Finance Committee on Feb. 2nd, 2012

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Harris.

We'll go to Mr. Jean, please.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair. Thank you, witnesses.

I have some questions in relation to Gift Aid. I'm using that in context out of the U.K. I know that originally when that was started in 1990, they required it to be a gift in cash of more than £600. My understanding is that in essence it adds approximately 25% to the value of the gift to the charity and gives a refund of 25% to the giver. They've changed that policy dramatically since its introduction in relation to the minimums, etc.

I do agree with you. My understanding is that there was a report by the National Post or The Globe and Mail four months ago to the effect that conservative Protestants give more. I was quite surprised by that report. The people who do give are usually making substantial incomes of over $1 million, and they give tremendous amounts of money. I know some people who do that kind of thing; they usually give about 10% of their income because of religious and other views, but they usually give it to non-religious organizations in developing worlds.

I'm wondering if you would recommend an encouragement to give more through an escalating percentage based on a certain amount given, such as $10,000 per year, but escalating over time. Most of the people I know who give these amounts.... I'm from Fort McMurray, and I know that the United Way gets more per capita from Fort McMurray than from anywhere else across the country. Many charities tell me that we give more than anywhere else.

It would be an escalating value over time, and it would identify blue-ribbon charities, which are charities that specifically have low delivery and administration costs. That's what I hear most from people: that they want those kinds of things and that they want more money getting to the end people in need. Would you encourage something like that through an escalating value? Would you encourage a particular set of charities receiving a designation by the government based on certain criteria?

[Prof. Paul Reed]

Perhaps I can tell you why, and after that I'll tell you what my answer is.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I only have five minutes, but please go ahead.

[Prof. Paul Reed]

We don't know very much about the difference between giving from income and giving from assets, from capital, but I think it's reasonable to expect that giving from capital, when there is substantial capital, is a lot less painful than giving from income, meaning from what you're earning. I think there are pools of capital and I think there are individuals with large amounts of capital who can be targeted. In my brief, I mentioned looking specifically at bequests. There is a lot of money there.

The answer I offer to your question is yes. I think having a sliding scale will be psychologically advantageous, because large donation donors are, with very high probability, giving from capital rather than from income.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I would disagree with you in relation to my personal experience with the people in Fort McMurray. They give from income and they give an amount based on certain criteria, but there is no encouragement to give more. If they give 10% of their income, there is no encouragement to give 15%. There's no encouragement to give more money. That's probably because it's not a capital-rich place, but an income-rich place.

Please continue. Sorry.

[Prof. Rachel Laforest]

I'd like to say something. One of the dangers is that we keep squeezing the minority of people who already make a lot of donations, and we just rely on them for the future of our charitable sector—

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

But wouldn't you agree with demographics and the change in our older population? I think a million people a year, or 100,000 people a year, are reaching over 65, so wouldn't the amount increase because those people give more as they get older?

[Prof. Rachel Laforest]

Yes, but eventually, if that's the way you go, with their further aging they will stop contributing. If you are just shrinking your base, it can topple over very quickly, because you are relying on just a small number of individuals for the greater good.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

If they are doing it from income instead of capital, I would argue that we could get more money from them—you can tell I'm a litigator by trade—over time by encouraging them to give more and matching it through government tax credits.

[The Chair, Conservative, James Rajotte]

You have about 30 seconds.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I'd actually like to hear from Mr. Parachin, if I could, please.

[The Chair, Conservative, James Rajotte]

Please give just a short response, sir.

[Prof. Adam Parachin]

We did have something similar to what you described before we transitioned from deductibility to tax credits. It had essentially the same effect. If you were in a higher tax bracket, you got a greater tax incentive. This was seen as regressive and as being unfair to donors.

One solution for that lies in what you propose. You would treat everybody equally, regardless of income, so that if you gave a greater amount, you would get a greater tax recognition. There could well be something to be said for that approach, although the exemption of capital gains tax on donations of land and private securities would achieve a similar outcome. That's before the committee from a variety of submissions.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Jean.

We'll now go to Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I do have a number of questions, but I'd like to get clarification on something Madam Laforest said.

I personally am very proud to be part of a government that chooses not to provide funding for political advocacy when the money is really supposed to go to the grassroots level. I'm curious to know where you got your information that funds for charitable organizations under this government have gone down. Simply looking at our record since 2006, it's increased substantially. When we look at Haiti and the money that was provided by the government to match, when we look at Japan and the tsunami and the matching of dollars there, when we look at the fact that we are the first country to actually double aid to Africa at $5 billion, it's incredible. We actually have the highest amount of funding for women's programs in the history of government.

So I'd like you to tell me what you were talking about when you referred to the funding going down. I would note that we did see, in the charts provided by Statistics Canada, that 2007 was the peak of donations at $9 billion, which clearly shows that under this government donations have gone up substantially.

[Prof. Rachel Laforest]

I'm sorry, can you tell me what that chart is again?

[Shelly Glover, Conservative, Saint Boniface, MB]

Statistics Canada was here to show us how many donations were made every single year. In constant dollars, they are substantially up. As you see, the Conservative government took office here, and this is where donations are.

[Prof. Rachel Laforest]

My first comments were not about charitable donations. I was asked about government funding of voluntary organizations and the trend in terms of how they support voluntary organizations. Within that I was talking about a decline in the practice of funding. The defunding of advocacy began before the Conservative government came to power. It was just a bit accentuated after that. So I wasn't—

[Shelly Glover, Conservative, Saint Boniface, MB]

I'd like your proof on that afterwards. You can send that to the committee. Our documents actually show the opposite, so I'm interested in your proof on that.

Going to bequests, Mr. Reed, thank you for that submission. I'm going to ask the clerk if we could get some further information, because I do want to ask you about page 7 of your submission on bequests and matching contributions and whether you actually have perhaps some projections on what we might actually gain by going that way. I think it was an interesting suggestion.

Perhaps I could ask the clerks, through you, Mr. Chair, for a note on the U.K. Gift Aid system—Mr. Jean talked about it also—so that we understand it well. Ms. Payne mentioned it, and I think it's interesting. I'd also like to see how the split receipting that was mentioned works. I thought that was interesting.

Then let's go to the bequests. Perhaps you could explain to us what you said in your document about matching contributions and how that might help us increase donations.

[Prof. Paul Reed]

I've already said more than I know. I'm simply dropping this out for discussion.

There is an incredible pool of capital in the baby boom generation. There has been, to my knowledge, close to no research on this, on how it's going to be used. There has been some excellent research done in the United States at Boston University.

We are also, however, looking at the coinciding of two things. The first is the end of what is called the “long civic” generation, people who grew up during the Depression and World War II and who learned to participate in civic life. You needed to. You had to. Combined with that is the arrival of the baby boom at retirement. As the long civic generation is passing and the other is coming in, how we as a society make the connection between those two is perhaps the reason why we're here.

[The Chair, Conservative, James Rajotte]

Ms. Glover, you have one minute left.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thanks, Chair.

I understand that, but in your documentation you talk about the suggestion that perhaps we ought to look at a way that bequeathed estates could obtain a matching contribution by government of either 10% to 15%. Have you looked at how much might actually be injected into the charitable sector if we did something like that?

[Prof. Paul Reed]

I've only done back-of-envelope kinds of calculations, and they don't count here.

[Shelly Glover, Conservative, Saint Boniface, MB]

Okay.

Mr. Parachin, I'll add just one thing—I know I only have 30 seconds—and then I'll come back to you.

Ms. Payne, I would like to know if you also looked at...because tax dollars are going up and donors don't seem to be. Do you know that we heard from Statistics Canada about pooling of donations? Husbands and wives might be donating, so it's not accurate. Perhaps you have a comment on that if we can get to it later.

Go ahead, Mr. Parachin.