Thank you very much.
My name is Mark Blumberg. I'm a lawyer and partner at the law firm of Blumberg Segal LLP in Toronto. I'm an editor of our firm's website, GlobalPhilanthropy.ca, which deals with legal and ethical issues facing Canadian charities.
As I testified on May 8, the charity and non-profit sector in Canada plays a vital role in this country. The committee is currently reviewing the 2012 budget, which has various provisions affecting the regulation of charities. I am most interested in those provisions dealing with transparency.
In my view, the most important provision in the budget is that which gives CRA the ability to suspend a charity's receipting privileges if the charity files an incomplete annual return. This provision and related education will emphasize the importance of charities' completing the T3010 annual return as accurately as possible. It will provide CRA with greater tools when a charity is being deceptive in its filing, such as if a charity were to have millions of dollars in fundraising expenditures but would put down zero in fundraising costs.
The budget adds some transparency requirements on political activities, especially when funded from foreign sources. I would point out that charities currently disclose quite a bit, and this would just be adding to what is currently disclosed. Currently, charities disclose the amount of foreign income received; the name of any foreign donor giving over $10,000, which is disclosed to CRA but is confidential information; whether the charity has carried out political activities; and how much is spent by the charity on political activities. The additional transparency exclusively related to political activities will not affect the ability of Canadian charities to conduct allowable political activities. In fact, much of the information that will be captured on the T3010 is already available from public sources such as the U.S. Form 990 filings and websites of the Canadian charities.
There has been recent coverage of political activities and cross-border philanthropy. It's important to recognize that, while charities are forbidden from being involved in partisan political activities, they play an important role in policy and political discussion. Registered charities can engage in allowable political activities as long as they are non-partisan, related to their legal objects, and limited resources are used, which generally means less than 10% of resources.
We are pleased that the 2012 budget did not include restrictions on political activities by Canadian charities or impediments to foreign charities and individuals supporting Canadian charities. We've written about charities and how they report their political activities, and we would argue that there is significant room for improvement in reporting on the T3010 questions already being asked, not to mention additional questions that may be added.
CRA will have additional resources to do outreach and education to help charities understand the rules. They'll probably conduct more audits on charities, and some of those audits will involve political activities. Many charities incorrectly assume that they're not allowed to do any political activities. I think after a few years of education by CRA they will come to be more knowledgeable and understand that charities can, and in many cases, should be involved in political activities. They just have to do it within the rules that are set out for them.
It's important that there is improved transparency in the charitable and non-profit sector. Canadians, especially donors, are asking for it. I would reiterate that I made a couple of proposals with respect to section 241 of the Income Tax Act to try to improve transparency. Specifically, the first idea was to allow the CRA to disclose serious non-compliance with legal requirements by registered charities and other qualified donees prior to revocation. Currently, CRA has to wait until after the revocation to let people know that, for example, a charity has been involved in a $600 million scheme. They can't say anything about it until after the revocation.
The second idea was to allow the CRA to disclose information contained in the non-profit organization's information returns, which many non-profits already have to file every year, but which CRA is forbidden by section 241 to disclose. These are short forms filed by many non-profits that set out their name, their revenue, and things like that. Whereas charities have to provide quite a bit of information on the T3010, we are not able to know, and CRA is not able to tell us, who these non-profits are and what their revenues are.
So those were two suggestions that I made with respect to changing section 241, and there's no cost to changing it. It's a matter of removing the shackles on CRA and allowing it to put out information on those two points.
I think that greater transparency will reduce the abuse of non-profits and registered charities, increase the chance that those who abuse charities are discovered quickly, and increase public confidence in the sector, which is vital for fundraising and increasing donations.
Thank you very much for having me here at the committee.