Mr. Chair, members of the committee. Imagine Canada is a national umbrella organization for Canadian charities and non-profits. These organizations work in every community across Canada, and in countries around the world, to help address some of today's most intractable social, economic, environmental and cultural challenges.
Charities and non-profits are a major economic resource. We employ 2 million Canadians and mobilize more than 12 million volunteers each year. We also contribute 7% of GDP—much more than, for example, the automotive or agricultural industry.
As Canada emerges from the economic challenges of the last couple of years, charities and non-profit organizations continue to be in the front line of responding to growing and changing community needs. However, like other economic sectors, our sector has been affected by the recession. Donations as well as government support from all levels have decreased. The pressure is on to further diversify our income streams.
In our brief we make three recommendations.
First, we recommend the adoption of a stretch tax credit that would apply to new and increased charitable giving on the part of individual Canadians. The proposal was endorsed by the finance committee here last year, and we hope it will receive serious consideration in the 2011 budget. The stretch tax credit would expand the donor base and help existing donors to give more by adding 10% onto the standard charitable tax credit for every dollar in excess of a person's previous highest donation level. It would apply from the first dollar donated, encouraging all Canadians from all walks of life, of all income levels, to stretch their giving. If someone, for example, increased their donation from, let's say, $250 up to $350 next year, they would get a 39% tax credit on that extra hundred dollars rather than the 29%.
We believe the stretch tax credit would lead to changes in behaviour and would be a better public investment than simply boosting the tax credit overall. This would be a powerful message to Canadians that anyone in Canada can actually be a philanthropist.
A vital component of adopting the stretch tax credit would actually be public education. Every year Canadians would be informed of their eligibility for the enhanced credit. This could be accomplished in a very similar way to the way we inform people of their RRSP contribution limits, and it would encourage Canadians to consciously assess and plan for their charitable giving. This would be, I think, a great step forward. The stretch tax credit is about building and strengthening the donor base for decades to come.
However, donations are not the most important revenue source for the charitable and non-profit sector. Self-generated income accounts for around half the sector's revenue. This is where our second recommendation comes into effect. We know that many organizations have great ideas about how to expand their entrepreneurial activities. However, they don't always have the expertise or financial resources to turn their good ideas into reality. The federal government already has a number of initiatives that actually help SMEs get off the ground. Assistance is available for everything from early business and market planning to securing capital and scaling up successful ventures. Programs such as the Business Development Bank, Community Futures corporations, and IRAP do excellent work with private entrepreneurs.
Despite the important economic contribution of charities and non-profit organizations--I would remind you, 7% of GDP--it is not clear why charities and non-profit organizations cannot get similar federal assistance. We therefore recommend that the federal government put social entrepreneurs and non-profit organizations on an even footing with other entrepreneurs. We're not asking for more money for business development programs, just that we be given equal access to these programs at a time when these are really needed. As I already mentioned, we are one of the largest economic sectors in Canada, and we believe that more can and should be done to support the sector.
Finally, we have a recommendation that is more technical and regulatory in nature, one that would reduce costs for charities without any significant costs to government. As things stand today, decisions by the Canada Revenue Agency to deny or revoke charitable status are subject to review in the first instance by the Federal Court of Canada. This is an expensive and cumbersome process and moreover does not allow for the introduction of new evidence. It seriously limits charities' ability to appeal decisions.
Several years ago, the Joint Regulatory Table recommended that the Tax Court become the first level of appeal. This would be a much simpler, cheaper and more accessible way of doing business. The Federal Court would still be available as a higher level of appeal. We are recommending that this reform, which has already been examined and endorsed, be implemented. This would greatly strengthen the regulatory environment for charities.
Thank you, and I would be happy to answer any questions you might have.