Top Six Takeaways for Fundraisers from the Special Senate Committee Report
On June 20, 2019, the Special Senate Committee on the Charitable Sector released its report Catalyst for Change: A Roadmap to a Stronger Charitable Sector. Within the report’s 190 pages, the committee outlined 42 recommendations for the federal government to implement with the intention of strengthening the nonprofit sector. The report was the culmination of 18 months of public hearings and written briefs. More than 150 witnesses, including several AFP members, appeared before the Committee, and over 90 individuals and organizations submitted briefs.
Many fundraisers have asked what the report’s recommendations mean for them. AFP has put together the top six takeaways from the report with the potential to have a huge impact on the fundraising profession.
- Ensure financial security for fundraisers into retirement.
Recommendation 5 (p. 36) That the Government of Canada, through the Minister of Finance and federal-provincial-territorial meetings of Ministers of Finance, support the development of pensions for the charitable and non-profit sectors that are portable across provincial and territorial jurisdictions.
Many nonprofits and charities are unable to offer their employees pensions and other retirement benefits–or if they do, they are not very significant, especially at smaller organizations. However, as more and more employees consider total compensation rather than just salary, the lack of these programs contributes to turnover both in the fundraising profession and overall nonprofit sector. Recommendation 5 and other similar proposals would help small and medium charities attract and retain top fundraising talent.
- Unlock more giving by incentivizing gifts of private shares and real estate.
Recommendation 34 (p. 108) That the Government of Canada, through the Canada Revenue Agency, develop, implement and evaluate a pilot project on the impact on the charitable sector of exempting donations of private shares from capital gains tax.
Recommendation 35 (p. 108) That the Government of Canada, through the Canada Revenue Agency, study the extent to which the donation of non-environmental real estate could be incentivized without undermining the Ecological Gifts Program.
In 2006, changes to tax law eliminating capital gains on gifts of public securities to charities fundamentally changed giving and substantially incentivized donors to make major gifts of public securities. Making similar changes to incentivize gifts of private securities and real estate also has the potential to increase giving, particularly in urban areas where land and property values have increased dramatically in recent years.
- Unlock more giving by increasing the minimum disbursement quota for charities and donor advised funds.
Recommendation 36 (p. 113) That the Government of Canada direct the Advisory Committee on the Charitable Sector to examine the advantages and disadvantages of amending the disbursement quota for registered charities; and the advantages and disadvantages of setting the disbursement quota in regulation, rather than statute.
Recommendation 37 (p. 113) That the Government of Canada instruct the Advisory Committee on the Charitable Sector to consider means of ensuring that donations do not languish in donor-advised funds but are instead used to fund charitable activities in a timely fashion.
There is currently no minimum disbursement quota mandated for donor advised funds (DAFs), which means a DAF is not required to grant any money to any charity on an annual basis. In addition, there are no external standards for reporting, which means that in and out funds are reported along with payouts of income from endowed funds. This lack of clear information around giving through DAFs means we do not know how much–or how little–is sitting in DAFs that could be unlocked to fund charitable activities. Establishing a minimum annual disbursement quota for DAFs would free up more funds for charitable activities, as would increasing the disbursement quota of charities, which is currently only 3.5%. With giving in Canada stagnating, and receipted donations sitting in DAFs and charities’ own accounts, failing to address this issue is a huge danger to the nonprofit sector and the growing number of Canadians who rely on charities for support.
- Decrease the administrative burden and restrictive nature of government funding.
Recommendation 10 (p. 45) That the Government of Canada, through the Treasury Board of Canada Secretariat, develop policies that require departments and agencies to compensate full administrative costs associated with delivering the services being funded in transfers to charitable and non-profit organizations.
Recommendation 11 (p. 46) That Government of Canada initiatives that support the sustainability of for-profit sectors, particularly with respect to overhead and infrastructure costs, be extended to the charitable and non-profit sector.
Recommendation 12 (p. 47) That the Government of Canada, through Treasury Board of Canada, ensure that grants and contribution agreements cover a minimum of two years, renewable as appropriate; and that the level of information required for both application and reporting on these agreements be commensurate with the level of funding, minimizing complexity for smaller amounts.
Recommendation 13 (p. 49) That the Government of Canada develop and implement a standardized set of reporting categories and an on-line tool for charitable and non-profit organizations to submit financial reports based on these categories. The Treasury Board of Canada should be tasked with working with federal departments and agencies and federal/provincial/territorial working groups.
A significant number of Canadian charities rely on some form of government funding. For charities funded by the federal government, these recommendations, if adopted, would decrease the pressure on fundraisers to secure additional funding to cover the full administrative and operational costs associated with running programs and initiatives that the government currently does not fund. The recommendations would also provide more funding certainty for programs and get fundraisers out of the annual grant writing cycle to maintain current funding levels.
By guaranteeing a minimum of two years for contribution agreements, programs will have a stronger chance of demonstrating their viability and impact, making them more attractive to other donors, especially those who might be reluctant to be the first funders to support a project. Standardizing reporting requirements and making reports easy to submit online would be a significant time-saver for organizations. These proposals also have the potential to reduce costs associated with contracting this function out, and at the very least, enable fundraisers and program staff to spend more time on work that furthers their organization’s mission rather than filling out paperwork.
- Create access to current data on giving, volunteering, and the impact of the nonprofit sector on Canadians.
Recommendation 16 (p. 55) That the Government of Canada prioritize data about the charitable and non-profit sector in all Statistics Canada economic surveys, including the Satellite Account of Nonprofit Institutions and the General Social Survey on Giving, Volunteering and Participating; and that the Government of Canada support collaboration between Statistics Canada and the charitable and non-profit sector to determine what additional data could be collected and disseminated in a timely and consistent manner to support the evidence base for decisions by organizations in the sector.
Having access to up-to-date and relevant data will enable charities to better plan for the future and adapt to changing demographics and trends in society. Accurate and updated information also will allow fundraisers to stay ahead of trends and be better able to assess the fundraising landscape. This information, which is no longer provided by Statistics Canada, is sorely needed and will enhance the effectiveness and efficiency of the fundraising profession and the entire nonprofit sector.
- Have government address the nonprofit sector in a comprehensive manner.
Recommendation 22 (p. 62) That the Government of Canada, through the Minister of Innovation, Science and Economic Development, create a secretariat on the charitable and non-profit sector to:
- establish and convene regular meetings of an interdepartmental working group, with representation from Finance Canada, the Treasury Board of Canada Secretariat, the Canada Revenue Agency, Employment and Social Development Canada and other departments with direct connections to these organizations;
- convene meetings of appropriate groups of federal/provincial and territorial ministers with responsibility for various aspects of regulating and relating to the charitable and non-profit sectors; and
- publish an annual report on the state of the charitable and non-profit sector. This report should include changes related to the sector by federal, provincial and territorial governments along with a more general overview of the economic and social health of the sector.
One of the most important recommendations calls for the creation of a secretariat that would bring together representatives from different government bodies and agencies to address issues related to the nonprofit sector.
To date, the sector—which raises billions of dollars every year and accounts for millions of jobs across the country—has never had a specific governmental body that can use its expertise to collect up-to-date, comprehensive data about the sector and develop policy decisions for the sector that are evidence-based. A significant part of our country’s economy is governed by rules from across several different departments and agencies depending on the particular issue. There is often lack of clarity or overlap in the responsibility and role of different bodies regarding the sector. This is no longer a tenable situation given the growth of the sector and its impact on communities across Canada. It would be unthinkable for any other major economic sector to not have a proper home in the federal government.
AFP is very pleased to see this proposal, as it has the potential to create one government body—a sort of “one stop shop” for charities and nonprofits when it comes to working with the federal government. Having a Secretariat dedicated to all aspects of the nonprofit sector, instead of just tax implications and regulatory requirements, will allow the sector to work in close partnership with the government and help create policies that will support charities and assist them in adapting to changes and new trends.
The recommendations in the Senate report can significantly change the nonprofit sector for the better. Though these recommendations are just suggestions for now, moving forward any of the 42 ideas would demonstrate a serious commitment by the federal government to a sector that in 2017 contributed 8.5 percent of Canada’s Gross Domestic Product (GDP), equivalent to $169.2 billion, and employed 2.4 million Canadians.
AFP Canada has prioritized the report’s 42 recommendations and will continue to work with our sector partners–Imagine Canada and CAGP, for example–to ensure these recommendations become reality for the benefit of all fundraisers, charities and Canadian society as a whole.
If you are interested in learning more about AFP Canada’s advocacy efforts, visit our Impact & Advocacy webpage.
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