Finance Committee on Feb. 7th, 2012

[Robert Kleinman]

It's hurt charitable giving, because it really had an effect on charitable donations. It wasn't that large. It wasn't all over the place. I think it affected mining more. It was where certain mining occurred, because these things continued to occur. And in other places where it occurred, it is no longer occurring.

[Scott Brison, Liberal, Kings—Hants, NS]

In terms of a broader policy issue, I'd appreciate your views on impact investing. Recently, the Royal Bank had, I think it was, a $25 million fund for impact investing. We're hearing more about impact investing and the potential to actually, through a structure and terms, have almost a traditional investment banking offering for high net worth individuals and foundations that want to participate in giving.

I'd appreciate your views, as people involved in traditional philanthropy, on the potential for impact investing and the role, in the future, of impact investing. When one of Canada's largest banks makes that kind of commitment—I think it was $25 million, and the announcement was in the last couple of weeks—it's a pretty significant step. We're hearing more about the potential.

At the committee we have not heard much about impact investing yet, but I think that's something we ought to consider as part of our deliberations. I'd be interested in your experience with it and your views on it and its potential.

[The Chair, Conservative, James Rajotte]

You have 30 seconds. We can have one person comment.

[Marcel Lauzière]

There are three sources of funding for charities, actually. One is philanthropy. We've been talking about that today. Another is government funding at different levels. The third is what we call earned income, social enterprise, and that's where impact investment comes in. How do we unlock the capital out there—and there is capital out there to be unlocked—to work with charities? It's something we are following very closely and are very interested in.

I think we need those three sources of funding to be healthy. This is a very new one, but there's lots of interest in it.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Hoback, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Again, I have just a few questions to follow up on.

I'm kind of curious. Mr. Kleinman, you're probably the best one to answer this. Can you recall when the last major comprehensive review of tax incentives for charitable giving was? How important is this exercise to the charities section?

[Robert Kleinman]

This particular exercise you're doing now is very important. We've done it in fits and starts. We haven't had a comprehensive look. It's been a little bit of this and a little bit of that over years and years and years. We participated in these things many years ago. This is more comprehensive. It's looking at something that has to grow.

There was a great proposal a few years ago from CRA to put together an ongoing group from Finance, CRA, parliamentarians, and users of charities to look at these things. It was not a group that would meet two weeks in a year. It was to have an ongoing relationship to talk about things. I think that's really important.

We've done it in fits and starts. We have ideas that come out. It takes time for a lot of these ideas to really percolate and really get somewhere. It's very hard the way we've been doing business.

[Randy Hoback, Conservative, Prince Albert, SK]

I would agree with you. It seems that when you come out with an idea, the domino effect or the unintended consequences can also be a factor you have to analyze and evaluate before you move forward with a proper policy. You definitely need the time to think through and flesh out stuff.

Moving forward, one of the comments was to create the culture of giving. We create a culture among our youth that giving something to charity is something they should be doing that just comes naturally. Do any of your organizations have any expertise in programs for creating that culture of giving among youth? Do you have any best practices you'd like to share?

[Alan Hatton]

I think it starts young. You start young, start in families, and start in school. There's the whole issue of starting with volunteerism. Now it's legislated in many provinces, but we're doing the same thing in philanthropy. In Quebec we have a comic book we've created, and we're spreading it all across the towns and cities in Quebec. It's really effective, because it's about education. It's about giving back to the community. It's about encouraging philanthropy. There are lots of techniques. It's a capacity issue as much as anything.

[The Chair, Conservative, James Rajotte]

Okay.

Oh, I'm sorry.

[Len Lifchus]

Also, in fact—

[Marcel Lauzière]

I was going to say that I imagine we'll soon be thinking a lot about that. We think the way to get at this is working with you directly. We're launching a national contest for university and college students called Students (Verb) Charities, which is going to challenge university and college students to think about what charitable organizations are all about, the contributions they make, and the role they play in society. They'll be able to do that through dance, through social media, however they decide they want to do it. This will be national; it will be over the next 18 months. It's all about creating excitement, getting youth to tell us what excites them about the charitable sector.

[The Chair, Conservative, James Rajotte]

Mr. Lifchus.

[Len Lifchus]

Our experience is right in the elementary schools, with the school boards assisting us in engaging the youth. We've also engaged in an initiative where we have set money aside for youth grants, where youth determine how this money is going to be spent.

The projects have to be youth-run, youth-led, and youth-administered. The only adult allowed in the project is one who receives the money and distributes it. It's engaging them right at the heart and having them see how the dollars are making a difference in their lives.

[Randy Hoback, Conservative, Prince Albert, SK]

That's what I wanted to know.

[The Chair, Conservative, James Rajotte]

Thank you Mr. Hoback.

Mr. Chisholm.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Ms. Glover asked you to identify what positive changes have been made in the charitable tax system over the past number of years. I thought that was a great exercise. I would note that this was under a minority government. I give the government its due for having done that.

I can imagine the discussion that would have happened in the finance committee in those days. Let's hope we see the same kind of energy and dynamism and positive results now that we have a majority.

It sounds as if there's a fair bit of support for this idea of the stretch tax credit. That's only one part. That's not going to solve all the problems, is it? What your organizations across this country are facing is a difficult economy, real competition for scarce dollars, and a declining sense of confidence and trust in charities. You're facing a lot of work out there, and not just trying to find vehicles like this to try to shoehorn some more money out of people's pockets.

Do you want to comment?

[Marcel Lauzière]

There are three sources of funding, and there are challenges on all those fronts. There's no doubt.

The charitable and non-profit sector is increasingly being asked to take on a lot of work. There are issues with human resources—how do we attract the best and the brightest to come and work in our sector? Our sector is not just about volunteers. We have two million Canadians working in our sector. That's going to be a challenge.

The whole issue of transparency, governance, and impact is on the front burner of charitable organizations, not because charitable organizations are doing a bad job, but because there are questions being asked. There are new ways that we need to do things, and we are increasingly looking for impact and results rather than just looking at the inputs.

Those are big issues. That's why at Imagine we're launching these two initiatives. First, we have this new portal, which is going to allow Canadians to get easy access to information about all 85,000 charities. Second, we have the standards program, which is an accreditation. Increasingly, organizations are coming forward and we're saying we want to find ways to make sure we have the systems and the programs and the policies to be a well-governed organization, because we know the impact is going to be better, and also because we want to be able to respond to Canadians, donors, and volunteers.

[Alan Hatton]

We also wanted to be focused, because you're trying to find tax measures that would help the sector. There's a variety of other things. There's the point about having a better relationship with all departments, having a way in which we can talk about other issues. Whether it's with CRA, Finance, Health, Environment, or CIDA, those relationships are critical.

It's about changing the relationship and having mechanisms that allow us to strategize together and share. That's a whole other domain. That wasn't the purpose of this meeting, but I think it's crucial to strengthening the capacity. Tax measures are one way to do this. But there are many other ways. We have to be much more strategic and communicate better together. There are lots of other things that could be done.

[Robert Kleinman]

We've talked about the young people tonight, but we haven't even touched on the elderly. What is the percentage of elderly that have put willed gifts in? It's very small. Those are acculturation and leave-a-legacy programs, which the charity sector is trying to do. Think of the transfer of wealth that's going to happen, and charities should be a major part of that transfer of wealth. It is today—some of it—but it's not enough.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I'm going to split my time with Ms. Glover. We're trying to get a number of last-minute questions in as we draw to a close.

I guess my first question is for Mr. Johnson. You talked about two issues, and it looks like the numbers were lumped together, both in terms of private company shares and real estate. Is one seen as the opportunity to be a stronger benefit than the other in terms of benefit to charities?

[Donald Johnson]

Based upon my understanding, they're roughly the same. I think the private company shared exemption would probably result in a larger proportion of incremental giving than the real estate section. In the case of real estate, there is that capital cost allowance recapture when the individual either donates the property or sells the property and donates the cash. With the private company shares, I guess that would be a large proportion of the two.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I don't know if you've actually crunched the numbers on that issue, but if you have and you'd be able to table it with the committee, that would be great.

[Donald Johnson]

Yes.