It’s time to act on recommendations to strengthen oversight and include funding innovation, volunteer engagement and regular taxation review.
The report “Catalyst for Change: A Roadmap to a Stronger Charitable Sector” was released by a Senate committee in 2019 – a time before Zoom fatigue, curve-planking, pivots and social bubbles were part of the lexicon. Adopted formally by the Senate in November 2020, it is the Red Chamber’s most-downloaded report to date, according to Senator Ratna Omidvar, one of the file’s champions. As Canadians reflect on COVID-19 recovery, it’s an important time to focus on this report. It makes 42 recommendations to strengthen charitable and non-profit funding, and oversight systems that could remove barriers to achieve healthier and equitable communities.
Since the 2019 committee release of “Catalyst for Change,” we’ve seen worldwide health and economic crises, a reckoning over racial injustice and calls for further mobilization around climate change. Yet, many of the rules regulating charities in Canada have not been reviewed in 50 years. In that time, we’ve seen drastic changes in service delivery and demand, especially now. Moving to the next stage of implementation couldn’t come at a more important time.
Those working in food banks and shelters are seeing steep increases in demand, as are other frontline-serving agencies such as health care. “This idea that we’re all working in the meantime. When is ‘in the meantime’ ever going to change?” This comment from an exasperated Valerie Tarasuk, founder of the Food Insecurity Policy Research Team at the University of Toronto, speaking on CBC’s The Current, is illustrative of the “Groundhog Day” scenarios in which many feel stuck.
In this time of disruption and with news of a vaccine rollout in its initial stages, here is a fresh look at the recommendations from the report and what to prioritize.
Funding model innovation
During the pandemic, the need for computers, software and broadband services became crucial for delivering mental health counselling, accessing education and developing portals for screening volunteers, among dozens of other services and activities in our increasingly online life. These aren’t often covered by project-based grants or small donations.
Clarity around the types of revenue-generating models in which charities can engage would provide additional sources of funding as organizations try to stabilize and cope with shortfalls and declines in donations, which are predicted to last well into the coming years.
Among other matters, WE Charity brought to light the related or adjacent revenue structures that charities must establish to earn money. As it stands, registered charities can engage in some revenue-generating activities if they are related to their purposes (think of a youth health charity that operates a fitness facility) or is run mostly by volunteers (think of hospital gift shops), but most other activities must be set up under an arms-length organization that does not interfere with the charitable entity.
Moreover, confusion around terms such as “social enterprise” and the differing rules for charities, for-profits and non-profits can lead to unintended lack of compliance with the Income Tax act. As more organizations scrutinize their books and diminishing fundraising options, clarity on permitted activities through streamlined explainer guides and tools would be welcome.
To be certain, business models aren’t the ideal domain or expertise of every charity, but for those that may benefit from this source of funding, a proposed “destination of funds” pilot would provide informative data on viability. In this pilot, charities could generate revenues as long as the proceeds were used to serve its charitable purposes.
Even before the pandemic, research from Imagine Canada, an organization dedicated to boosting the work of charities and non-profits, estimated a social deficit gap of $25 billion by 2026. This means that in a few short years, social-purpose organizations would need billions more than they are likely to have to deliver services.
Now, with fundraising galas cancelled, ticket sales lost and pending closures, it’s a time for sober reflection. With nearly seven-in-10 charities reporting a decrease in revenue, a funding source to support the process of merging or closing in a thoughtful way, also known as a Farewell Fund, would assist with adaptations, transitions and retooling.
Volunteers deliver services and they are a lifeline for small, understaffed organizations. During the pandemic, updated screening protocols and virtual intake portals were established to stay in line with public health guidance. These necessary pivots happened quickly to allow those who stock shelves at food centres or who reach out to isolated seniors to continue offering their time.
It is important to sustain, grow and empower this source of volunteer labour through shared platform tools and recruitment, retention and recognition strategies in light of the vital role volunteers play in the charitable and non-profit eco-system and in the country. For example, the report noted that volunteers working with the Correctional Service of Canada assist offenders with community integration to bridge gaps between correctional institutions and communities.
Company and community volunteer strategies, post-secondary credits and national recognition would sustain programs beyond a by-the-seat-of-our-pants frenzy. In the U.S., Volunteering Untapped hosts community improvement projects in Baltimore. It asks volunteers to commit to a different project each month for three hours. Its tagline is: “Volunteering should be easy. Now it is.” Closer to home, the cross-Canada Ismaili CIVIC program provides a model framework for active engagement with collective goals such as one million hours of service to galvanize communities.
To keep these services going, the cost of personal protective equipment and program adaptations need to be determined. For example, some organizations are offering “in a box” envelope-stuffing kits allowing high school students to complete their volunteer hours at a distance, along with other episodic, project-based engagements.
A secretariat for the sector
Establishment of a central desk within the government would underline the sector’s importance and complexity beyond the regulatory function of the Canada Revenue Agency. A cross-departmental secretariat should support the sector’s economic and social roles, and assure it is considered in government decisions. Rather than waiting decades, this new position could review the rules governing charities every few years to adapt to rapidly shifting ways of working, along with regular reviews of tax incentives to further encourage giving at a time of great need.
Recently, Irfhan Rawji, chair of the board of governors at the Glenbow Museum in Calgary, suggested a “super tax credit” to encourage donors to increase their 2020 donations and expedite cash infusions. Instead of getting 50 per cent of a donation back, people could get 75 per cent back. “Showing up with a $300 cheque next year for an institution that no longer exists isn’t that helpful.”
Additionally, a central point within the government infrastructure would provide a mechanism for shared data on board diversity and economic health, as well as insight from rural, small, Indigenous- and newcomer-serving organizations. We’ve seen this example at the provincial level with the recent appointment of Niki Sharma, MLA for Vancouver-Hastings, as parliamentary secretary of community development and non-profits, in British Columbia. She will bridge the charitable sector and government on post-pandemic recovery work through coordination with and investment in the sector.
In the “Catalyst for Change” report, the special Senate committee on the charitable sector also signaled a shift by asking for a detailed response led by the minister of national revenue with a dotted line to nearly a dozen other portfolios. Committee chair Senator Terry Mercer noted that with “the rise in unemployment across the country and the fact that many people with lower incomes have been affected, charities have a very important role to play in helping them get beyond that.” Moreover, the charitable sector is an essential service-delivery network, an economic driver that contributes eight per cent to Canada’s GDP and employs more than two-million people who are the agents of mobilization and change around matters of health, equity and sustainability – all critical issues of our time.
The pandemic has put so much into question, particularly concepts around “charity.” The weight of massive social issues cannot rest on outdated infrastructure. A timely review of the “Catalyst for Change” report’s 40-plus recommendations and an implementation plan for a manageable shortlist would be a great start toward accelerating structural change.