Industry Committee on March 10th, 2009

[Gord Brown, Conservative, Leeds—Grenville, ON]

Thank you, Mr. Chairman.

Thank you to our witnesses for coming today.

I've served on a number of non-profit corporation boards over the years, so I have a little bit of familiarity with it. I'm sure all of you are glad the government is moving ahead to see this legislation put in place after many years.

There is going to be a change to the NGO structure in Canada, and since it's going to be easier to incorporate new organizations, do you think there is going to be an increase in new charitable organizations?

My questions are general, so if I could hear from both organizations that would be great.

[Cathy Barr]

I wouldn't think that just a change in this act alone would drive those numbers. They have been increasing anyway just because, you could argue, the needs in society are increasing. It is likely the numbers will continue to increase. I don't think that simply making it a little bit easier to incorporate is likely to result in some sort of rush in the creation of non-profit organizations.

[Susan Manwaring]

I would just add that, to be a charity, they would also have to get the approval of the Canada Revenue Agency. So there may be a rush of people trying to incorporate, but whether they'd get through the charitable status is....

[Gord Brown, Conservative, Leeds—Grenville, ON]

These changes to due diligence are especially important. What is your perspective on these changes? Do you think that, with these changes, charitable organizations are going to be able to attract directors who might have broader experience, who may bring more to the organizations...I won't say higher quality, but with more experiences that might be able to help?

[Susan Manwaring]

It's difficult to imagine. To my mind, when I look at the statute and I see that it might create greater debates between members and directors, my fear is that there will be fewer people willing to stand. There will be a fear that they will be accountable to the whim of someone's passion--they wouldn't have a monetary interest--and be subject to greater difficulty.

I'm not saying that should drive people away, but I fear there may be a sense, if insurance goes up, that it might be more difficult. We don't want it to be, obviously. We want it to facilitate greater participation. But I would not have any way of guessing one way or the other.

[Alan Reid]

Every time we have a change in the board of directors, I speak to them, and I have noted increasing interest in things like insurance, indemnification, these kinds of issues, the potential legal liability, but I do not sense that people are deterred. They want to be informed. They want to be prepared. They want to know the organization will protect them and stand behind them. But people who are inclined to take these positions I think are inclined to take those positions, and they will adjust to the realities of the day.

I can only remember one instance; that person didn't go away, but he was very concerned. He wanted his questions answered. We did that as best we could. I think people want to serve, and if they want to serve, I think they will deal with what they have to deal with. They're not going to be deterred because of this, I don't think.

[Cathy Barr]

I would add that I think that might be more the case for larger organizations than smaller ones.

One of my roles is as the director of the Insurance and Liability Resource Centre for non-profit organizations, which Imagine Canada runs. It's funded by the Ontario government. Through my work on that, I would say that among medium-sized organizations—not so much the small ones, because they're so small they hardly have time to worry about anything—there's a great deal of concern about liability. Anything that might even hint at increasing the chance of being sued, etc., I think could deter some people, particularly from the medium-sized ones. They feel reasonably well protected with a large organization like Red Cross, which would indemnify them and have the insurance in place, etc., but not so much with the medium ones.

So I think it's going to be a continuing challenge to attract directors.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Brown.

We're going to go to Mr. Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chair.

Welcome.

My question is for Mr. Reid. Last week, I questioned the minister about the bill she has introduced to replace the old C-54. In clause 4 of the new bill, the question of a budget required to set up a not-for-profit organization is not dealt with. As a result, anyone can register. You contact the Government of Canada, you register, and you get permission to establish a not-for-profit organization.

If I set up an organization with an operating budget under $25,000 and myself as president, vice-president and member all at the same time, there is no investigation.

Is that a shortcoming of the bill? With the wording of the new bill, is it possible that organizations like that could be laundering money?

[Alan Reid]

That's a tough question. I really don't think I can answer that. I've never seen it raised, and I haven't thought about it. I don't know.

[Susan Manwaring]

My take on it is that if somebody wants to money-launder, they will always find a way. Whether it's this statute or some other statute or finding a way, they will find one. I'm not sure the law can be structured to ensure that this doesn't happen in any kind of scenario. I don't think this enhances the risk.

[Robert Vincent, Bloc, Shefford, QC]

They had the same reaction as you. They had never seen it and wondered whether it was possible. Under the new bill, no investigation is held if an organization's operating budget is less than $25,000. That is open to several interpretations and can have implications for law-abiding organizations. That is where I was going with my question.

Let me go back to Ms. Barr. I found your brief interesting and I am going to continue along the same lines as Mr. Wallace. He said that there had been no consultation. You mention the names of eight organizations, but they were not consulted.

Why did no one get in touch with you to find out your suggestions?

[Cathy Barr]

Sorry, I missed the last part.

[Robert Vincent, Bloc, Shefford, QC]

Okay.

At the end of your brief, you list eight organizations. Why did the government not consult you to obtain your help in developing the new bill?

[Cathy Barr]

The translation wasn't coming through very well, but I think you're asking about these eight organizations that we consulted.

I don't think it's that we feel that Imagine Canada wasn't consulted by the government. Imagine Canada is a national charitable organization that's relatively well connected to these sorts of activities. We've come before this committee before.

What we're saying--and perhaps it didn't come through clearly enough--is that the vast majority of small and medium-sized non-profit organizations across the country are not even aware that this bill has been introduced. It's not Imagine Canada; we feel adequately consulted, I think. But there are 161,000 non-profit charities across this country, and probably 0.0001% of them even know that this bill exists. That's what we're saying.

As I mentioned about the process in Ontario, there was a consultation process. The committee that was looking at it, or the officials who were involved in it, travelled around the province and consulted with hundreds of non-profit organizations in their communities. It's that kind of consultation process we're alluding to that did not take place in this case.

There really is a severe lack of awareness about the bill.

[The Chair, Conservative, Michael Chong]

Thank you very much, Madam Barr.

The floor is now Mr. Warkentin's.

[Chris Warkentin, Conservative, Peace River, AB]

Thank you, Mr. Chair.

I thank you for coming, both organizations, to testify before us this afternoon.

I'd like to broach the issue of voting. I think there may be, at least on my part, a necessity to understand the concern that was brought forward, specifically by Imagine Canada.

I'm trying to understand what your concern is with regard to the actual text of the bill. My understanding is that there are two different ways an organization can go. They can either have a single class of members, with every member having the same rights, or they can go to a second type of framework, in which you have different classes of membership--you can have 12 people who vote and 150,000 people who don't. That is simply left to the organization. That's the way I read the bill.

Do you have concerns with regard to the way it was constructed in the bill? I'm just trying to grapple with it so we can better understand and have a bill that better reflects your needs.

[Susan Manwaring]

That aspect of the bill is not what is being questioned. There are a few sections--I apologize, I don't have the specific sections, but we can get them to you--where it says that those 150,000 non-voting members have the right to vote about a particular decision. It's questioning that. Many non-profit corporations and charities....

I know that, in the first instance, this sounds problematic. You sort of say, “Well, what do you mean you don't want your members to have a vote?” But today many organizations have honourary members.

[Chris Warkentin, Conservative, Peace River, AB]

Yes.

[Susan Manwaring]

They don't follow the ongoing operation of an entity. They don't vote. This would give them the right to basically veto a decision of the board and the voting membership if they didn't like it.

That's what we're questioning. Those are just very specific sections in the act.

[Chris Warkentin, Conservative, Peace River, AB]

I'm wondering if you could lay those out and provide a brief to our committee so that we might be able to accurately look into those different instances.

[Susan Manwaring]

We would be happy to do that for you.

[Chris Warkentin, Conservative, Peace River, AB]

We do want to ensure that the entire bill is not contradictory and that we don't provide a situation in which one portion of the act is saying one thing and another is saying something different. It is our understanding, it's our hope, that organizations have the ability to set up their organizations in the way that best suits whatever work they're endeavouring to undertake.

[Susan Manwaring]

Okay.

[Chris Warkentin, Conservative, Peace River, AB]

We certainly would appreciate that information.