ORNGE - A lesson for charities in the dangers of too little transparency

February 21, 2012 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Canadian Charity Law, Ethics and Canadian Charities

ORNGE, for those outside of Ontario, is a Canadian registered charity that runs the air ambulance service in Ontario.  Their helicopters are painted orange.  It is a charity but largely funded by the Ontario government.  ORNGE has been receiving a large amount of media scrutiny over the last few months.

The story of ORNGE highlights the importance of transparency in the charity and non-profit sector.  While many charities are very open and transparent, a small number of people in charities use the system to hide some pretty egregious dealings. Put another way - while we have 86,050 registered charities the sort of behaviour I am referring to relates to a few hundred charities.  While we may have 15 million volunteers and 2.2 million employees in the charitable sector, we are talking about the behaviours of a comparatively small number of people who have been hiding behind the glow of the charitable sector. Many charities that are non-transparent are not working hard to hide things - but rather they do not know how to be transparent or understand the importance of transparency.  A few others have created complicated structures in part to get away with things that they should not being doing. 

I find it fascinating the information made public by ORNGE, uncovered by a major newspaper (The Toronto Star) with a team of investigative journalists, is information that probably should have been disclosed on the website of the charity if it was a transparent charity.  Transparency does not guarantee that people will not misuse the resources of charities but it makes it less likely and more difficult.

I have argued for greater transparency in both the registered charity AND non-profit sectors.  Non-profits that are not registered charities are required to provide almost no information to the public.  The mixture of registered charities and non-profits can be helpful, or a disaster as we see in the case of ORNGE.  My submissions to the Finance Committee of the House of Commons are below.

Scandals such as ORNGE hurt the reputation of the charitable sector, and gives charities less credibility which could make fundraising and obtaining government funds more difficult.  Governments in Canada provide charities with over 2/3 of their total revenue.  If governments don’t have confidence that charities can do a good job the charity sector could suffer tremendously. 

I want to commend the Ontario government for two things - bringing in a new board of directors and then the Ontario Provincial Police (OPP) to investigate.  - I don’t know if the activities are criminal but it is important that police forces be brought into discussions such as these.  I see things often enough that look far worse than ORNGE and the Charities Directorate are generally the only ones who are prepared to act and there are tremendous limitations under the Income Tax Act as to what the Charities Directorate can do.  Hopefully various levels of government will involve police forces more when there is significant mischief in the charitable sector that may cross the line into criminal behaviour. 

What are some of the tentative takeaways from ORNGE:
-governance at some charities is not as good as it should be (including big charities that get lots of government funding);
-there should be greater education about “standards” rather than just legal compliance in the charitable sector (especially amongst board and senior staff);
-lack of transparency helps those who wish to misuse the assets of registered charities;
-there is an important role for the media in Canada in monitoring the activities of some charities;
-charities are vitally important and when there are bad decisions made resulting from a bad governance system people can suffer tremendously and die;
-generally charities have many stakeholders and charities need to be listening and responding appropriately to their stakeholders (for example front-line employees);
-we need to be more realistic about public private partnerships and how in some cases they can have significant limitations;
-charities should have systems in place to deal with conflicts of interest and help whistleblowers come forward and these systems must work;
-having more information released to the public is not necessarily going to make for more transparency (we need important information in context that is easily accessible).

Here are some other resources I have put together that you might find helpful:

Transparency - What can the Charities Directorate of CRA disclose about registered charities?
http://www.canadiancharitylaw.ca/index.php/blog/comments/transparency_-_what_can_the_charities_directorate_of_cra_disclose_about_reg/

Blumbergs submission on the importance of transparency to the charity and non-profit sector (2012)
http://www.globalphilanthropy.ca/index.php/blog/comments/blumbergs_submission_on_the_importance_of_transparency_to_the_charity_and_n/

Blumbergs submission to the House of Commons Standing Committee on Finance on Bill C-470
http://www.globalphilanthropy.ca/images/uploads/Submission_to_Finance_on_C-470_by_Mark_Blumberg_of_Blumberg_Segal.pdf

Blumbergs Submission “Canadians demand more transparency in non-profit and charitable sector” (2010)
http://www.globalphilanthropy.ca/images/uploads/Submission_to_Finance_by_Blumberg_Segal_LLP_2010_on_transparency_in_the_charity_and_non-profit_sector.pdf

Here are some of the Toronto Star articles on ORNGE (http://www.thestar.com/topic/ornge):

ORNGE scandal: Tougher legislation, but whistleblowers muzzled

ORNGE will be probed by OPP detectives

ORNGE finances to be investigated by OPP

ORNGE founder Chris Mazza used air ambulance expertise for own business interests

ORNGE loaned ex-CEO Chris Mazza $1.2M

ORNGE: Alf Apps resigns from his law firm

ORNGE boss Chris Mazza and his dreams and schemes

ORNGE paid lawyers $11 million

Ontario health ministry was warned of serious problems at ORNGE in 2008

ORNGE founder Chris Mazza terminated

ORNGE’s mysterious $6.7 million payment

ORNGE air ambulance design risky to patients, top doctor discovers

ORNGE charity that vowed to improve patient care has been closed

ORNGE names new board of directors

ORNGE lets 18 go, shutters charitable entity

ORNGE architect George Smitherman brokered meeting between Korean officials and ORNGE

ORNGE changes policy that delayed sending helicopters to accident scenes

ORNGE changes policy that delayed sending helicopters to accident scene.

Flashy motorcycle in ORNGE lobby must go, opposition parties say

Ontario taxpayers paid part of ORNGE spending spree

Ontario taxpayers funded much of ORNGE air ambulance’s wild spending spree, the Star has learned.

Ontario Premier’s office ignored red flags over ORNGE raised one year ago

ORNGE wasted $600,000 on empty hangar

Tim Hudak blasts Liberals over ORNGE

ORNGE air ambulance service now run by Ontario deputy minister

Cohn: The Liberal politics of grounding ORNGE high flyers

Ontario’s “minister of empathy” has shown she has a spine of steel. Beyond red faces, the ORNGE scandal may yield yet more red tape.

Tighter controls needed for ORNGE, Tories say

The ORNGE air ambulance service has recently spent more than $600,000 on university business degrees for top executives.

ORNGE admits secrecy surrounding exec’s salary was a mistake

Ontario’s ORNGE air ambulance service is conducting a “vigorous” internal review and has admitted that secrecy around its business model and the salary of its boss was a mistake.

Cohn: The political roots of the ORNGE helicopter debacle

Why was ORNGE chopper delayed 44 minutes as cyclist lay dying in rural hospital?

ORNGE president was paid $1.4 million per year

ORNGE ordered to open books by health minister

Shortage of paramedics leaves ORNGE helicopter idle

ORNGE spinoff lands rich payout from same firm that sold Ontario its air ambulances

Ontario auditor to dig deeper into air ambulance executive salaries

Auditor general delays report on ORNGE

Executive pay kept secret at airlift service

 

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

mark@blumbergs.ca
416.361.1982
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