The great issue of our day is whether we can order our world with flourishing institutions apart from governments and the markets. This is the very key question behind the very taxing issue facing this committee. The future of charitable giving and the vibrancy of the charitable sector will be influenced more by social and cultural conditions than by the limited tools of government. Tax incentives are only one such tool, but they are a powerful tool, and we must use them in the best way we can.
The charitable tax credit is one of the most successful tax credits ever implemented. It is a $2 billion investment that may be our most effective lever to animate more than 80,000 charities across Canada. It is less than 1% of the whole federal budget, yet it's treated like the oil of Elijah that the ancient texts suggest never runs out.
The numbers speak for themselves. In 2005, government expenditures for the charitable tax credit were $2.26 billion. In 2011, it was less than $2.26 billion. Over that same period of time, Canada's population increased by two million, and the incomes of Canadians increased. Additionally, Canada's demographic bubble would suggest that giving would be at a dramatic high. Indeed, in 2008, the government estimated that charitable tax expenditures for 2010 would be slightly less than $3 billion. Clearly, it expected Canadians to give more. We can all see the arithmetic on the wall. Unless Canadians have greater motivation to give, something in the charitable sector is going to give.
So here's my appeal to you. When you have the oil of Elijah, and it will cost less than $1 billion to keep it flowing, prudence demands that tax expenditure happen. The way to do this is to raise the charitable tax credit, ideally from 29% to 42%. It's simple. It's bold. It's straightforward. The public understands it.
I had the privilege of sitting on Minister Diane Finley's advisory council for social partnerships. We advise the minister on social enterprise initiatives to leverage the work of government and others. If we discovered a $3 billion idea that could act as a powerful fuel cell for every charity across the country, we would be leaping for joy right over to Minister Flaherty's office, with every confidence that it would be right up there in the highlights of the upcoming budget.
What I'm really talking about is a strategy to shore up the great work of Canada's civic core—a small but amazing part of our society. What I'm asking you to do is to tell the participants in the civic core that government is behind them and will help them do even more. In the meantime, the deep social and cultural questions that really motivate our care and love for our neighbour must become the next great debate in our country. If it doesn't happen, tax incentives won't help.
There are many great ideas out there to complement Cardus's strategy. There are also some that, unfortunately, do not measure up. I respectfully suggest that the stretch credit is such. As it stands, it is not a policy that is material to the whole charitable sector. It will generate limited dollars. It's too experimental. It is biased toward the spontaneous giver rather than the planned giver. Getting your young, male Bay Street lawyer to donate more in one year than he spends at the pub with his buddies on Friday night is a cultural task, not a tax strategy.
Attracting new donors through tax incentives is a stab-in-the-dark strategy. Everyone who raises money, and that's all of you around the table, knows that the best way to receive a donation is to ask someone who already donates. And except perhaps for Canada's charitable-giving leaders, who live in Abbotsford, B.C., Canadians already have much more room to give.
In contrast to the stretch credit idea, Don Johnson's plan for the removal of capital gains on the gifting of real property is a great idea. It's easy to do. Extending to privately held shares needs a lot more work. Another drawback—the giving of capital already receives more benefit than the giving of income, a disincentive to those who have no appreciated capital to give. Maybe it's time to send an encouraging message to the middle class that their charitable works are worthy of acceptance.
Cardus has done extensive research on the nature of generosity, on the health of the civic core, and on the importance of institutions mediating between government and the market. It is our considered opinion that increasing the charitable tax credit is the best idea of the ideas on the table.
Thank you very much.