Special Edition Digest - Public Policy & The Charitable Sector

Special Edition Digest – Public Policy & The Charitable Sector
Désirée McGraw Special Advisor to PFC

Based on its first three months alone, 2021 has already proven to be an exceptionally busy year on the public policy front with respect to the charitable and non-profit sector. Key developments were addressed during a well-attended PFC webinar (17 February) on Charity Sector Reform featuring three thought leaders in Canadian Philanthropy:

Senator Ratna Omidvar who on 2 February tabled in Parliament Bill S-222, entitled “The Effective and Accountable Charities Act.” Of note, the legislation amends the Income Tax Act to enable charities to establish equal partnerships with non-charities – such as not-for-profits, social enterprises, co-ops, or civil society groups – while still ensuring accountability and transparency.

Hilary Pearson (founding President of PFC) and Bruce MacDonald (CEO of Imagine Canada) as co-chairs of the Federal Advisory Committee on the Charitable Sector; their first report entitled, “Towards a federal regulatory environment that enables and strengthens the charitable and nonprofit sector,” was publicly released on 12 March.

Also of note and very much in line with our PFC Statement of Vision and Values, on 10 February Statistics Canada released its report on Diversity of charity and non-profit boards of directors. And on 18 February, the Report of the Standing Committee on Finance in advance of the federal budget was tabled, with a dedicated section on Charities and Non-Profit Organizations containing three recommendations most relevant to PFC membership.

On 19 February, PFC made its own formal submission to the Government of Canada in advance of the 2021 federal budget: it details PFC’s position and proposals to the Federal Government aimed at enhancing the economic and social contributions of the charitable sector to Canada; our four main recommendations are as follows:

Recommendation 1: That the federal government designate a dedicated space for the charitable sector within the machinery of government.

Recommendation 2: That the federal government maintain, enhance and support programs and initiatives to strengthen both the resilience and diversity of the charitable sector so that it can continue to support communities and serve Canadians throughout the pandemic.

Recommendation 3: That the federal government invest in data pertaining to the charitable sector through Statistics Canada.

Recommendation 4: That the federal government create a level-playing field by reforming non-qualified donee requirements as well as support the legislative amendments contained in The Effective and Accountable Charities Act

A campaign to “Increase the Grants” – a self-described “movement to require greater granting from Canadian charitable foundations” was launched early this year. This campaign was preceded by a Give5 Pledge launched in spring 2020 on the heels of the pandemic and calling on foundations to voluntarily contribute 5% of their assets for the duration of the pandemic; over 70 organizations, including many PFC members, made the pledge.

These initiatives and others have highlighted the Disbursement Quota (DQ), mandated by the Income Tax Act, as an important policy tool; and one that must be considered as part of a broader public policy agenda. Beyond PFC’s public pronouncement as it relates to the DQ (which can be found on the President’s December 2020 blog, entitled “Canadian foundations stepped up in 2020 – more to do in 2021”) PFC has three over-arching messages:

We welcome all calls to action aimed at improving the impact and effectiveness of the charitable and non-profit sector in the short term (responding to addressing immediate crises), medium term (addressing pre-existing and protracted problems) and long-term (preparing for unforeseen and future crises).

We believe that regulatory instruments such as the DQ need to be considered in a coherent and holistic manner and as part of a broader reform agenda. The DQ is but one aspect of the fundamental role of private philanthropy in promoting the public good, including how it does so in relation to government.

We believe that simplistic solutions are no substitute for serious policy reforms and that, without due diligence, may in fact be self-defeating. To maximize intended benefits for the common good – and minimize unintended consequences – policy development must be data-driven and evidence-based.

PFC believes that philanthropy can best be deployed to serve the common good through a coherent and collective policy agenda – one that is deliberately developed through a process that is inclusive of all stakeholders as well as evidence-based. This helps to ensure alignment of policy intent with real-world impacts. The approach should also be comprehensive in that it addresses the Disbursement Quota (DQ) as part of a broader reform agenda for the charitable and non-profit sector, particularly in relation to government. This is the mandate of a special Working Group of the PFC Board that will consider these policy issues. It is also the rationale that underpins PFC’s active participation in many cross-sector initiatives, including the Coalition for a 21st Century Social Good Sector and An Agenda for Equitable Recovery hosted by Imagine Canada.