Thank you, and good afternoon.
My name is Don McCreesh. I am the chair of the board of Imagine Canada, the national umbrella group for Canada's charities and not-for-profits. I've been a volunteer director for over 40 years and often served as chair of the board or head of the HR committee. Compensation issues have formed a large part of my professional life as an HR corporate officer and now director of boards of publicly traded corporations and charities.
I take my responsibilities very seriously, as do the hundreds of thousands of charitable board members who give of their time and expertise.
At a time when charities are striving to respond to growing demands, even as governments and philanthropists are increasingly constrained in their ability to maintain their support, I sincerely hope that the mischaracterizations of charities' compensation levels, of their commitment to transparency and accountability, as you've heard today, and of the use they make of the valuable resources that are entrusted to them have not, even unwittingly, done a great disservice to charities' donors and the people they all strive to support.
Imagine Canada and the charities are committed to increasing public understanding of the true costs of doing good and promoting transparency and accountability regarding all moneys entrusted to the sector, contrary to what has been stated. Canadians need access to a broad range of information in order to make informed decisions, and we're constantly striving to enhance the availability and accuracy of this information.
On the issue of compensation levels in the sector, the facts speak for themselves. Employment in the sector is often characterized by non-competitive salaries, few or poor benefits, and little or no pensions. Of the approximately two million Canadians who work in this sector, over 99% make less than $250,000, but even large organizations with great financial means often find themselves at a disadvantage attracting or retaining highly skilled people, who could just as easily choose employment in the private or public sector.
Over the past several months we have shared our concerns with parliamentarians regarding the unintended consequences of this bill, and we are pleased to see the significant amendments that have been proposed. We strongly encourage members of the committee to look favourably upon those proposed amendments. Imagine Canada is firmly opposed to the compensation cap, both as a matter of principle and for practical reasons.
Charities are governed by independent boards of directors with fiduciary obligations to make decisions in the best interests of the organization, including those concerning compensation. The compensation cap would have undermined the authority and role of these volunteer boards, and would also have been highly discriminatory. No other sector would have been singled out for this treatment, regardless of the public expenditure from which many of them benefit.
As I understand from the amended bill, only one clause would remain in the proposed legislation, the one that would require the disclosure of names, titles, and compensation details for the five most highly compensated employees of a charity, if it exceeds $100,000 a year.
We respectfully submit that this additional layer of transparency, if it's deemed necessary, is best achieved through administrative reforms rather than through legislation. CRA officials have outlined the compensation information that charities are required to provide. That is already publicly available and has been enhanced this past year.
We strongly support this level of transparency and would be prepared to see more reporting ranges added to increase transparency regarding compensation above $350,000. We do question the added public benefit of revealing individual names. Where such practice has been introduced, the end result has been to drive executive compensation upwards.
If members still believe salary disclosure would achieve benefits that outweigh privacy concerns and unintended consequences, this can be achieved through administrative means. This would also allow greater flexibility in adjusting the parameters of these requirements over time and should unintended consequences arise.
If, despite the possibility of directing CRA to implement these changes, members of the committee deem that legislation is required, we once again strongly recommend that the amendments be accepted, but we would add two caveats.
First, where laws have been required on the disclosure of compensation details, one of the main drawbacks has been the lack of an inflationary escalator for the trigger amount. In Ontario, for example, the $100,000 was established almost 15 years ago and has not changed. The disclosure list now includes people it was never intended to capture. We hope the members take this into account and build in an escalator.
Secondly, there are instances when there are potential personal security ramifications to full disclosure. We have heard about international development workers, but I also point out that employees of domestic abuse shelters have the same issue. They often require anonymity, and they have spoken to us about that. We believe the minister should retain the flexibility to choose, where circumstances merit, the publication of this information, and not to publish exact details where that could be an issue.
I commend you for the responsiveness that you've shown to date on this issue and welcome your questions.