Thank you so much, Madam Chair.
I wanted to quickly say “thank you so much” to the committee for its conduct. We've all watched, and it has been so refreshing to see a really thorough investigation of what happened at Hockey Canada.
My name is Kate Bahen. I'm the managing director at Charity Intelligence. Charity Intelligence researches Canadian charities, and we post research reports on our website so that Canadians can be informed about their giving.
I have not analyzed, reviewed or rated Hockey Canada. My work on this file was purely to help journalists walk through and understand the audited financial statements. I've been invited to report to you on the financial transparency of Canada's sports organizations—the RCAAAs—and charities.
The RCAAAs are amateur athletic associations. They're a small subset of Canada’s registered charities. They can issue donation receipts, yet this small group of 138 amateur athletic charities is not required to complete an annual return, called the T3010. Every other Canadian charity must complete this annual return. The T3010 discloses basic information about a charity, including staff, compensation, programs and finances. This loophole must be closed. RCAAAs must file an annual T3010, just like every other registered charity in Canada.
There is another area where financial transparency can be improved. Last May, when the news about the Hockey Canada legal settlement broke, Canadians had many questions. We were unable to answer these questions. Hockey Canada was not financially transparent. Its books were closed and its finances were not publicly available.
The information is available if one goes to the bother, cost and delay of filing an access to information request. Mark Blumberg filed this request, but the pages he received were incomplete. It took three months—until August 2022—for us to receive Hockey Canada's complete audited financial statements. Hockey Canada became financially transparent in December 2022, when it posted the PDFs of its audited financial statements.
The lack of financial transparency among Canadian charities is far more common than Canadians expect. In 2007, when we asked charities for audited financial statements, 28% refused. In 2022, 13% refused. This lack of financial transparency is out of step with the public’s expectations, as 92% of Canadians say that charities should be financially transparent. Whether it's 2007 or 2023, Canadians are always shocked to learn that charities are not required to be financially transparent.
Should Canadian charities have the right to refuse to be financially transparent? This option is only available in Canada. In the U.S., the U.K. and Australia, financial transparency is regulated. In those countries, the audited financial statements are posted on the charity regulator’s website and are easily available with just a click. It's time Canada got in step and did the same.
While aligned with what Canadians want, there could be strong opposition from the minority of charities that fiercely keep their books closed. These charities include some of Canada’s largest charities, which receive hundreds of millions of dollars in annual donations. We track $750 million in annual donations going to what we call these “dark pool” or “black hole” charities.
Thomas Cromwell found this attitude at Hockey Canada. I quote from his report, in which he said:
Hockey Canada expressed that some other changes were just not well suited for their organization, such as making the financial statements…available to the public. Although Hockey Canada has achieved considerable financial success over the years, Hockey Canada is concerned that being seen as an organization with “deep pockets” could create some negative implications.
For example, [financial transparency] could have an effect on their bargaining power with respect to the settlement of lawsuits, and this could also influence the amount of money that sponsors would be willing to offer in the future. This is not to mention the fact that the media could use [the] information to depict a negative image of the organization.
Hockey Canada's attitude is common among the non-transparent minority of charities. These charities see their activities as nobody else's business.
I ask for your committee, for your leadership, to make Canadian charities financially transparent.
Thank you.