Good afternoon, ladies and gentlemen of the committee.
On behalf of the Canadian Diabetes Association, I want to thank you for the opportunity to be here today.
I'd like to begin by giving you a brief background of our association. We are a national charity and membership association founded in 1953 by Dr. Charles Best, a co-discoverer of insulin.
We lead the fight against diabetes and are committed to improving the quality of life of individuals living with this disease while we work to find a cure. The association promotes the health of Canadians through diabetes education, services, advocacy, and research. In fact, we're investing $6.8 million this year alone in research. In addition, our clinical practice guidelines are internationally recognized.
As one of the largest health charities in Canada, the opportunity to be here to offer our views concerning tax measures to encourage charitable giving is greatly appreciated, especially since today we estimate that more than 9 million Canadians have diabetes or pre-diabetes, and by 2020, one in three will be living with this disease.
Canada's charitable sector is a critical economic driver. We have the second largest non-profit and voluntary sector in the world, which employs two million people and accounts for over $75 billion, or almost 8% of the GDP, which is larger than the automotive or manufacturing industries.
As you have heard from others, conditions remain challenging within the charitable sector. The last recession saw declines in donations of approximately $1 billion. While fundraising efforts were relatively stable until that time, worrying longer-term trends—such as a decline in the number of donors and their increasing age—now coupled with the significant impact of the recession, pose serious questions about the sustainability of the charitable sector in Canada.
The contributions of our sector are crucial to our economy and our social fabric. This is particularly so for health charities because we provide supplementary health programs and services to Canadians, which also serve to alleviate the cost pressures on a publicly funded health care system.
Without the proper funds we will not be able to continue to provide the services that Canadians rely upon, and our economy will decline. This is why it is crucial to determine ways to maximize the impact of charitable donations in Canada.
Given the serious challenges facing our sector, we need to consider the following in order to make the most of our civil assets: one, what social and economic contribution is the charitable sector best able to provide and how; and two, how can financial policy optimize these contributions.
The Canadian Diabetes Association supports the proposal from Imagine Canada for a stretch tax credit for charitable giving. We also note that this committee recommended this credit in 2009. An enhanced tax credit would enable us to expand the many needed services we deliver to people living with diabetes, their families, health care professionals, and the public.
The Parliamentary Budget Office carried out an impact and cost analysis of a proposed private member's bill that would have implemented a stretch tax credit on amounts exceeding $200. They found that the median donation would rise by up to 26% within three years and there would be between 350,000 and 600,000 new donors. It also concluded that after three years the annual incremental cost to the treasury in foregone revenue would be between $10 million and $40 million.
While the current stretch tax credit proposal is more generous, it is not believed the annual cost would be significantly out of line with this estimate. Every dollar invested will yield a measurable return in new charitable giving, since the credit would only be activated when Canadians increased their charitable donations. In addition, we recommend introducing a higher charitable tax credit on all donations over $500 to a single charity. Many charities actually lose money on donations of small amounts, typically those of $20 or less. All charities, and those whom we serve, would benefit from encouraging citizens to give larger amounts to fewer charities. This would serve to keep administrative costs down for individual charities and affect a significant change in donation levels.
Again, on behalf of the Canadian Diabetes Association, thank you for the opportunity to be here today.
I'd be pleased to take any questions you might have at any point.