Special Senate Committee on the Charitable Sector

… an Atlas case in Problem Definition and Agenda Setting

Click for Committee website

The case

This page provides links pertaining to the work of the Special Senate Committee on the Charitable Sector, appointed in January 2018 to “to examine the impact of federal and provincial laws and policies governing charities, nonprofit organizations, foundations, and other similar groups; and to examine the impact of the voluntary sector in Canada” and “to report from time to time and to submit its final report no later than December 31, 2018, and retain all powers necessary to publicize its findings until 60 days after the tabling of the final report.” (Journals of the Senate, 30 January 2018)

This case can be used in conjunction with Using the Atlas to Plan a Policy Report and Denman Island Charities. See also Brief by Ian Clark for the Senate Committee on the Charitable Sector.

Potential Assignment for MPA and MPP Students

Imagine that you are the Library of Parliament Analyst assigned to the Committee and have been asked by the Chair to provide Committee members with a 4-page memo suggesting a viable outline for the Committee Report. Drawing on the Proceedings and Briefs, and applying policy analysis concepts referenced in Using the Atlas to Plan a Policy Report, your memo should include:

  1. a one-paragraph definition of the public policy problem
  2. a one-page description of the socio-economic context and previous policy initiatives
  3. the pros and cons of different policy instruments to address the identified public policy problem
  4. one to three principal recommendations with their estimated costs
  5. the interests that would be affected if the recommendations were adopted and their likely reactions
  6. the expected impacts of the recommended course of action and how it could be evaluated in five years
  7. a one-paragraph communications strategy
Useful links
Senate Committee on the Charitable Sector

Order of Reference (see “Resuming debate on the motion, as modified, of the Honourable Senator Mercer, seconded by the Honourable Senator Fraser …”)

Witnesses

Proceedings, 16 April 2018 (Susan Phillips, Rachel Laforest, Peter Elson)

Proceedings, 23 April 2018 (Finance Canada, Canada Revenue Agency)

Proceedings, 7 May 2018 (Statistics Canada, Brian Emmett)

Proceedings, 28 May 2018 (Statistics Canada, Sachi Kurl, Laura Lamb, Kayla Smith)

Proceedings, 4 June 2018 (Statistics Canada, Service Candada, Femida Handy, Paula Speevak, Debra Basil)

Proceedings, 11 June 2018 (Employment and Social Development Canada, Global Affairs Canada, Corrections Canada, Canada Mortgage and Housing Corporation)

CRA Charities and Giving

List of charities search page

Political activities, CPS-022

Senate Committee Briefs

The Charitable and Non-Profit sector in Canada’s Economy (Statistics Canada brief)

Charitable Giving in Canada (Statistics Canada brief)

Estate Giving and Research by Donors (Statistics Canada follow-up brief)

Tax Treatment of Charities and Non-profit Organizations (Finance Canada brief)

Imagine Canada

Imagine Canada Standards Program

Charities, Sustainable Funding and Smart Growth (2016 Discussion Paper by Brian Emmett)

Beyond Synergy: Charities Building the Future Canadians Want (2018 Discussion Paper by Brian Emmett)

Selected Highlights from the Proceedings

(for detail see the link above corresponding to the witness and date cited)

Peter Elson (University of Victoria) on the responsibilities of government (16 April 2018, emphasis added)

“What is the responsibility of government for the well-being of non-profits and charities in Canada? Is it their responsibility to help support, guide, or to get out of the way so that the contribution is, in fact, one of absence?

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

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

Brian Emmett (Imagine Canada) on the gap between growth in the economy and the growth in the demand for what charities do (7 May 2018, emphasis added)

“[W]e see that charities have grown faster than the economy as a whole. … Why have charities grown faster? In my view, they have grown faster because demand has grown faster. They have grown faster because the demand is driven by different factors than the economy. The economy generally cares about productivity, investment, and so on and so forth. Demand for what charities do is determined by demographics, culture, changes in family structure, diversity, increasing addictions, and those sorts of things. The number one influence among them is the aging population.

“You can look at the sector over time to see that it has been growing faster for good reason than has the economy as a whole. I guess my argument would be that in the future these trends are likely to continue and even accelerate. Demand for charities will continue to increase rapidly because the population will not get any younger. Culture will continue to change as will family structure. Addictions, homelessness and so on, we don’t see as slowing down. If anything, what charities are facing on the demand side will place increasing stress on them.

“What about the means, the means generated by the economy? We see, as backed by the Parliamentary Budget Officer, the Conference Board of Canada and others, that long-term economic growth is likely to slow to less than 2 per cent, a very significant drop from about the 3.5 per cent that we have seen over the past couple of decades. This creates for us a divergence of the outlook for ends and means, which creates real problems for governments and charities. In some ways, governments and charities are in the same business of delivering social goods to individuals.

“The biggest example is health care. The aging population will impact on health care. It will impact on tax revenues. Demand for health care is going up and tax revenues are not going up as fast. The Conference Board has forecast deficits for the provincial governments at about $300 billion a year by, I believe, 2036. It’s a fairly long-term forecast, but the idea that ends and means will diverge as a fundamental one.

“We have tried to look at the forecast. If demand for charities continues to grow as rapidly as it has in the past 15 to 20 years and if economic growth slows down, can we come up with a number for a deficit that will stress the charitable sector? We have come up with a number of about $26 billion social deficit in the year 2026.

“In our view, the gap between ends and means will grow, and there will be a real deficit in 2026. You will not see that on Statistics Canada’s books because it will be a deficit that shows up in longer waiting lines at food banks, longer waiting lines for health care, congestion, overstress on staff, and charities trying to do too much with too little. It’s what we might call a shadow deficit but it will nevertheless be real in unmet social needs. …

“The bottom line of the message I want to convey is that we are not talking about a charity sector problem when you look at the synergistic relationship between the economy and the charitable sector and when you try to forecast forward to see the divergence between ends and means. We are talking about a Canada problem. The Canada problem is that what most Canadians want is a mixture of economic growth, wealth creation, social justice, environmental responsibility, and those sorts of things. The divergence between ends and means will make it more difficult for all of us, governments and charities, to achieve that. To me, that means you want to look to each sector being in a position to maximize its value to Canada.”

Susan Phillips (Carleton University) on changes in the sector (16 April 2018, emphasis added)

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

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

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

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

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

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

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

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

Rachel Laforest (Queen’s University) on the diversity of the sector (16 April 2018, emphasis added)

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

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

Peter Elson (University of Victoria) on low pay and non-existent pensions (16 April 2018, emphasis added)

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

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

Femida Handy (University of Pennsylvania) on volunteering by boomers and Millennials (4 June 2018, emphasis added)

“There are lots of things that have changed in the ways we volunteer and also the kinds of people who volunteer. For example, older people are undergoing what gerontologists refer to as productive aging. They are very productive and healthy and want to have a role in society. They are retired and want to find options to actualize their lifestyles and to have some roles. They are seeking opportunities to engage in activities that are meaningful and contribute to society.

“There is another cohort, the Millennials, who are not content to practise philanthropy as the baby boomers did. They want it in their everyday lives as part of their working lives, careers and families. They seek purpose in their consumption activities, as well as networking, and very often they volunteer with their colleagues and friends, make online donations, volunteer online, and engage in online and initiatives promoted by their employers. Millennials often want to engage in volunteering activities in their workplace.

Femida Handy (University of Pennsylvania) on informal volunteering (4 June 2018, emphasis added)

“Another trend we have seen that we have only begun to notice but that has existed for millennia is the idea that volunteering can only happen through organizations. We have missed a large part of volunteering that happens informally and not within organizations. All the accounts and statistics we have on volunteering generally refer to that which happens through a formal organization. That’s the one that has been valued and legitimized.

“But there is the one-to-one help afforded to the “other” – and I don’t mean that to your family members or relatives but really to the “other.” The question is, do we want to value this in the same way we value formal volunteering? Sometimes we do. We give awards to private acts of heroism for saving people’s lives or something unusual, but not for the everyday acts that are the glue of our society.

“Informal volunteering, whether it is giving change to the homeless or helping the elderly across the street are taken for granted, but not so for the recipients who receive that help. In fact, the old scouting motto of “doing a good deed a day” is relevant for us today, I would argue, as are the “random acts of kindness” that people provide and that are now being recorded.

“As many demographic, technological and other changes take place, I have no doubt that the human imagination will also invent new ways of giving and volunteering. I think philanthropy is firmly rooted in our DNA, often waiting for the opportunity, either through organizations or other ways, to actualize itself.”

Femida Handy (University of Pennsylvania) on things that promote philanthropy (4 June 2018, emphasis added)

“The other piece of research I would like to share with you is a book we just published on the culture of philanthropy in 26 different countries. We hold the idea that philanthropy is something in our DNA. Human beings all over the world want to practise philanthropy. What was it that made some countries appear more philanthropic than others? In our book, we looked at 26 different countries, and I will give you the eight things we found that promoted philanthropy. Generally, we were speaking of money donations, but it applies to volunteering as well.

“The first one was the culture of philanthropy. We found that in those countries where philanthropy was celebrated, for example, if there was a celebration of philanthropy and volunteers, it was very visible and they discussed it openly. The presence of visible major volunteers and donors in a country motivates other people to follow their example. Making the culture of asking more professionalized was also a way to get people to give and contribute, both time and money.

“The second was public trust, issues of transparency, accountability and effectiveness. We found that in countries with stronger government regulation for non-profits, it increased the trust in non-profit organizations, made them more effective and made people more willing to contribute time and money to these organizations. The regulatory and legislative frameworks were very important as well, for example, the role of paid and unpaid employees, the union treatment of volunteers versus paid labour, how organizations treat their volunteers. When was it considered exploitation, and when was it considered a volunteering role?

Fiscal incentives was the other one, but for volunteering that didn’t make sense. Basically, they found that creating more philanthropic talk, making it something commonplace, encouraged and was more effective than giving any kind of incentive, also making it sustainable for future giving.

“Number five was the state of the non-profit sector and the professionalization of volunteer management in non-profits, good relations between the state and the non-profit sector. People typically would be more inclined to volunteer when there were good relations with the organization, when volunteers are managed professionally. It is not ad hoc and we will find something for you to do, but the way volunteers are trained, recruited, retained, appreciated and all of that.”

Susan Phillips (Carleton University) on priorities for policy and regulatory reform (16 April 2018, emphasis added)

“First, what kinds of organizations are considered charitable? This sector and our expectations of it have outgrown a historical view of charity and our approach increasingly lacks public legitimacy, it’s not easily understood and it does not serve society well. …

“Current rules on “political activities” are confusing and reporting is a fiction. The language and the limits on political activities need to be clarified. …

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

“Effective regulation depends on the authorities, the credibility, the transparency and the resources of the regulator. Is the Charities Directorate of the Canada Revenue Agency suited to be a modern regulator?

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

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

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

“Next is stronger governance, skills development and decent work. With increased expectations of impact, innovation and the pursuit of new business models, the need for effective board governance and leadership skills are critical. …

“I don’t believe that governments can realistically regulate good governance and leadership, only encourage and invest in it. The Imagine Canada Standards Program is one of the most rigorous sector-wide certification systems in the world, and more could be done to integrate it into a co-regulation approach. There is a need for charities to attract new leaders and employees with the right skills.

“The sector is advancing a decent work agenda that includes precarious work compensation, pensions and benefits, and the committee could assist the work of the sector by encouraging conversations around decent work.

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

Susan Phillips (Carleton University) on charitable taxation (16 April 2018, emphasis added)

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

Brian Emmett (Imagine Canada) on charitable taxation (7 May 2018, emphasis added)

“The first thing to say is that you start in Canada with a system that’s quite generous in terms of the refundable tax credit. In some ways it’s quite equitable. If you look at the U.S. where you get a deduction from your income, the value of giving a dollar to charity depends on how rich you are. In Canada, it doesn’t. It depends on how big a donation you make. In many ways it is an excellent system.

“There are some areas where we would recommend thinking about making changes, one of which is to stretch tax credit which would compensate people a little more if they increase their donations over their historic level. …

“Other issues are the donation of privately held securities and real estate, on which the sector has made recommendations to government. We’ve generally found the comeback on that is we already have one of the most generous systems in the world and the government is not willing to move on that. We continue to be very interested in anything that would make donations more attractive, but we have to recognize there is a certain reality of pushback there.”

Sources

Senate of Committee, Special Committee on the Charitable Sector, at https://sencanada.ca/en/committees/cssb/, accessed 11 September 2018.

Imagine Canada, at http://www.imaginecanada.ca/, accessed 11 September 2018.

CanadaHelps.gov, at https://www.canadahelps.org/en/, accessed 11 September 2018.

Atlas topic, subject, and course

Problem Definition and Agenda Setting (core topic) in Policy Analysis and Process and Atlas101 Policy Analysis and Process.

Page created by: Ian Clark, last modified on 16 September 2018.

Image: Senate of Committee, Special Committee on the Charitable Sector, at https://sencanada.ca/en/committees/cssb/, accessed 10 September 2018.