The Silence is Deafening - A Call To Action for Canada's Charitable Sector

“If I am not for myself, who will be for me?

If I am only for myself, what am I?

And, if not now, when?”  –Hillel

This is what I thought of when I heard the wording around charities and innovation in Canada's 2012 Budget that was presented by Minister Flaherty last week.  I was dismayed that over the weekend, the articles and blog posts that came out from the charitable sector were limited and did not put a strong stake in the sand.  The closest blog post that actually said anything about the budget and its impact on the social profit/charitable sector and innovation came from Tonya Surman at the Centre for Social Innovation in Toronto.

“Given their unique perspectives and expertise, it is broadly recognized thatcharities make a valuable contribution to the development of public policyin Canada. Accordingly, under the Income Tax Act charities may devotea limited amount of their resources to non-partisan political activities thatare related to their charitable purposes.

Recently, concerns have been raised that some charities may not berespecting the rules regarding political activities. There have also been callsfor greater public transparency related to the political activities of charities,including the extent to which they may be funded by foreign sources.”(Pg. 204 of the 2012 Budget)

When we are sick, we seek advice from a doctor. When we need legal support, we go to a lawyer. When we are building a house we seek guidance and planning from an architect, structural engineer and contractor. So it is only fitting that if we, as a society, are trying to manage some of the most complex social issues of our times like poverty, obesity, equal access to education, climate change (just a few off the top of my mind) that we should go to the source of those who are working the front lines of the issues.

What this budget states, is that politicians know best and instead of going to the experts in their fields, they are curtailing the way that policies and social change can happen.  If the government really wanted to have charities be more transparent then perhaps they should start asking the right questions, and perhaps look at some of the very organizations that they themselves are funding who are actively engaged in furthering the misguided conversation around fiscal responsibility and reporting processes.

I am all for transparency in the sector. In fact, that is my business – to work with donors and charities TOGETHER – to create accountabilities that resonate with the investor and with the supplier (the donor and the charity).  When I began building out Place2Give, we were sent data from the CRA Charities Directorate. What we found was over 70% of the files we were sent had mistakes. These mistakes ranged from generic typos, to Category misclassification (i.e. social organizations labeled as arts groups), to revenues being zeroed out and so on.  When I spoke to the charities directorate staff person about these errors the process was explained to me.  Guess what – It’s NOT the charity’s fault all the time!  I was informed that when a charity completes their form and sends it in, the CRA outsources it to be data entered. From there it gets sent back to the CRA for review. If there are glaring mistakes the charity is informed, if there are not glaring mistakes, the CRA staff person makes the adjustment and then it gets posted on the website.  So is it the charities fault?

• Error one – initial form completion ... Charity’s responsibility
• Error two – data entry… CRA responsibility
• Error three – data correction… CRA responsibility
• Error four – posting info on searchable database on the CRA site… CRA responsibility
• Error five – communicating to the public… Charity’s responsibility

When the government is looking at spending $8Million over the next few years on auditing charities and where they get their funds, perhaps they can ear mark part of that for their own internal charity process management.

If the government was really interested in managing transparency in the charitable sector perhaps they should ask what the COST of solving the issue is instead of what is being spent on solving the issue.  For example, what is the COST of keeping people in cycle of poverty? What is the COST of creating a health care system that actually ensures that we are not raising a generation of obese children? The form that the charity should be filling out is not just where did your money come from, and what did you spend it on, but it should also ask what is the cost of the issue you are mandated to solve?

 I was working with a client building a charitable giving plan that was looking at poverty and homelessness. In the course of our exploration we asked organizations, what is your success rate?

Here's a small example:

If an organization spends $100/client getting them off the street with a 20% recidivism rate and a similar organization spends $50/client getting them off the street with an 80% recidivism rate, which one is really better? The information currently provided by the charities on the CRA forms (the very forms that the government states are what makes a charity transparent), would say that the second organization is better because the cost of raising a dollar v. the cost of spending on the program is a better ratio.  Does this really paint the transparent social picture?!?!

Charities should be banding together NOW to express their dismay at the blatant attack on the sector by the body that is supposed to regulate them.  The voice of the sector is supposed to be coming from Imagine Canada and the various Chambers of Voluntary Organizations across Canada.  What we are hearing from these groups is more of the same-old-same-old.  Focus on getting your financials to conform with what the government wants.  The power that these groups could have in actually influencing meaningful, democratic, social change is immense, but they too are funded by the very body that they are supposed to be advocating to.