Giving the Charitable Sector the Tools it Needs to Thrive

A new report on the charitable sector recommends a national volunteerism strategy and a regulatory approach that updates the definition of a charity.

Vitally important but long neglected, Canada’s charities, nonprofits and voluntary organizations deserve the attention and support of the federal government. Canada’s 170,000 charities, nonprofits and voluntary organizations and their millions of volunteers and staff play an important role in Canadian society. From providing social services to driving research and community development, Canadians experience the impacts of their work every day.

The economic impact of the charitable sector cannot be understated. Charities and nonprofits contribute more than $150 billion to our national economy each year, representing 8 percent of our GDP. Despite these figures, Canada’s charitable sector is facing multiple challenges. Demand for the essential services these organizations provide is expected to rise dramatically over the next decade, and revenues are unlikely to keep up. According to Imagine Canada, sector organizations will require an additional $25 billion in revenue by 2026 to avoid what it calls a “social deficit.”

Last year, the Special Senate Committee on the Charitable Sector undertook the first comprehensive study of the sector in more than 20 years. Over the course of the committee’s work, we heard from 160 witnesses during 24 public hearings and received 695 responses from sector organizations through our online survey. Our report, Catalyst for Change: A Roadmap to a Stronger Charitable Sector, identifies some of the regulatory changes charities in Canada need in order to thrive and provides a vision for how the federal government must support their work.

Our recommendations seek to sustain the sector well into the future, in part by empowering the volunteers and staff who drive this sector’s invaluable work. According to Statistics Canada, Canada’s volunteers contribute almost 2 billion hours of their time each year, equivalent to 1 million full-time jobs. However, the way Canadians give their time is shifting. Many charities, nonprofits and voluntary groups are finding it difficult to retain volunteers and create opportunities that appeal to would-be volunteers while also meeting the needs of their organizations.

We believe the federal government has a role to play to sustain — and grow — Canada’s volunteer base. Our report recommends that the federal government implement a national volunteerism strategy.

A number of national efforts could stem from such a strategy. For instance, the federal government could collaborate with the sector to identify best practices for recruiting, retaining and managing volunteers. Federal departments and agencies could pursue more ways of recognizing Canada’s dedicated volunteers, through local events and national campaigns. Furthermore, our political leaders could reach out to new sources of volunteer talent by extending the invitation to Canada’s employers to forge corporate volunteerism strategies.

Short-term funding arrangements greatly affect the 2 million Canadians employed by this sector. Simply put, short-term and unpredictable funding creates precarious work in the sector. Wages are low and benefits and retirement pensions are becoming hard to come by. Despite the draw of working for the betterment of our communities, the sector struggles more and more to compete with for-profit industries for top talent.

We can alleviate the pressures placed on charities and their workers by acknowledging the reality that it costs money to make an impact. Together with the federal government, we can move to long-term funding agreements with charities and nonprofits that cover more of the overhead and administrative costs associated with doing business in the sector. The federal government can also support the development of pensions for its workers and collaborate with the sector to develop a human resources renewal plan that promotes equitable work and ensures the long-term sustainability of its workforce.

We must also pay more attention to how we define charity and how this sector is regulated. Registered charities still need to fit within one of four categories of charitable purpose: the relief of poverty, the advancement of education, the advancement of religion or the provision of other services that benefit a community. These categories come from a British common law definition that hasn’t been updated since 1891.

Canada has changed a great deal since then, and we need to ensure our charity laws reflect our values and the needs of our communities. We recommend looking at how charity is defined in Canada and how appeals of decisions of the Canada Revenue Agency (CRA) relating to charitable status are considered.

As our country has grown, our national policy priorities have shifted and expanded. And yet many nonprofits are unable to obtain charitable status in this country. While they are solving modern-day problems, their missions and innovative methods are often not considered charitable by the CRA.

Countries like Australia and the United Kingdom have experienced similar difficulties and have found solutions by passing a legal definition of charity in Parliament. We believe the newly struck CRA Advisory Committee on the Charitable Sector should be tasked with considering whether Canada should do the same.

During our 15-month-long study, we heard that common law would also be able to evolve more freely if appeals by organizations that have had their charitable status revoked or refused by the CRA are moved to the Tax Court of Canada. Currently, CRA decisions relating to charitable status applicants can be appealed to the Federal Court of Appeal. Unfortunately, Federal Court of Appeal judges are not able to consider new evidence but can merely review the CRA’s rationale. As described to the committee by one legal expert, “No not-for-profit organization has won a charitable registration appeal in Canada in more than 20 years.” If proceedings are moved to the Tax Court of Canada, where more evidence can be submitted, the common law definition of charity should finally be able to evolve.

Finally, perhaps one of the more crucial recommendations is for the government to create a dedicated secretariat at the Department of Innovation, Science and Economic Development on the charitable and nonprofit sector. The CRA is an effective and appropriate regulator, but the proposed secretariat would convene regular meetings with federal, provincial and territorial ministers and would also be responsible for publishing an annual report on the state of the charitable and nonprofit sector so emerging issues can be swiftly addressed.

From the economic value of volunteerism to the federal government’s reliance on the sector, charitable, nonprofit and voluntary organizations deliver key public services. The positive impact this sector has on this country cannot be overlooked: health care, education, the arts, sports and recreation, the environment, social supports, criminal justice, emergency response — all are underpinned by the volunteer effort of millions of Canadians, managed by a dedicated staff operating with inadequate and unpredictable funding to create miracles in their communities every day.

A real voice in government for the sector is needed now more than ever. The giving landscape is evolving, all while demand for charitable services continues to grow.

We urge the government to use the committee’s report as a road map to modernize the sector and empower charities, nonprofits and volunteers to strengthen one of our most defining human impulses: the desire to help someone in need.