Thank you, Mr. Chair.
You have a copy of my presentation before you, so I'm going to start by reading it, and please stop me if you have any specific questions.
I would like to thank the members of the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities for the opportunity given to me today to speak about the Income Tax Act in considering applications for charitable status for organizations whose purpose is poverty alleviation.
In my respectful submission, this matter is very important because many organizations like mine are faced with the challenge of applying for charitable status.
Since 2009, CNDC has twice attempted to gain charitable status to seek alternative sources of funding through a charitable foundation and to move toward organizational sustainability. Our application for a charitable status has been declined both times, and we are currently undergoing a review process by CRA.
The basic reason for declining our application, we have been told, is failing to establish how our activities in the community lead to poverty relief. The challenge is that the Income Tax Act, the legislation based on which an organization is granted charitable status, does not contain a definition of charitable nor a definition of poverty. Therefore, what's deemed charitable is left to be determined through legal interpretation of common law conventions and practices derived from the 1601 Statute of Charitable Uses, or commonly referred to as Statute of Elizabeth.
While the preamble to the statute considers acts like helping humankind, maintenance of schools, houses, food banks, and highways, looking after the poor and the elderly, and many other publicly beneficial acts as having charitable purpose, it does not lend itself to the more contemporary progressive agenda of the charitable sector that has become a significant economic actor in Canada.
For example, minimizing the societal ills of low graduation rates in inner-city schools through ancillary programs offered to underserved schools, or promotion of commerce by allocating microloans to small local businesses to flourish in areas experiencing business lags are not seen as charitable activities, because empowering marginalized communities does not fit the traditional definition of charitable acts.
A positive step toward a comprehensive strategy for poverty reduction in Canada would be legislative inclusion of services offered through organizations like the NRCs, neighbourhood renewal corporations, aimed at empowering the disadvantaged population and entrenching a progressive definition of charitable and poverty relief that would include those of no means as well as those with moderate needs who certainly are at the same risk of experiencing poverty.
A constructive measure toward developing an inclusive and proactive strategy for poverty reduction could be initiated by amending the Income Tax Act or through enabling legislation.
The relief of human suffering from disaster and destitution in times of crisis is a purpose beneficial to the community and is considered charitable, so then should be the provision of proactive and preventive services to disadvantaged groups by means of examining the scope and outcome of those activities. Thus far, the act has been interpreted by CRA with an emphasis on charitable activities rather than charitable purposes that would benefit the community over the long term.
Allow me to further elaborate my point by using activities of my agency as an example.
We are a neighbourhood renewal corporation charged with delivering community economic development in three economically stressed areas here in core Winnipeg: Central Park, Centennial, and West Alexander. These areas are designated major improvement areas by the city and are selected as a designated community by the Manitoba Community Renewal Act.
We have found in the past that serving the complex needs of unique communities like these, characterized by higher than average unemployment, higher than average populations with core housing needs, higher than average instances of living below the poverty line, higher than average cases of high school dropout, and higher than average rates of incarceration, requires a more progressive approach by the act in defining poverty and charitable acts.
That is why I'd like to submit to the committee that an entrenched, progressive, expanded, and inclusive definition of “charitable” and “poverty relief” in the Income Tax Act would be beneficial to the community and would constitute a small but effective step towards a comprehensive poverty reduction strategy for Canada. As the French novelist Victor Hugo once said, nothing is more powerful than an idea whose time has come.
Thank you.