Finance Committee on Feb. 7th, 2012

[Donald Johnson]

Also, with gifts of real estate, when the donor sells the real estate, if it's, say, commercial real estate, they've had the tax benefit of the amortization of the cost of that real estate. There would be a recapture of the amortization of the asset, so they would be paying tax on the recapture.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Hoback.

Mr. Chisholm, please.

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

Thank you very much, Mr. Chairman.

I also want to thank the presenters today.

I'm a fairly recent addition to this committee, and in examining this particular issue.... Before I was elected in May, I was part of the United Way in Halifax and also co-chair of the fundraising committee, so I can speak directly to the kinds of pressure that organizations like yours and your members are under in the community today in trying to raise money.

I am interested in the concept behind the stretch tax credit. In our last campaign while I was there, we had a corporate donation. The way we set it up was that this corporate donation would match anything a donor gave that was more than they had given the previous year. It's probably something that happens across the country, but we found it very effective as a way to leverage a little more money out of people's pockets. It was very much in the $100, $200, $300, $500, $600 range at which you are recognizing some quite material changes. I'm curious about this concept and wonder whether you would talk a little bit about it.

On your point, Mr. Hatton, that governments are retrenching, whether it's a Conservative government nationally or the NDP government in Nova Scotia, there is pressure to balance the books and to be more responsive, and there is a question of choices. Too often, maybe, the choices leave communities and community groups sitting high and dry, putting real pressure on organizations such as yours.

If we can come up with a strategy that recognizes a cost to government of 10% and in which the cost only comes about when the money is given, that sounds like a pretty good deal. Would you talk a bit to that?

[Alan Hatton]

Thank you. I hadn't even thought about it. We do this; we do it very effectively. We tend to do it for very large donors; we don't do it for small donors. It works for large donors because they think that through leveraging they're getting a larger return for their investment or donation than otherwise. I hadn't thought of it in that sense, but one of our new strategies is to support leadership giving, and if it were across the board and we could sell it to everybody, that would be a huge advantage. I think you're absolutely right.

[Len Lifchus]

Let me add to Al's comments. We have two types of matching programs in the three United Ways that I've worked for: matching offered not only by corporations but by generous individuals who match first-time gifts as well. We have corporations that match their employees' gifts dollar for dollar. Just recently, ArcelorMittal Dofasco in Hamilton matched all new business gifts that came in to the United Way up to $50,000. We had 67 businesses come forward with new gifts that brought in additional revenue. Some were individual gifts and some were corporate business gifts.

So it is an incentive, and this is an example of how the stretch tax credit would benefit the donor, because the person wasn't previously giving and is now giving $100 or $500 or $20, which increases their own individual giving and would allow them a stretch tax credit for their return. The winners are the community and the programs that are funded.

[The Chair, Conservative, James Rajotte]

There are about 30 seconds left.

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

I want to ask quickly about the eco land credit. You talked about extending it to ten years from six years. Could you just give me a brief comment on that?

[Karen Cooper]

Certainly.

The current ecological gift program exempts that kind of gift of real estate from capital gains, and currently you get the deduction in the year of the gift and for an additional five years. Because these are gifts of land tending to be of high value from folks who don't necessarily have a high income, they may not and very often do not use the full value of the gift over the course of the six years. Extending it to ten years gives them more time.

The U.S. has recently extended the credit to 15 years. We picked a sort of midway point.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Adler.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

I also want to welcome all of the guests here today.

Everybody's hurting for money—governments, charities, individuals. Notwithstanding all the tax credits and incentives out there for charitable giving, what are you doing in Montreal to encourage the younger people and create a culture of giving, as opposed to relying on incentives and going back to the same donor base, which you've all admitted is shrinking?

[Robert Kleinman]

We've tried in our organization and in our sister organizations to bring young people together, to provide them with the tools to actually give. We provide them with some dollars. They have to contribute some and we provide some. We give them an opportunity to make donations and we teach them about different organizations. That's how we're trying to deal with them. We're dealing with them from the age of 13 up, providing small amounts of cash, which, with the help of their families, allows them to make gifts of $50 a year. This is a way of teaching them about philanthropy. That's what we've been involved with.

[Mark Adler, Conservative, York Centre, ON]

And you're finding that to be an effective...?

[Robert Kleinman]

Well, it's a long—

[Mark Adler, Conservative, York Centre, ON]

Yes, it's a long-term project, I know.

[Robert Kleinman]

The kids are excited about it. They're having fun.

[Mark Adler, Conservative, York Centre, ON]

Great.

[Robert Kleinman]

They love the program. The parents love the program. Will this mean something 10 years from now? I hope so.

[Mark Adler, Conservative, York Centre, ON]

Me, too.

[Marcel Lauzière]

Youth are very interested in the charitable sector, no doubt about that. They are volunteering. We sometimes think they are not, but they are. They're the largest group of volunteers in the country. They volunteer fewer hours, but they volunteer in very big numbers.

Their expectations are often different. They may go from one charity to another, rather than staying with the same charity for 30 years. That's a challenge for charities sometimes, but it is really heartening to see.

One way to come into a charitable organization is through volunteering. Another way is through giving. Of course, it's not all about tax credits. We find that when people start giving it's a hook into that organization. They develop a relationship with that organization, and often they start volunteering with it. The kids are asking a lot of questions—and that's not a bad thing—about impact and where organizations are going, what the real results are.

So all of these things, I think, mesh together. It's not only one element, clearly not just a tax credit. But the idea of the stretch is something that could really help them get into it from a different perspective.

[Mark Adler, Conservative, York Centre, ON]

I know there are a lot of advantages to the stretch, but isn't one disadvantage possibly that individuals might delay their donations with an eye to pooling with, say, their spouse to attain a higher deduction? Wouldn't that create a cashflow problem for charities? Is that not a major disadvantage of a stretch tax?

[Marcel Lauzière]

With what we're recommending under the stretch, there would be no spousal pooling. We've had discussions with the Canada Revenue Agency and Finance about that, because we think it would be too complicated. So with regard to the stretch, it would have to be per individual.

Again, I think the people who will be interested in the stretch are interested in it because they really want to help a particular charity. They believe in what they do. As for wanting to wait and do something that would not be helpful to the charity, we may see some of that, but overall I don't think that would be the behaviour of most Canadians. We have, however, recommended that spouses be disconnected for the stretch.

[Alan Hatton]

We've actually given a lot of thought to your first question about how to engage youth, because that's the future. That's a great question.

In fact, in every one of our major cities we now have Gen-Xer clubs. This is not about fitting them into the campaign so much—it's what folks are interested in. What turns you on? They love to be engaged, but they're not engaged like our generation. It isn't about guilt and charity and my mother and father always gave, so I will too. Those days are over.

[Mark Adler, Conservative, York Centre, ON]

That's right.

[Alan Hatton]

It's about impact, results, using Flickr, using Facebook, using clubs. It's about them coming together and finding out about the issues. It's about us finding better ways to engage them. We can't keep up. They are ahead of us. Our systems can't cope with what they want to do, which is hard for organizations. But if you get onto that, it's really exciting.

So for us it's having the traditional way for people to give, but being much more ahead on the new ways.