Thank you, Chair Rajotte, for this opportunity to present to the Standing Committee on Finance.
My name is Mark Blumberg. I'm a lawyer and partner at the law firm Blumberg Segal in Toronto. In addition to providing clients with legal advice relating to non-profit and charity law, I'm involved with educating charities on compliance issues. I have a couple of websites, canadiancharitylaw.ca and globalphilanthropy.ca. On those websites I try to put up information on how charities can comply with the law and also information on some of the things going on within the charitable sector.
I've provided two briefs. One was in January, but a few things have happened since then, so I added a few pages to it. If you're wondering if there are two briefs, the longer one is the most recent and up-to-date one.
The charity and non-profit sector in Canada plays a very important role. It provides some of the most important services and helps some of the most vulnerable in our country.
The revenue of the sector is $192 billion. There are 2.2 million employees and 600,000 board members. There are lots of volunteers. And almost all Canadians donate to charities.
My presentation is not going to be about most of that. It's going to be about a few people who are hiding in the charity sector doing things they're not supposed to be doing. This is not so much a reflection on the charity sector as it is on those people with the schemes and transactions that they are involved with. I'm going to discuss transparency and disclosure and the extent to which the Canada Revenue Agency can provide the public with information about non-profit organizations and charities.
What does transparency about non-profits and charities do? And why should we care?
It helps the public understand the work of a particular charity and it helps donors make informed decisions about whether to support a particular charity.
It does not necessarily guarantee that non-profit organizations and charities will be accountable or effective, but it makes it more likely that if there's transparency, they will be.
It can shine a light on certain non-profit organizations and charities, which will hopefully help to reduce the amount of abuse that goes on. People are less likely to abuse charities if they know they'll be more easily discovered.
A few hundred people are involved in most of the abuse of the charity sector. They get away with it, in large part, because the CRA is forbidden under section 241 of the Income Tax Act to provide any specific information about the abuse until many years later, once the charity has been officially revoked. For example, according to the CRA, over the last eight years there has been approximately $5.7 billion in donation receipts issued as part of abusive gifting tax shelter schemes. Of the $5.7 billion in receipts, according to CRA, approximately 1% of that figure was spent on charitable activities.
Over the weekend, the CRA revoked an organization. It's called Help Eliminate Disease and Addiction Canada. It issued $113 million worth of inappropriate receipts. I've known for many years, just by looking at the T3010, that there's a problem with this charity, and now it's confirmed, I guess. But it's probably been about six years since CRA was aware of the problem. Now on Saturday they can tell everyone else, after they've revoked it, that they have revoked it.
Essentially, the non-profit and charity sector is divided into two. On the one hand, you have non-profit organizations. They file a two-page form, the T1044. Then you have registered charities. They file the longer T3010. The T3010 is available publicly, but the T1044 is not available publicly and one cannot access it. Basically, we know a lot about the 85,796 registered charities in Canada because the T3010 is available publicly.
Unlike some other countries, like the U.K., the CRA cannot publish an inquiry report on a charity that is still a registered charity. The CRA cannot notify people that a charity is delinquent in filing its return, as they do in the U.K. The CRA cannot let you know that a charity is involved in a $600 million scheme to issue inflated receipts. Essentially, the CRA can put up the information from the T3010, which is provided by the charity, but it cannot warn the public if it has a huge concern about a particular charity.