Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities
On December 6 2010 the Standing Committee on Finance held hearings on C-470 and whether there should be salary caps on charities in Canada.
Here is the minutes of meeting
“MINUTES OF PROCEEDINGS
Meeting No. 51
Monday, December 6, 2010
The Standing Committee on Finance met at 3:31 p.m. this day, in Room C-110, 1 Wellington Street, the Chair, James Rajotte, presiding.
Members of the Committee present: Kelly Block, Hon. Scott Brison, Robert Carrier, Bernard Généreux, Ted Menzies, Thomas J. Mulcair, Massimo Pacetti, James Rajotte, Paul Szabo and Mike Wallace.
Acting Members present: Hon. Albina Guarnieri for Hon. Scott Brison and Yves Lessard for Daniel Paillé.
Associate Members present: Cathy McLeod.
In attendance: Library of Parliament: Mark Mahabir, Analyst. House of Commons: David-Andrés Novoa, Committee Clerk.
Witnesses: Canadian Conference of the Arts: Alain Pineau, National Director. Association of Canadian Community Colleges: Terry Anne Boyles, Vice-President, Public Affairs. As an individual: Gary Bizzo. Ontario Hospital Association: Tom Closson, President and Chief Executive Officer. Association of Universities and Colleges of Canada: Paul Davidson, President. Canadian Red Cross: Alan Dean, Vice-President, Board of Governors (volunteer), National Office. World Vision Canada: Sharon Dymond, Chair, Board of Directors. Canadian Bar Association: Terrance S. Carter, Chair, Charities and Not for Profits Law Section. Charity Navigator: Ken Berger, President and Chief Executive Officer. Imagine Canada: Don McCreesh, Chair of the Board. Association of Fundraising Professionals: Mark Blumberg, Partner, Blumberg Segal LLP. Calgary Chamber of Voluntary Organizations: Katherine van Kooy, President and Chief Executive Officer. SickKids Foundation: Patsy Anderson, Chair, Board of Directors. Kingston and District Labour Council: Joan Jardin, Treasurer.
Pursuant to the Order of Reference of Wednesday, April 21, 2010, the Committee resumed consideration of Bill C-470, An Act to amend the Income Tax Act (revocation of registration).
Alain Pineau, Terry Anne Boyles, Gary Bizzo, Tom Closson, Paul Davidson, Alan Dean and Sharon Dymond, made statements and answered questions.
At 4:31 p.m., the sitting was suspended.
At 4:34 p.m., the sitting resumed.
Terrance S. Carter, Ken Berger, Don McCreesh, Mark Blumberg, Katherine van Kooy, Patsy Anderson and Joan Jardin made statements and answered questions.
At 5:37 p.m., the Committee adjourned to the call of the Chair.
Clerk of the Committee”
Here was my initial report to the committtee:
Mr. Mark Blumberg (Partner, Blumberg Segal LLP, Association of Fundraising Professionals):
Thank you, Mr. Chairman.
My name is Mark Blumberg. I’m a charity lawyer in private practice and a volunteer with the Association of Fundraising Professionals’ Canadian government relations committee. I’ve written quite extensively on Bill C-470, and I’m grateful for the opportunity to address you today.
The Association of Fundraising Professionals, also known as the AFP, is a global professional association for individuals responsible for generating philanthropic support for a variety of non-profit charitable organizations. The AFP advances philanthropy in society by enabling people in organizations to practise effective and ethical fundraising. The core activities through which AFT fulfills this mission include education, training, mentoring, research, and credentialling. AFP is the largest association of fundraisers in the world, representing more than 30,000 practitioners, including 3,100 members in 16 chapters across Canada.
AFP appreciates the spirit of Bill C-470, strongly supports transparency and good stewardship, and is pleased to learn of recent amendments proposed relative to the bill. However, we remain concerned about the bill for a number of reasons.
First, there are already rules on charity compensation. CRA notes that compensation should be fair and reasonable. Otherwise, if compensation were disproportionate to the services rendered, it would contravene the Income Tax Act. The CRA’s fundraising guidance, which is available on the charities directorate website, also discusses good staffing processes and notes that the salary should “never exceed the fair market value for the services provided”.
Second, a regulatory framework for transparency already exists. On the revised T3010B , the Canada Revenue Agency already requires that charities must provide compensation information for their ten most highly paid employees in one of nine ranges to the CRA, which then publishes them. Creating another secondary disclosure is unnecessary.
Third, non-profit board members and administrators are already subject to CRA scrutiny and have a fiduciary duty to make sure that all decisions, including those concerning employee and executive compensation, are made in the best interests of the registered charity.
Fourth, CRA already has the power to ask charities, first, to provide additional compensation detail as it deems appropriate, and second, to publish that information. This appears to make the bill as revised unnecessary.
Fifth, providing simply the name, job title, and annual compensation without context could be misleading. One researcher might be paid $150,000 and another $250,000. Which charity is providing appropriate compensation? Or might both be appropriate subject to differing circumstances? To know the answer, an individual would require information including, but not limited to, information on experience, professional qualifications, amount of responsibility, and comparable market compensation.
AFP has strongly supported past tough measures to enhance transparency and accountability, including the June 2009 guidance on fundraising, which owing in large part to open, comprehensive, and cross-sector consultation was well designed and welcomed by the sector. Indeed, the recent Attorney [ed. Auditor] General’s report, while noting capacity challenges, specifically highlighted CRA’s improved performance in charity regulation and enforcement.
AFP proposes that this bill not go forward at this time. Instead, we propose that the charities directorate of the Canadian Revenue Agency be instructed to immediately and urgently undertake consultation with the sector and other interested parties about increasing transparency and accountability. CRA Canada, without changes to the Income Tax Act, has already significantly increased disclosures in the T3010B on a number of different issues, including expanding salary ranges from $120,000 to $350,000 and up. That did not require any legislative changes, and I don’t believe Mrs. Guarnieri was even aware of that change.
AFP strongly believes that it would be beneficial to this sector, its stakeholders, and the CRA to have greater transparency and more relevant information available. CRA has a proven record of delivering on such matters.
In conclusion, AFP would like to thank the Standing Committee on Finance for this opportunity to appear, and we are available to provide any additional information you require in your deliberations on this important issue.
Do you require legal advice with respect to Canadian or Ontario non-profits or charities?
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.