Canada’s Charitable Sector: What to Expect in 2022

Changing the rules around non-qualified donees

In Canada, the conversation around embracing more trust in philanthropy is tied to non-qualified donees.

There may be changes coming, as Senator Omidvar’s bill, the Effective and Accountable Charities Act, passed its third reading in the Senate in December. The bill would amend the Income Tax Act to allow charities to fund non-qualified donees, if they take “reasonable steps to ensure those resources are used exclusively for a charitable purpose.”

The bill has since been retabled and is now in the House of Commons, sponsored by Conservative MP Phil Lawrence. “I hope it will be passed into law in 2022,” says Omidvar, who has been involved in the charitable sector throughout her life. “There is a lot of support for this bill from all sides of the House of Commons,” she says, though she warns that the bill, if it is passed in 2022 without amendments, would not come into force until 2024. The bill, she says, would not mandate trust-based philanthropy so much as alter the way accountability is measured.

As it stands, she says, the rules around allocating funding to non-qualified donees are not only “outmoded” but also an example of systemic racism, forcing funders to form “not a partnership, but a takeover of the project.”

She points to data that demonstrates the inequity of funding to Black- and Indigenous-led organizations. A 2020 study entitled Unfunded: Black Communities Overlooked by Canadian Philanthropy found that grants to Black-led organizations represented a “meagre 0.7 percent of total grants during the 2017 and 2018 fiscal years.” Another 2021 study found that “even though Indigenous people are about 4.9% of the population, Indigenous groups received just over one half a percent of gifted funds.” Omidvar believes this can begin to be addressed by changing the rules around non-qualified donees.

Read the full article in The Philanthropist Journal