or France, or
Switzerland, and ends up in northern Manitoba, we can follow that donation.
How do you feel about that, Mr. Lauzière?
Mr. Lauzière: I think transparency, absolutely. I was pleased to
hear you on As It Happens yesterday because you framed the issue
around transparency and not on the 10 per cent political activity, which is
good. We are trying to work towards that, so thank you for that.
Transparency, absolutely, in terms of how philanthropy works — and many
people hand the table would know; it goes to the other question also — there
are philanthropists in the U.S. and in many other country that give to
Canada. I think it is good. They give for the arts and for health issues,
sometimes for a particular health issue. I am coming to your question, in
terms of how you tag that. It goes to organizations that are more left, more
right, religious, et cetera. That is a good thing, because you want to
ensure that the voices of all Canadians are heard in philanthropy.
Philanthropy going to external countries is fine, but philanthropy is not
just about the needy and helping those in developing countries, it is also
about the arts, quality of life and research, et cetera.
In terms of philanthropy, there will always be individuals — maybe it is
different for foundations; we could track that more easily, I think — and in
terms of individual philanthropists who will always want to remain
anonymous, in terms of the tagging, that would be difficult. In terms of
better information on what foundations it is coming from and where it goes
in Canada, there will be more information on the T3010.
Senator Eaton: I am hoping that Canadians would be able to go into
someone's website and be able to see who gives to whom and where the money
is coming from. I think that gives you a good indication of what the charity
is all about.
I agree with you that we should be open to receiving money from
everywhere, but I would like it to be tagged and for it to be up there,
front and centre, the way a political donation is.
How do you feel about that, Ms. Krause? Is it doable?
Ms. Krause: I do not know whether it is doable, but I would like
to share my perspective as a director of a federally registered charity. I
think we have the more noble cause in our country. We are the Adoptive
Families Association of British Columbia and we try to find families for
children that need to be adopted and to support families in the process of
adopting a child. We find it very difficult to raise money, yet we have such
an important cause. Senator Larry Campbell here has been one of our
ambassadors and will know very well the difficulty we have, even in raising
a few tens of thousands of dollars.
Some of biggest and most important contributions have come from anonymous
donors who want to remain anonymous. I am thinking of a particular $50,000
contribution that made a big impact on our programs.
I am aware that there is a segment of donors who want to remain
anonymous. I wonder what the sort of tagging that you are suggesting would —
Senator Eaton: I am hoping that the tagging would reveal where the
money came from.
Ms. Krause: Yes.
Senator Eaton: For instance, the Pembina gets money from the U.K.
However, if you go on the Pembina Institute website, you should be able to
see, if the donor's name is not there, where the money is coming from.
In other words, it cannot go through something like Tides Canada, be
receipted and become a Canadian donation that is then given to the Pembina
Institute. It remains always monies from the U.K., monies from the U.S. or
monies from Saudi Arabia. I think it would be very interesting to know where
the money is coming from.
Ms. Krause: I agree with you fully, but the point I would like to
add is that I think not only the source of the money is important, but as
important or even more important is the purpose. One thing that I think is
important to highlight in this discussion is that the money is going for
charitable purposes. In fact, based on the review that I have done of the
nature of the grants that have been given, if it is to further a purpose
that is truly charitable, then I think the source of the money becomes less
of an issue. It is nonetheless an issue, but the emphasis needs to be on
whether charities are doing charity. My concern is that for some of the
activities that I see being funded, I do not see how they qualify as
Senator Eaton: Do you support the 10 per cent political activity
Ms. Krause: As I understand it, it is not just 10 per cent. It is
10 per cent, but that is to further a charitable purpose. If the political
activity is not to further a charitable purpose, then it is zero per cent.
In the media, there has been a misunderstanding created that charities have
the right to do 10 per cent political activity. That is not true. My
understanding is that it is 10 per cent but that is to further a charitable
As a director of a charity, to be honest, sometimes I wish that we were
unencumbered. As long as we are furthering a charitable purpose, we have
basically free reign to accomplish that charitable objective. In that sense,
I would almost like to see the limits off to the extent charities are
allowed to do political activity, but the emphasis is on the fact that it
must be charitable.
Mr. Lauzière: To add to that, the 10 per cent is for charitable
purpose, so it has to be linked to the charitable purpose of that particular
charity. That is very clear.
Going to your earlier question about how much organizations know about
this, it is clearly identified in the Canada Revenue Agency guidelines that
it is 10 per cent for charitable purpose, so not 10 per cent about anything
but 10 per cent linked to your particular charitable purpose as an
organization. That is well understood and clearly identified, both on the
site of CRA and what they call their guidance on political activity.
Senator Callbeck: Ms. Krause, you have indicated that a number of
environmental campaigns are really funded by foreign interests.
On CBC, on Sunday, did you hear Ms. Berman, who is a co-founder of Forest
Ethics and an environmental activist for over two decades? She stated that
96 per cent of all financial support for environmental charities is provided
by Canadians. I would like you to comment on that.
Ms. Krause: I would be glad to.
Senator Callbeck: Do you agree with that? Do you think it is less
Ms. Krause: The issue is not the overall percentage but the fact
that there are some charities that are receiving 80 or close to 100 per cent
of their funds from foreign sources. There are other charities for which the
per cent of foreign funding has dropped dramatically over the year. The
David Suzuki Foundation, for example, I believe right now is only 5 per cent
or 6 per cent, but 10 years ago half of the funding of the David Suzuki
Foundation was from American foundations. Half of their budget was covered
by American foundations. I think that giving a global figure like 96 per
cent obscures the fact that you have some organizations that are heavily and
in fact almost exclusively foreign funded.
I am glad that you raise the organization Forest Ethics, because if you
read the U.S. tax returns of Forest Ethics, you find that Forest Ethics has
told the IRS that they aim to stigmatize the Canadian oil industry. Forest
Ethics aims to make the Canadian oil industry unacceptable. My question is,
how can you be an honest broker at the same time that you are telling the
IRS that you want to stigmatize an industry and make it unacceptable?
The Chair: Could we find that information?
Ms. Krause: Yes, I will be glad to provide it to the clerk.
The Chair: That would be helpful.
Senator Callbeck: You have no problem with that 96 per cent
Ms. Krause: Did she say it was 96 per cent for all charitable
organizations or for environmental groups?
Senator Callbeck: Support for environmental charities. The
statement was 96 per cent of all financial support for environmental
charities is provided by Canadians.
Ms. Krause: It depends on what you define as an environmental
group. The Boy Scouts are picking up garbage and cleaning up the park. Does
that make them an environmental group? I do not think so. It depends on how
you define an environmental group. If you look at some of the largest
environmental groups, for instance Ducks Unlimited or Tides Canada, roughly
30 per cent of their funding is from foreign sources. It is a difficult
question to answer. As I said, I think the issue is that some small groups,
but in fact some of the most vocal and most politically active, are
receiving 30, 40 or more than half of their funding from American
foundations. As I said, the David Suzuki Foundation is down around 5 or 6
Senator Callbeck: Mr. Lauzière, you said your organization
represents volunteer organizations and charities. How many members do you
have, and what is the advantage of belonging to your organization?
Mr. Lauzière: Imagine Canada actually never says that we
represent. We are not that type of organization. We have about 1,500
charities that are members of Imagine for two reasons essentially: They want
to support our work, but they also provide credibility when we speak. Our
charitable purpose actually is to support the whole charitable sector. We
are connected with anywhere between 8,000 and 10,000 charities across the
country. We never come to a parliamentary committee, for example, and say
this is what our charities are saying and this is what we represent. We are
not a trade organization in that sense.
In terms of services, our services are essentially open to pretty much
every organization out there, around capacity building issues and around our
standards and accreditation program. We have an online directorate to help
organizations find funding, et cetera. That is the role that we try to play.
We try to bring people together, because increasingly charities are
realizing, whether in the arts or education or in health or social services
or in the environment, that they are all essentially dealing with similar
issues. The more we can come together to work together, the better that is.
That includes philanthropy, volunteerism, how we govern ourselves, how we
are transparent, et cetera.
Senator Callbeck: You say 1,500. Where do you get your funding? Do
they pay a fee?
Mr. Lauzière: Absolutely. Over 12 per cent of our funding comes
from members. We have a number of corporations that fund the organization.
We have a great program at Imagine Canada that is called the Caring Company
Program, which recognizes corporations in Canada that give at least 1 per
cent of their pre-tax profit to charities, so we are very connected to
corporate Canada also. We have a number of services that we provide. Our
funding is quite diversified. We get a bit from government, but very little.
When I talked about CharityFocus, which is the new portal that was just
launched, that was launched with funding from the Canada Revenue Agency, but
that was just to develop the platform and then we move on. We do
fundraising, like other organizations.
Senator Callbeck: You mentioned a stretch tax credit. If I am
correct, back in 2009, the Finance Committee in the other place recommended
that. I would like you to explain that fully. Has there been any analysis
done as to how much more money that would raise?
Mr. Lauzière: Yes. It is a new concept. It has never been tried,
to our knowledge, anywhere in the world. Our governments, the latest
governments in the last 10 or 15 years, have done a lot of work to help
wealthy Canadians to become better philanthropists, and that has made a huge
difference in terms of gifts of stocks and securities. That has been really
good. A lot of those dollars have gone to universities, hospitals, big
cultural institutions, United Way, and that is important.
Stretch is about talking to ordinary Canadians, people of all walks of
life, the message being that everyone can make a difference. If you look at
most health charities in the country, their average donation is about $35.
They essentially do their incredible work with very small donations from
Canadians. The idea of the stretch is to say that if you give and you give a
bit more, even your small donation will make a big difference.
The way it works is that there is a 29 per cent tax credit now if you
give anything over $200. Let us say you gave $400 last year. With the
stretch tax credit, if a charity comes to you and asks you to stretch your
giving to $500 this year because an extra $100 will make a difference for
the charity, for that extra $100, you will get a 39 per cent tax credit,
rather than 29 per cent. The tax credit is only for any new dollar that is
given. If there is no change in behaviour, there is no new dollar, so it
does not cost anything to the government in terms of foregone revenue. It is
only to encourage people to constantly give more.
There are two messages: First, small donations make a difference, and the
more you can stretch the better; and second, you do not have to be rich and
wealthy to be a philanthropist. Anyone can be a philanthropist.
There has been a lot of interest, as you probably know. The Finance
Committee in the House of Commons has been undertaking this review of
charitable giving, and we have been pushing this forward with a number of
organizations. I think now about 70 per cent of the witnesses that appeared
before the committee said that the stretch was a good idea. Ipsos Reid did a
poll showing that 84 per cent of Canadians think it is a good idea. We hope
it will go forward. We see it as positive and a great tool for charities to
be able to go to their donors and say start giving. For those who do not
give, then the year they give, it is a great advantage for them, and we hope
that will help bring people in. I was saying earlier we are seeing the base
of donors slowly start to erode, and the idea is to pick that up and build
it for the next 10, 15 or 20 years.
Senator Callbeck: It seems like a very positive step.
You also mentioned that you feel there will be more questions asked by
the Canada Revenue Agency regarding political activity. Charities will
probably have to report differently. I think you said you felt there would
be additional intermediate sanctions for inaccurate reporting. Would you
comment on both of those things? What do you anticipate in the change in
reporting, and what do you mean by intermediate sanctions?
Mr. Lauzière: The questions will probably be linked to probing
down a bit more. If you have identified a particular amount for political
activity, there will probably be some questions: How did you do that? Was it
through conferences? Was it through meetings with MPs? Was it through a
leaflet in the paper? It will be to get more information on how that
political activity has taken part.
There will also be some questions linked to foreign funding. For example,
of your foreign funding, how much of that foreign funding would have gone to
political activity. It is those types of questions. I know that is still in
the works, but that, I think, is the direction that they want to go to.
We have no concern about more questions. The only concern is that the
burden not be too high in the way of responding, so that it does not overly
increase the reporting burden of charities. As you know, charities are
already highly regulated, not only by the CRA but by all of the funders that
provide dollars to them. They have to report back. It is a big part of what
The intermediate sanctions are not just for political activities; they
are around the information that you provide on the T3010 form, which is that
annual form, if there are mistakes, and I would expect serious mistakes, not
a small arithmetic mistake. However, if there are mistakes and they are seen
as inaccurate, then the Canada Revenue Agency could put forward what they
call an "intermediate sanction, " which could be that for a certain period
of time, the charity would no longer be able to receipt its donations, for
example. I imagine it would be rarely used, but it is a tool at their
disposal if there is inaccurate reporting.
Senator Callbeck: Did you say that is not just for charities?
Mr. Lauzière: It is only for charities, but it is not only for
political activity. It could be around what you report for fundraising. On
this T3010 form, there is much more information — not as far as the IRS
goes, I agree — on compensation. The 10 highest paid in any charity now have
to identify the 10 highest categories in which they are paid. If that was
inaccurate, that could be another example. It is not linked just to
Senator Runciman: Ms. Krause, you were talking about Forest Ethics
and something they had declared in the U.S. but did not declare in Canada. I
was looking at one of your columns where you said American charitable
foundations are not allowed to mobilize voters in a foreign country. I think
you have drawn attention to the fact that has been occurring. I think you
linked it as well to the civic politics in Vancouver. Are American
authorities looking at this issue as well? Are they doing anything to
address this issue from their perspective?
Ms. Krause: I am not aware of anything, no. I would like to say
that the group that was funded to mobilize urban voters for a federal ban on
tanker traffic was not Forest Ethics. That was the Dogwood Initiative, and
it was funding that came through the Tides Foundation.
Senator Runciman: In terms of the need for the changes outlined in
the budget bill, both of you can speak to this.
Ms. Krause, you have taken a long, hard look the lack of enthusiasm in
certain organizations in terms of transparency. I am referring to some of
your columns about the Suzuki Foundation, and this is going back a few years
when they were under-reporting, if you will, in terms of the numbers they
were receiving from U.S. donors. Apparently, that has changed under the new
You also made a reference that once the Minister of Finance announced
these changes with the budget, quite a number of organizations suddenly
rewrote the stated purpose of their grants.
Could you speak to how significant and extensive those issues are?
Ms. Krause: I have been tracing the American funding of Canadian
environmental groups now for about five years. I started with a submission
that I made to a special committee of the Legislative Assembly of British
Columbia. In the five years that I have been following this issue, there
have been 15 foundations and environmental groups that have either rewritten
their grants or removed web pages that I had raised concern about. Most
recently, for example, the Oak Foundation removed the sentences that said
things like the purpose of this project is to stop or to block the Enbridge
Northern Gateway pipeline. That happened days after the federal budget was
announced this spring. I wrote about that in the Financial Post in a
piece called "Damage Control. "
Another thing I see happening is less transparency on the part of certain
environmental groups. I was not going to name names, but I guess I will in
this case. One of the organizations I will mention is Tides Canada. The
reason I mention it is Tides Canada now has 250 employees and has a payroll
of $10 million. To put those numbers in perspective, in Vancouver, and, of
course, Tides Canada is based in Vancouver, two leading, large influential
organizations, the Vancouver Foundation and the Fraser Institute combined,
have half as many employees as Tides Canada reported in its Canadian tax
returns for 2010. That is just to give you the size of things.
I think whenever an organization becomes large and influential, it is
fair to ask questions about its funding and its operations.
What concerns me is that, for instance, in Tides Canada's American tax
returns for 2009, it listed 25 internal projects for a total of $5.3
million. We could see that Tides Canada had paid Forest Ethics, which is not
actually a separate organization and never was and has been part of Tides
Canada, $780,000 for Forest Ethics Canada. However, last year, they did not
itemize these projects. They just reported $7.7 million spent on internal
projects. That is a big step backwards in terms of transparency.
I have asked Tides Canada, for example, to please post its American tax
returns on its website so Canadians can see for themselves what it is
funding. The CEO of Tides Canada called for an honest debate earlier this
year about energy- related issues, so I think as part of that honest debate,
if it could post its American tax returns, it would be more transparent.
I think the environmental movement is coming of age. It had no money 20
years ago, far less than it had 10 years ago, so with more money comes more
responsibility. My hope is that environmental organizations would just sort
of say, "Point taken. Here is how we are funded, and here is what we
are doing. "
Senator Runciman: Did you want to comment?
Mr. Lauzière: I guess where I would disagree is that I do not
think there is a difference between large and small organizations. The
message at Imagine Canada is that transparency is transparency.
Organizations, large or small, should provide adequate information to
Canadians and be able to respond to questions, but we also have to realize
that people are asking different questions and want different ways of
reporting on information. You also have to find the balance between that
reporting burden — responding to every new request in terms of what is done
— and the fulfillment of your mission. I would not say that only the large
organizations need to be transparent; on the contrary. We have very large
organizations in Canada that are very transparent. It is part of our culture
now. The trend I am seeing is the opposite trend; there is a very strong
recognition of the need for good governance and transparency. People realize
that that is going to be important if they are going to keep the trust of
the donors and the volunteers. Everything I am seeing is going in the
opposite direction, providing better information. I think that that is one
of the reasons for the success of CharityFocus, a new portal that we just
Senator Runciman: This is a follow-up to what Senator Eaton was
referencing earlier. The new rules require a donor to include, in terms of
the political activities portion of the money that they are giving to
another charity, "can reasonably be considered to be intended for political
activity. " How do you think that this will work? There have to be real
challenges in tracking what money is eventually used for. Do you see that as
an administrative headache or more of a problem for the folks who come in
and occasionally conduct an audit? How do you do this in a practical way?
Mr. Lauzière: It is complex; there is no doubt about that. I would
go back what Ms. Krause was saying earlier. It is more around how the
dollars are spent, rather than just around the sources of funding, that we
need really good information. There are a variety of ways of doing that,
depending on who the funder is, whether it is a foundation, the United Way
or an international foundation. There is no one magic bullet, but
information on how those dollars are being spent needs to be there. If they
are being spent for political activity based on a charity's purpose, that
needs to be said. However, is there one way of doing it? That really
There are 85,000 charities in Canada, ranging from big hospitals and
universities to very small, volunteer-led organizations. A response for one
will not fit for others, but the general principle of reporting on what you
are spending on and why you are spending on that is very important.
Senator Runciman: Thank you.
Senator Chaput: My question is for Mr. Lauzière. Very few
Canadians, if any, are against integrity and transparency. I think it is
fair to say that we desire and demand integrity and transparency from any
group or organization, and not only charities.
My question is more philosophical in nature. With the changes proposed
under Bill C-38, will we be politicizing the charitable process by
questioning, as I understand it, the mandate or mission of a foundation, as
evidenced by its political activities and donations?
If a foundation is fighting for a cause in which it truly believes and
demonstrates integrity and transparency, although that cause may differ from
our ideology, does that mean it is less credible because it has a different
Mr. Lauzière: No, not quite. What I stated in my presentation is
that, if public policy development is to be based on a healthy process in
Canada, there must be a diversity of views around the table — people who are
in favour, others who are against, people from different backgrounds; all of
that must be encouraged. That is the reason why the 10 per cent rule is
important, and it is important that the Canada Revenue Agency be independent
and ensure that, if something is being done or if information is verified,
there is a valid reason for it, as opposed to a political reason. Everyone
would agree on that.
Senator Chaput: And would the definition of political activity —
for example, by a foundation — be developed by the foundation?
Mr. Lauzière: What is meant by "political activity " is clearly
defined by the Canada Revenue Agency.
Senator Chaput: Very good.
Mr. Lauzière: The 10 per cent must be connected to the mandate and
mission of the charitable organization, as defined by that organization, but
also as recognized by the Canada Revenue Agency when the organization
registered as a charity. The organization does have control over that, but
its mission must be one that is acceptable to the Canada Revenue Agency, in
relation to four general categories. I believe that process is working well.
Senator Chaput: Very good. What will the changes proposed under
Bill C-38 contribute, compared with what already exists?
Mr. Lauzière: More detail, for those seeking that information,
regarding the way in which the political activity is carried out and the
amount of foreign money used to fund that activity. As I said at the outset,
it is all right for questions to be asked, as long as the process is
reasonable and does not place too heavy a burden on charities by forcing
them to spend their time preparing reports, instead of doing their work. We
will have to wait to see the final questions developed by the Canada Revenue
Senator Chaput: Thank you very much.
Senator Duffy: Thank you to the witnesses for coming today. This
is an important topic because, as you pointed out, Mr. Lauzière, the
charitable sector covers the entire country, and people from the $35 donors
all the way up are involved.
To get some idea of the magnitude of money, Ms. Krause, if the average
Canadian health charity gets a donation of $35, what kind of offshore money
are we talking about coming into these other charities? Are these grannies
with $35, or are we talking about much different kinds of offshore
donations? How many bucks are involved?
Ms. Krause: Big bucks. That is the heart of the issue. If we were
talking about $35 coming from thousands of Alaskan families who were worried
about an oil spill, I think that would be fair. It would be foreign funding,
but I think it would be fair for Alaskans to fund, say, environmental
organizations in British Columbia. That would be very small amounts of money
coming from a large number of people. We are seeing the exact opposite of
that — very large grants coming from a handful of very large foundations.
I think the size of the average grant has probably gone from maybe
$20,000 or $30,000 to hundreds of thousands of dollars. It is now not
uncommon for a grant of $1 million. The foundations funding this are billion
dollar foundations. Four of them alone have $20 billion in assets. They give
away a billion dollars a year.
Senator Duffy: I read your column in which you said that Tides
U.S.A. moved $100 million into Canada just before the budget.
Ms. Krause: No. According to my analysis, Tides Canada has had $62
million since 2000.
Senator Duffy: There was one big movement of money.
Ms. Krause: The $100 million was one grant from the Hewlett
Foundation to a foundation called Climate Works. I mentioned, of course,
that in the Rockefeller tar sands campaign —
Senator Duffy: I want to get to them in a minute. Tell me about
this $100 million. This is not penny-ante change. Was it done to get it in
before the budget out of fear — this is my suspicious journalist mind —
because they wanted to beat the deadline? I guess you do not know the answer
to that, but $100 million is a lot of money.
Ms. Krause: That money did not come targeted for Canadian
campaigns. It was for the Climate Works Foundation, which funds the Energy
Foundation, which funds a large array of environmental groups, some of which
are tackling the Canadian energy sector. You are also tackling, for example,
coal producers in the United States and other projects.
Senator Duffy: You have written about money laundering as well,
about how Tides in the United States flushes money from their foundation
into Tides in Canada who then spread it out. I think that word was used, was
it, in your column or in your blog?
Ms. Krause: This is an important point I want to clarify. Actually
Terence Corcoran, the editor of the Financial Post, wrote a column,
if I am not mistaken, in which he spoke about money laundering not
necessarily as a use of the term, I am not sure, but of referring to
obscuring the origin of money.
Senator Duffy: We will not call it money laundering. We will call
it flushing through the system to avoid public scrutiny.
Before my time runs out, let us turn to the Rockefeller brothers. A
PowerPoint deck about the Rockefeller brothers has come into the public
record. Mr. Lauzière told us earlier that charities can spend up to 10 per
cent for charitable causes. Do I understand from what I have read in your
blog and the newspaper columns that in fact in the Rockefeller deck is a
straight-out statement that they want to block these pipelines?
Ms. Krause: Yes, they say they want to stop and slow down
infrastructure development related to the Canadian oil sands.
I want to clarify one thing, Senator Duffy, I have never seen anything
that I believe to be illegal, let alone criminal, but I am not an expert in
Senator Duffy: I am not alleging criminal activity.
Ms. Krause: Exactly.
Senator Duffy: I am just asking why would the rules in Canada not
be identical to the rules of transparency that exist in the United States?
Why did you have to go to Washington to find out who is pulling the strings
in British Columbia?
Ms. Krause: I certainly hope I am the last Canadian who ever needs
to do the kind of work I have done. As Canadians, we need access to
information to find out who is funding who in our own country. I hope that
the CRA will collect and make available roughly the same information as the
IRS with regard to the compensation and also payments to consulting
companies. We are seeing millions of dollars being spent by charities
funding consulting companies. I am concerned that those consulting companies
and investment firms sometimes make large political contributions to
Senator Duffy: Do you fear that money destined for charities may
be finding its way into Canada's political process?
Ms. Krause: Yes, lots of it.
Senator Duffy: I want to ask Mr. Lauzière about the whole question
of how we Canadians are doing in comparison to the rest of the world when it
comes to charitable giving. I think many Canadians think we are such good
people and are at the top of the list. Where do we rank compared to our
neighbours to the south in individual charitable giving?
The Chair: You can also comment on the last matter if you wish,
Mr. Lauzière. You had indicated you wanted to.
Mr. Lauzière: On the latter one, the metrics are always difficult,
but Canada is a very generous country. It depends on what you are looking
at. Is it the amount of dollars? Is it the number of people giving? The
Canada Survey on Giving, Volunteering and Participating that Statistics
Canada does every three years shows about 84 per cent of Canadians give in
one way or another, so we are very generous. In terms of size of the
donations, they are probably a bit smaller than they are in the U.S., but we
are a very generous country. There is no doubt about that.
I would like to go to your comment, Senator Duffy, about money
laundering. That was a term used by Minister Kent. I did write Minister Kent
about this, asking him if he had information on charities actually doing
money laundering. If he did, then those names needed to go to the proper
authorities. If he did not have any information, we would like Minister Kent
to retract those words.
The reason I say that is because it goes to the trust and confidence that
Canadians have about charities. What we are trying to do with the stretch
tax credit is send a message to Canadians that people need to give and
engage. That is an important message. On the other hand, we have a comment
like that about money laundering which will start Canadians asking what is
Senator Duffy: Is it not the responsibility on the charities to be
Mr. Lauzière: We talked about the need for transparency.
Senator Duffy: You should be putting pressure on your members to
ensure they fill in the forms. Documentaries have been done about Canadian
charities with staff and the forms were left blank. I think the
responsibility is on the good charities to make sure that the less good or
the more evasive kinds of charities do not ruin the sector for everybody. Do
not blame the government.
Mr. Lauzière: There is a question of mutual accountability here.
On the first one, you are absolutely right about the data and the forms, the
T3010. Part of our new portal CharityFocus has a tool we have developed
called the T3010 QuickPrep. This will help charities fill out their T3010
form in the best possible way. It is bit like you do with income tax. It
stops you if you have made a mistake. If you have not answered a question,
you cannot go any further. This is all in the hope that charities would do a
better job — not because they do not want to but because it is a complex
form to fill out.
However, at the same time, when a minister like Minister Kent says
something like that, that has an impact also. It is on both sides. There has
to be a mutual accountability about how we support the charitable sector.
That comment made a lot of noise, and many Canadians may wonder, if they
hear this again, if there is something terribly awry within the charitable
sector and maybe they would not give any longer, and that would be the most
disastrous of conclusions.
Senator Duffy: Ms. Krause, there have been a number of people both
in this chamber and in the other place who have may have verbally assaulted
you about your credibility, that you must have a hidden agenda, what is
going on. Would you like to leave us with a brief résumé of why you are
doing this, what motivated you, and why you think Canadians should know the
truth about how some people are trying to manipulate them? Are you being
paid by anyone?
Ms. Krause: No, I am not paid by anyone. In fact, I have been able
to support myself because I sold my house. I am doing this because I love my
country. I worked overseas for 10 years in places where there are no proper
environmental laws, and the evidence is heartbreaking.
I came back having been away from British Columbia for 15 years. I wanted
to work in the poorest parts of my own country. I worked with the Algonquin
people in Quebec before I left Canada in the late 1980s, and I talked to the
chiefs in the First Nations communities in northern B.C., and they told me
they believed in salmon farming because they wanted at least one person to
get up in the morning and send the kids off to school and have a job. They
wanted jobs, not just the jobs in the band office. That is why I got into
salmon farming, and then I saw how the campaign against salmon farming has
been devastating to the dignity of hard-working people. There have been
brawls in bars and children have been teased and ridiculed at school because
one of their parents is a fish farmer. Hundreds of people have lost their
jobs because the industry has been brought to its knees by a campaign that
is largely based on claims that are faulty and flawed, some of them are
The reason I have done this is because I feel too many people are being
hurt by these environmental campaigns. Meanwhile, I see that some of the
directors are earning salaries approaching $200,000 themselves. I see
purchases of million dollar properties right next door to the private
properties of directors and things like that, so I can see how in some cases
the directors of the charities are not hurt by their own actions but the
I took it upon myself to do this because when I came back to Canada I
wanted to do something for my own country. I thought I would do this by
working within the salmon farming industry. I would never have guessed that
I would have ended up spending several years pouring over American tax
The reason I am doing this is because I care profoundly about the
environment. I believe we do need a fiercely strong, financially autonomous
environmental movement. Obviously the environmental movement is not
appreciating the calls for greater transparency, but at the end of the day,
I think it will make them stronger and that we will have a stronger
environmental movement, and I hope we will have a stronger charitable sector
as a whole.
Senator Campbell: Thank you for coming today. I feel like I am in
an editorial meeting for the National Enquirer.
I invite Minister Kent to make those allegations outside the other place
to see how that goes, and to actually attach something to it.
The first thing I have a problem with is this idea that somehow when
someone gives anonymously to a charity there is something wrong with that.
There are people sitting at this table who sit on charitable boards and who
know that often anonymous donations are given because the person simply does
not want to be out there. There is nothing nefarious about it. For some
reason, we seem to be getting into that. What do you stay about that Mr.
Mr. Lauzière: Anonymity for some people is important for all kinds
of reasons. For others, the reason is religious and moral. For others, it is
because they do not want to be linked to a certain cause for all kinds of
reasons. More important in terms of information, although the dollars should
be there, is how organizations spend the dollars. That is what we are
talking about, but anonymity is very important for some. I fear that we
would put that in jeopardy. It would be difficult for a number of charities
that have been the beneficiaries of some very good dollars for very special
causes from people who want to remain anonymous. That needs to be protected.
Ms. Krause: I agree. I have nothing to add.
Senator Campbell: Tides Canada seems to have risen to the top
here. Are you aware that Tides Canada has been audited by the CRA?
Ms. Krause: Yes. I read it in the news.
Senator Campbell: What was the result, do you know?
Ms. Krause: I believe the audit is ongoing. I have not heard any
Senator Campbell: Do you have any knowledge that they may have
been audited two or three times over the last five years?
Ms. Krause: I read that in the news as well.
Senator Campbell: Do you assume that the audits would be complete
over a five-year period? Tides Canada has been gathering a lot of
lightening. I would assume, if Tides is being audited virtually every year
or every other year by the CRA, that if there was wrongdoing in respect of
10 per cent, or whatever, it would be found by the CRA.
Ms. Krause: Having spoken with the CRA, I know that they did not
have the information that I provided, which I got from the American tax
returns. My understanding is that whatever they may be doing now, they have
information that they did not have previously.
The Chair: Are you saying that you were required to go to the
United States to do the work that the CRA would normally have done when
talking to the IRS?
Ms. Krause: I am saying that the first time I spoke to the folks
at the CRA, I was asked to do so because they contacted me. I gave them
information that they did not have. I know they did not have it and that is
part of the reason I created part of my blog so I could talk to folks in
Ottawa and we would be looking at the same thing. They did not have the
information in the U.S. tax returns, which brought about my questions in the
first place. If I had looked only at Canadian tax returns, I never would
have had the questions that bring me here today.
The Chair: That is what I understood.
Senator Campbell: Senator Duffy asked why the rules are not the
same in Canada and the United States. It is probably because we are Canadian
and they are American. This is how we have progressed and they have
A lot of rhetoric is happening here in many of the statements. I do not
think that any statements by Ms. Krause are meant in a threatening manner. I
do not see them as threatening any more than I see the statements from Mr.
Lauzière as some sort of cover-up for charities. I am simply saying that
there is an assumption that someone is right and someone is wrong. I am not
making any comment on that; I am simply asking questions about how things
are being done.
The rhetoric has overtaken the common sense. I have the same sense as Mr.
Lauzière. I am on the board of a few charities, and we are feeling a chill
from this because there is a lack of trust, perhaps coming from this.
Certainly, I hope that from this we get some illumination on where we should
be going. I thank you both for coming today.
Senator Mitchell: When I hear the arguments that Ms. Krause is
making, I am heartsick. I find them disturbing and I think many Canadians
find them disturbing, particularly when you have a government that picks it
up and institutionalizes these arguments. This is about freedom of speech.
We send people to Afghanistan to fight for those values. Then, when someone
in our country wants to speak about something the government disagrees with,
they are intimidated and bullied. Largely, that is an extension of this kind
of argument. I am deeply disturbed by it. This is not a game. This is about
freedom of speech and about someone trying to rank values and rank what is a
more important democratic value. It is an important democratic value that
someone can fight for development and it is an equally important democratic
value that someone can fight to preserve the environment.
It is ironic in the extreme that you picked the salmon fishery issue. Why
is it that when people want wild salmon in Canada, they have to go to
Alaska? It is because climate change has been killing our fisheries, and we
do not have the same wild salmon reserves that we could have so we would be
free to buy those things. When you talk about what is good for the economy,
I say that defending the environment is good for the economy. How many jobs
have we lost in the east and west coast fisheries? How many jobs have we
lost in the forest industry? My point is that you are not really saying you
are opposed to charities having input to the public policy debate, such as
the Fraser Institute which does only that, but that you are opposed to
charities you do not agree with. Who gets to decide that?
Ms. Krause: May I respond?
The Chair: Yes, please.
Ms. Krause: As I said in my opening remarks, I am all for
environmental activism. We need environmental activists to prompt reform in
industry and to keep government and industry on their toes. However, if
Canadian environmental organizations are participating in the Rockefeller
Brothers Fund Inc. campaign to thwart major projects in our country, the
least they can do is be out in the open and say that they are part of that
campaign. We should not have to find out about it years after the fact.
The Chair: Do you have a comment Mr. Lauzière?
Mr. Lauzière: No.
Senator Mitchell: Speaking about big family foundations, let us
talk about the Koch brothers. They had been declared one of the top 10
polluters in the U.S. They are directed with two fundamental objectives for
their foundational funding: one is to oppose any government regulation that
limits the unrestricted operations of the oil industry; and the second is to
discredit climate change and clean energy while denying global warming. The
Koch brothers gave $500,000 to the Fraser Institute between 2007-10. Are you
saying that fair is fair and that the Koch brothers should not be allowed to
fund that or that the Fraser Institute should have told everybody they were
funding that? Are we picking sides?
Ms. Krause: It should be out in the open. Last fall, long before
this became a broader discussion, I asked them about that. Someone asked me
on twitter about the Koch brothers' funding to the Fraser Institute. I asked
them publicly on twitter, as public as that is. They replied right away and
it was out in the open. That was at least six to eight months ago. I agree
with you if you are saying that money from the Koch brothers in Canada
should be out in the open.
Senator Mitchell: Are you saying that it should be out in the open
or stopped? On the one hand, you are saying it should be open but, on the
other hand, you are saying it should be stopped.
Ms. Krause: Let me answer that.
The Chair: Senator Mockler, I will try to chair this meeting the
best I can. Please do not give directions to the witnesses or to anybody
else at this table. If we follow the normal rules, we will get through this
quite nicely. Thank you.
Ms. Krause: My humble view is that money that goes to charities
should be used for charitable purposes. If it is coming from the Koch
brothers or elsewhere and is for charitable purposes, that is fine as long
as it is out in the open, especially when it comes from sources as big as
the Koch brothers or some of the other American foundations.
Senator Mitchell: Certainly many Canadians believe that defending
the environment is a charitable purpose.
You mentioned Ducks Unlimited and said that they get 30 per cent of their
funding unintentionally. I am quite surprised that from your perspective you
would pick on a group like that. I want to establish that you are noting
that that is a problem group and that it would come under the rubric of the
government's policy on limiting funding to groups like that. Is that what
you are saying, that Ducks Unlimited would fall in with Pembina and, in your
lexicon and structure, would fall in with Tides Canada and those kinds of
organizations as you depict them?
Ms. Krause: No. My understanding is Ducks Unlimited is essentially
an environmental construction company. They do a lot of great work, but I
have been surprised to see some of the projects for which they have been
funded. For example, they were funded for something called the Prosperity
Project, which is to fight a particular mine in British Columbia.
I think Canada is a very rich country, and we should be able to fund our
own environmental movements. It concerns me that Ducks Unlimited has
received $57 million from a few charitable trusts. I think we should be
funding our own environmental movements.
Senator Hervieux-Payette: Because Mr. Lauzière speaks French, the
opportunity for us to speak French together will give me a little rest. I
would like to establish one thing. First of all, the term "charity " is a
word that, based on my Judeo- Christian culture, refers to a positive
religious sentiment and so on; in French, the term we use is "bienfaisance
", as opposed to "charité ".
Second, I would like to remind colleagues that part of the charity in
Quebec is carried out through taxes. We pay 10 per cent more taxes than
people in the rest of Canada, in large part because that money goes to
causes such as education, daycare or health research.
The reason I say that is, when we talk about charitable organizations, we
are referring to those activities that the government does not take
responsibility for. Some time ago, I was a member of the Standing Senate
Committee on Legal and Constitutional Affairs, and I was aware of the fact
that an American organization, the National Rifle Association, collects some
$200 million every year and that 50 gun manufacturers provide funding to the
National Rifle Association, which has enormous influence and funds research
here in Canada.
We cannot start compartmentalizing. Either everything is open and
transparent, as you say, or we prohibit it altogether, and you can tell me
how we would go about doing that.
Personally, I would prefer for everything to be open and to know where
the money is going. More than $100 million a year is collected in order to
fight the seal hunt: the International Fund, $21 million; the Humane
Society, $1 million; $25 million for People for the Ethical Treatment of
Animals; the Humane Society of the United States, $99 million. They go
around the world, to Europe and elsewhere, to wage a battle against a group
of workers in Canada.
I sympathize with your issues about fish farming — except that my sense
is that we eat a lot of salmon; I had it twice yesterday; at the same time,
we must arrive at something real and enforceable.
Mr. Lauzière, does transparency trump relevance? In reality, the word
"charity " is much broader, as it relates to income tax, than the
charitable and religious sentiments we are all familiar with. It is
important that people watching this today know that the word "charity
a much broader interpretation and covers much more than just looking after
your neighbour to ensure that his basic needs are met.
Would you reduce the scope of the term "charity "? Would you provide for
an obligation to produce financial statements?
On the matter of anonymity, I believe that we all agree here that, if we
were to publish a list of every donor tomorrow — and I know what of I speak
since I am involved with a number of organizations — those individuals would
be constantly harassed. They would take the donor lists from another
association and chase after them. I understand why they do not want to
publish the list, and lists are also sometimes sold. For example, people
purchase company lists: Maclean's sells its lists, as do Reader's
Digest and many other large corporations, for the purposes of
The frame of reference is what I am interested in — as a means of
determining where we stop, where we begin and what we put out to the public.
I would like you to explain the parameters your organization would be
prepared to support.
Mr. Lauzière: With respect to your question about the charitable
sector, you are absolutely right: it is very broad and covers much more than
simply feeding the poor — something that is an essential activity in our
sector, no doubt about that.
But it also includes museums, hospitals, universities, sports clubs that
allow young people to get involved, become athletes and everything else; it
is also arts and religion. It is very broad.
The charitable sector in Canada is not just a bunch of nice people doing
nice things; they are people tackling the most fundamental issues within our
society, our economy and our environment. I believe we need to rethink the
way we talk about the charitable sector; I fully agree on that point.
Regarding your other question as to whether the 10 per cent should be
prohibited, I think that would be disastrous. It has been demonstrated—and I
think everyone here would agree — that charitable services act as partners
to every level of government. In Canada, there are so many of our public
policies that have come about thanks to the work of charitable
organizations. In my opinion, this is about much more than just good
information and transparency; it is about balance.
We cannot focus only on transparency, because that could paralyze these
organizations. They would spend their time preparing reports rather than
serving Canadians. In my opinion, it is about finding the proper balance; we
are getting there. I believe we are moving in the right direction. Canadians
have a right to access proper information in order to make their own
decisions, but there must also be a proper balance between the information
that is sought from organizations and, as I was saying earlier, the burden
placed on them. They are already highly regulated and subject to significant
reporting requirements in relation to their funders.
Senator Hervieux-Payette: I found out recently, for example, that
McGill was establishing a chair of Islamic studies with Yemen. This could
have been funded by Canadians but, in this case, it was funded by people
outside our country. In any case, they will not be benefiting from many tax
credits. At the same time, if we are saying that we want to put a stop to
foreign charitable donations, that will have to apply to every sector, and
not just the environment — in other words, education, health, arts, and so.
There are some substantial donations made to the arts from U.S. foundations,
for museums and the like, which we are very happy to receive.
Should we be taking a comprehensive approach to this, as opposed to
making a distinction between sectors where it will be allowed and others
where it will not?
Mr. Lauzière: We cannot do that. If there is that transparency and
everything is clear, you are right: international cooperation agencies are
the greatest beneficiaries of outside funding, followed by universities,
hospitals and research organizations. Government organizations are very far
down on the list of those receiving foreign funding. If we started
interfering with that, the impact would be enormous. Closing our borders to
international philanthropy is not either feasible or advisable, in my
Senator Hervieux-Payette: What kind of practices or procedures are
you recommending with respect to transparency, given your experience on the
ground? For example, if a New York foundation wants to donate $1 million, is
it just the organization that will have to report that in its annual report
— in other words, we received this amount of money from Canadians and these
amounts of money from other countries? What kind of mechanisms would you
recommend to enhance transparency?
Mr. Lauzière: The first would be to properly complete the Canada
Revenue Agency's T 3010 form, which is going to include additional
questions. As we discussed earlier, it is important to provide accurate
information. However, as I was explaining earlier, because of the great
diversity — organizations range from universities to food banks to the
Cancer Society — and the fact that there are organizations out there that
work in very different spheres of activity, it would be difficult to say:
You must do things this way. At the same time, every organization has to
recognize that Canadians want accurate information. We must find some way of
achieving that, while still striking the right balance.
The organization's job, first and foremost, is to develop its mission and
serve Canadians, while at the same time finding a balanced way of providing
proper information to Canadians seeking it.
Senator Hervieux-Payette: If we assume that charitable
organizations make at least $1 million a year, is it your view that the
salaries of executives and the percentage of funding that went to the cause
should be published, so that organizations are not spending 50 per cent on
administration and 50 per cent on the cause. Are you looking at these kinds
Mr. Lauzière: In terms of compensation, that is already part of
the Canada Revenue Agency's form. You have to state how much is being spent
on salaries in general, and then indicate, for each of the 10 highest paid
employees, which category they are in — for example, $200,000 to $250,000,
$250,000 to $300,000, and so on, without naming individuals. It is a matter
of confidentiality. That is something that can be discussed.
But it goes much further than that. Up until 2008, the only requirement
was to indicate whether people were making more than $120,000. The Canada
Revenue Agency has gone much further. Now there is a whole series of
categories and you have to provide information for the 10 highest paid
Senator Lang: I want to welcome our guests, specifically Ms.
Krause. I appreciate all the time and effort you have put into this
particular file. I think the Canadian public is better off for the hard work
that you have done over the past number of years.
I think an issue here is the magnitude of the dollars that we are talking
about. We are no longer speaking in the context of funding various
environmental movements by virtue of my grandma writing a $10 cheque to
support either the construction or not support the construction of the
reservoir. This there is a huge amount of money coming into our country that
I think most Canadians did not know was coming in. There was in the
neighbourhood — if my understanding is correct — of well over $300 million
that has come in over the last number of years to support organizations that
are trying and that are making every effort to direct public policy.
My question to Mr. Lauzière is: Did you know, prior to the work that Ms.
Krause did, that over $300 million had come into this country from beyond
our borders for the purposes of funding environmental organizations?
Mr. Lauzière: The numbers we have come from the Canada Revenue
Agency, so we have the numbers on all foreign dollars coming on board. I can
give you a few of those numbers, if you would like. For example, 2.4 per
cent of charities report receiving some type of foreign funding. That was
$880,032,000 in 2010, for all organizations: universities, international
development, et cetera.
In terms of the environment, 4 per cent of the revenue environmental
organizations receive come from foreign sources. It is 14 per cent for the
That gives you some of the numbers. What particular foundation gave to
what particular organization to do what particular thing is the kind of
information that is not available.
Senator Lang: I will go back to my comment earlier. I know I and
many of the people in my area had no idea that this volume of money was
coming into the country.
The Chair: I am sorry. You cannot assume that is the case when you
have just heard what the Canada Revenue Agency's figures are.
Senator Lang: I am talking about the public, Mr. Chair, because I
have phoned the Canada Revenue Agency.
The Chair: You just heard from Mr. Lauzière regarding what the
Canada Revenue Agency's figures are, so we cannot assume one is right or the
other is right. However, we know what the Canada Revenue Agency's figures
Senator Lang: I would just like to move on to one other point. I
think Senator Campbell alluded to the fact that Canada has different rules
than the United States as far as disclosure is concerned. There is more
disclosure on the United States side in respect to the financing of our
charitable organizations as compared to Canada.
Do you feel we should be looking at our rules comparable to the United
States, and perhaps other jurisdictions, to ensure that the same sort of
full transparency is there, so you can meet all the responsibilities that
you talked about earlier?
Mr. Lauzière: I think we should always be looking at how we report
on that in other jurisdictions, not only the U.S. It is hard to say the U.S.
is doing better than we are — probably not. They have a different set of
criteria. Some of it might be more precise than others. On the other side,
when you look at what is happening in the charitable sector in Canada, we
have just launched the accreditation standards program that does not exist
in the U.S. This new portal does not, either.
Therefore, all the information you are talking about in terms of the
dollars coming into Canada will be made much more public than before. That
something we are doing here in Canada that they are not doing elsewhere.
I think we can learn from each other, sure, but I am not sure the U.S.
model is the one to follow. There may be some aspects of it — we need to
look at that — but we should constantly be looking at how to do things
Ms. Krause: I agree. I do not think I have much to add. I think
there are things we can learn from the American model.
To go back to something that was said earlier, we have all of our
not-for-profit organizations essentially in one category. In the States,
there are several categories according to the amount of lobbying that is
done by the organization. Perhaps if we had that type of a structure — if we
had more of a breakdown within the charitable sector — it might be easier
for the CRA to hone in on those who are self-declaring lobbying activities.
That is perhaps one way that we could take a look at their model.
Mr. Lauzière: In terms of the regulation, charities that do lobby
also have to be part of the Lobby Registration Act. They have to register at
the federal level, and in most provinces, also. That goes back to what I was
saying: There is a lot of regulation; there are many sources of information.
However, charities do have to register as lobbyists, so there is that
Senator Mockler: Mr. Chair, I did not want to give any impression
that I was questioning the way you chaired this meeting earlier, so I want
I want to link a bit with what Senator Campbell has said in that I think
we have a common denominator, and the one we all have is that we want more
transparency, integrity and accountability. Do you agree with that?
Mr. Lauzière: More transparency, if it is well balanced. I would
not say that about more integrity. There is a very high level of integrity,
so I would not say we need more integrity. That we need more measures so
information is more available to Canadians — I agree we need to look at
Senator Mockler: Do you agree with more accountability?
Mr. Lauzière: I would say the charitable sector is probably the
most accountable of the sectors. It is accountable to the Canada Revenue
Agency, to its members, to its donors and all of the foundations that fund
it. They are hugely accountable. I think it is more looking at how we
present the information to Canadians so that it makes sense and it is
Ms. Krause: The concerns I have tried to raise are about a couple
of dozen organizations, so a very small number. There are tens of thousands
of them in the charitable sector. Therefore, the concerns I have tried to
raise are really about a very small group, and these concerns should not be
over-generalized to the whole sector.
Senator Mockler: Since the debate has been undertaken, people have
come up to me. I was in the Halifax airport yesterday morning and I want to
tell you I had two people coming over and saying to me, "I want to share
with you that I think we are all on the right track when we want to ask
those charities, " especially when you look that we have approximately
85,000 charities across Canada, Mr. Chair. In the U.S., there are a little
over 1.1 million charities. I think we can all learn from ourselves.
Senator Buth: My question has been answered. Thank you.
The Chair: That sometimes happens when we have 12 interveners.
Senator Ringuette: There was a red tape commission that was
looking at reducing the amount of red tape that the federal government was
requesting. Was Imagine Canada part of the consulting process, Mr. Lauzière?
Mr. Lauzière: Was this the red tape commission launched last year
Senator Ringuette: Yes.
Mr. Lauzière: No, we were not part of that.
Senator Ringuette: Thank you.
The Chair: Thank you very much.
I will continue by thanking each of you for being here. You have helped
us a lot in this particular area. We have two things happening with respect
to charities. We have an inquiry ongoing that was started by Senator Eaton
in the Senate, and that is a broader discussion. Our purpose today is to
focus on the amendments in Bill C-38, with respect to charities. That is our
most immediate challenge.
Mr. Lauzière: As I said earlier, to add in where we are
comfortable with the intent in where this is going in terms of the budget
bill, and in terms of how foundations and all charities that transfer
dollars to another charity, there will be a new way to report on that. On
the wording, we may have some wording that we want to provide to the
financing. We are working on that now. It does not go to the intent, but
into the clarification of what is in the bill now. That will follow to you
as a committee.
The Chair: Thank you very much. Keep up the good work in this
area. We have some other business that we will deal with. If you could fold
up your documents, you are welcome to go at your leisure.
I understand Senator Ringuette has an issue.
Senator Ringuette: I do not know where the steering committee is
in its discussion in regard to witnesses. I would certainly like to
reiterate the fact that this committee should be hearing from the
Parliamentary Budget Officer.
You will remember that a few years ago that, upon the recommendation of
this committee, the Parliament of Canada would have a Parliamentary Budget
Officer. I wish for us to hear the Parliamentary Budget Officer in regard to
Bill C-38 and the $5.2 billion reduction plan in order to have perspective
in regard to the bill. I believe this committee — which was instrumental in
having this parliamentary position put in place for all parliamentarians —
would at least have the courtesy to invite the Parliamentary Budget Officer
before our committee in regard to Bill C-38, which is the budget bill and is
the main issue of research right now.
The Chair: Anyone else wish to make any comments? The steering
committee will of course take that under consideration.
Senator Buth: I will make the comment that I think the
Parliamentary Budget Officer's reports are all available. He has reported on
this, and so his comments are already a matter of public record. I will
leave that with the steering committee.
The Chair: Is there anything further?
Senator Ringuette: All parliamentary officers report, just like
the Auditor General. When the Auditor General reports, we have him before
our committee. When the Public Service Commission reports, we have her
before our committee. There is no reason we should not have the
Parliamentary Budget Officer before us.
The Chair: Let me comment on that. There are really two things.
One is having an officer of Parliament or the Parliamentary Budget Officer,
who is not quite in that category, come to our group after a report is
different from bringing that person in as a witness in relation to a bill
that we are studying.
That is the only comment I would make at this time. I think that has to
be considered by steering committee, and that is what we will do.