Thank you very much.
I'm here on behalf of the Canadian Bar Association's charities and not-for-profit section. The CBA, as I think you all know, is a professional association of some 36,000 lawyers, notaries, law teachers, and law students, and the charities and not-for-profit section is composed of Canadian lawyers who advise charities and who sit on their boards.
In my personal capacity, I'm also general counsel and corporate secretary of the Canadian Red Cross Society. I am here today not in that capacity but rather as a representative of the Canadian Bar Association.
Now, I'll be taking a somewhat “unlawyerly” approach to my little chat with you today by talking about the big picture and not very much about the details. The theme I want to share with you today is that charities are actually an asset in countering terrorism. While the vulnerability of charities to abuse by potential terrorists has been noted quite often, I think it's important to make the point that charities are in fact an asset in countering terrorism. This is not something you need to take from me or from the Canadian Bar Association, but you might merely consult the guidance of the financial action task force of 2013 regarding its best practices for combatting abuse for not-for-profit organizations.
In that guidance, the organization says that “NPOs can also play an important role in preventing the causes of radical ideology from taking root and are, therefore, potential allies in the fight against terrorism”. Moreover, if you couple that with the fact that one of the four pillars of Canada's counterterrorism strategy is prevention, it's important to note that charities can play an important role in the prevention element of the strategy as well, given their outreach to communities both within Canada and outside Canada.
Now, when you consider that charities in this context are an asset, it's instructive to also consider the kinds of regulatory compliance costs they face when they're in fact trying to comply with the laws of Canada. That, of course, needs to be done, but the costs are significant. Sophisticated financial systems, volunteer and donor screening, and legal and financial advice must be paid for. There are procurement policies, gift acceptance policies, audit rights, and sophisticated contracts for the control of funds disbursed to others. There is project planning and sophisticated governance for boards of directors, including good governance, bylaws, policies, and training.
All these things cost charities a great deal of money, and when you consider that in Canada and elsewhere the public expectation is that most donated dollars must go to the beneficiary and that administrative costs must be kept low, you can see the bit of a bind that charities find themselves in. Moreover, donated dollars are possibly only one source of revenue, but investment policies must be very conservative. That's the law. As a charity, you can't take risks with charitable assets, and you can't really go into business, because the Canada Revenue Agency requires your business to be subordinate to your charitable objects.
So where do charities find the funds to comply with these important compliance requirements?
The Canadian Bar Association's written submission has a number of suggestions for the committee to consider, one of them being Canada Revenue Agency education on a pre-audit basis before ill-equipped charities get into trouble so that they know what they're getting into in terms of compliance costs. The Canadian Bar Association also suggests possible cost recovery and allocation of funds to charities for the specific purpose of achieving greater compliance.
These are some of the suggestions the Canadian Bar Association is sharing with this committee today to try to find creative solutions to assist charities in complying with legal requirements in Canada.
That is essentially my presentation, and I thank you very much for your time, as does the Canadian Bar Association.