August 14, 2017
From the President

Thoroughly Modern Charities

By Hilary Pearson

If we were in a world where Canadian charities and charitable funders were regulated as modern organizations, what might that look like?

  • Charities would be pursuing their purposes and planning their budgets based on earned income from activities that included business-like activities.
  • Charities could invest in their own capacity through easily-available capital, supplied by loans, guaranteed mortgages or direct investments from commercial or charitable investors.
  • Emerging projects could be incubated on fully-funded shared platforms run by either charities or social enterprises.
  • Funders would be working with and funding non-charities on collaborative projects in which various sources of funding including some from business, would be combined for a shared charitable purpose.
  • Funders would be working with non-charities through agreements that were easy to understand, manage and share.
  • Information and key data for decision-making would be collected and shared easily with other charities, governments and funders through commonly-shared reports and benchmarks.
  • Reporting to government would be done online and through shared formats that can be easily uploaded, and with clear and straightforward instructions.
  • Charities would be expected to participate in policy debates and would advocate freely, with reasonable and fact-based arguments, for a policy change if it was relevant to their purposes.

If we were truly imaginative, we could picture a world in which social-purpose organizations could be registered and supervised by a stand-alone agency of government, with a mandate to facilitate, educate and keep order while minimizing fraud and bad behaviour.

Charities would be productive, able to offer decent work, innovative in their approaches, and able to work freely with organizations across the economy and society on purposes that were widely accepted as being for public benefit.

Canadian charities and foundations recognize that this is far from the case today. So, how do we get from here to there? How do we find ourselves in a world where charity regulation is flexible, encouraging and up to date, without losing sight of the equally important goal of public regulation, that is to prevent fraud and abuse of public funds.

The federal government made a commitment to the possibility of “modernizing” the regulatory framework for charities when federal Ministers were given their mandate letters by the Prime Minister in late 2015. This has been a tantalizing and hopeful commitment, but we are having trouble realizing it in practice. The federal government did create an opportunity in 2016 for sector-wide input and conversation on one aspect of this bigger picture for modernization: charities engaging in public policy work, up to and including so-called “political” activity, which means, of course, not partisan activity at all but rather calls to action for policy change.  This consultation, in which PFC participated, generated many comments on the importance of creating a more open and flexible regulatory regime, going well beyond the question of whether charities can and should engage in calls to action on policy change. The discussions resulted in an excellent report from a government-appointed Sector Panel which was released in May of this year.  PFC, along with many other representative organizations, responded very positively to that Report.

Meanwhile, in the Senate of Canada, there has been a call for a broader inquiry into charities, nonprofits and the volunteers who support them.  Arguing that “we have not had an in-depth review to see if the laws and policies regulating non-profits and charities are adequate”, Senator Terry Mercer has moved for the establishment of a wide-ranging inquiry.

So where are we now?  There is a summer lull in the work of Parliament, and the federal government is still contemplating its response to the consultations and discussions on the need for modernization of the legislative regime.  But the activity continues.  Given the opportunity to push for change, PFC and other umbrella organizations in the charitable sector are continuing to advocate for modernization.  In August, PFC submitted a brief to the Standing Committee on Finance which called for pre-budget submissions to review in its planned hearings in advance of the 2018 federal budget.  We intend to continue our call for implementation of the Sector Panel Report recommendations and to pursue further approaches to modernizing the entire federal regime for charities.  We know that this will take more study and more analysis of the best options for change.  But we also know that in the 21st century, in a world in which flexibility, cross-sectoral collaboration, innovation and urgency are all badly needed to address our complex challenges as a country, we will lose many opportunities for being more effective and productive, and government will lose opportunities for partnership and progress on its ambitious policy goals. Let’s hope that we will find ourselves in that thoroughly modern world of charities before too much longer!

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Showing 2 comments
  • Jodie Becker

    I was drawn to this article largely because I have recently gone through the process of incorporating a non-profit. Having established a “social enterprise” in 2016, with no intention to make large profits, I still found that having access to funding, and sponsorship was limited when living in the “for profit” sector.

    It took over 6 months to hit “submit” on the incorporation documentation, for fears of bureaucracy, lengthy grant writing applications, and tedious record keeping requirements would take over our business and we would lose sight of why we exist in the first place.

    I very much agree with your view on the modernization requirements of charities and non-profits, yet also understand government obligation to ensure funding is not being abused.

    Thank you for your comments on this topic.

    • Jennifer Thomas

      Thanks for your thoughtful comments Jodie. Always a balancing act for sure. We wish you the best of luck.

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