Mr. Speaker, I am pleased to rise in support of the bill proposed by my colleague, the member for Mississauga East—Cooksville. We on this side of the House believe the charitable sector is extremely important and it is important for government to act to strengthen it and to increase the credibility of the charitable sector in the minds of Canadian donors.
My colleague's bill would do just that. It is particularly timely because the government recently has acted to undermine the credibility of the charitable sector in the eyes of Canadians. Therefore, my colleague's bill is particularly important in order to redress the imbalance caused by the government's behaviour.
The first example I will mention is this. On January 14, the government promised to match the donations of Canadians for earthquake ravaged Haiti through the Haiti earthquake relief fund. However, two months and one day later, news has broken that the government has not sent a single matched dollar down to Haiti. This is causing a certain amount of anger in the Haitian community and among those who have contributed to Haiti on the understanding that the government would expeditiously match their contributions dollar for dollar. That hurts the government's credibility. The next time there is a disaster and the government promises to provide matching funds Canadians, who will no doubt respond with generosity, may not be as likely to believe the government will act swiftly and with purpose.
The second example where the government has undermined the charitable sector concerns the finance committee and prebudget proposals, which would have had the effect of enhancing the ability of Canadians to make charitable contributions. I believe the finance committee unanimously endorsed the following:
The federal government examine incentives that would have the effect of increasing the level of charitable giving by businesses and individuals. In particular, the government should consider:
an increase in the charitable tax credit rate to 39% for incremental annual increases in giving, provided that annual giving is more than $200 and less than $10,000;
the creation of a corporate structure for not-for-profit organizations that would allow the issuance of share capital and other securities;
and the elimination of the capital gains tax on donations of real estate and land to public charities.
Unfortunately, the finance minister did not share the finance committee's enthusiasm for strengthening Canada's charitable sector in one or more of the three ways that I have just described. However, as we know, there was no mention of any of these recommendations in budget 2010.
My first point is that while we on this side believe it is important to strengthen the charitable sector and to strengthen the credibility of that sector in the minds of donors, the government first, by not following through expeditiously on its matching donations to Haiti, and second, by totally ignoring the proposals to improve the ability of Canadians to give to the charitable sector, particularly at a time of recession when those donations are needed more than ever and when Canadians are less able than normally to afford to give them, the government declined to do. Therefore, it is more important than usual that a bill like that of my colleague arrives in order to strengthen the credibility of the charitable sector.
In the United States, charities file the salaries of their CEO and other top executives with the IRS and they are publicly accessible for anyone who is thinking of donating to that charity. Canadians are not so lucky.
Last fall, one CEO departed a very well known charity, with a $2.7 million incentive payment in cash for leaving that charitable organization before his contract was finished. This was on top of his annual $600,000 salary.
The old saying is “It takes money to make money”, and there is no doubt some truth to that. Some of Canada's largest charities obviously require some very good talent at the top if they are to raise the funds they need to provide services.
Even more important than this, however, is that Canadian donors can feel confident that the money they have worked hard for and donated to charity goes almost entirely toward the charitable purposes it was intended for and not toward very large executive compensation packages. Think about the example I just gave.
It takes a lot of donations from a lot of Canadians to pay someone $2.7 million. To make this tangible, let us assume that someone signed up to give $10 a month through automatic withdrawals to a charity. That is $120 a year. It would take more than 22,000 Canadians, at this level of donations, just to donate enough money to pay the departing CEO of that charity. I would argue this could be enough to damage the confidence some Canadians have in our charitable sector.
Worse, news only emerged about this case because the amounts were discovered in publicly available IRS documents, as this charity operates on both sides of the border. Media reports indicated that Canadians were so outraged by the revelation that the charity had to set up a special phone line to deal with all the incoming calls.
Canadians had a right to be outraged. Canadians listening at home should know that my good colleague, the member for Mississauga East—Cooksville, has heard them, which is why we are debating Bill C-470 today.
What exactly would Bill C-470 do to help deter this kind of behaviour and restore the confidence of donors in the charitable sector?
First, it would limit the pay of a charity's CEO to $250,000 per year. It would similarly limit the pay of other executives who work at a charity. The penalty for non-compliance would be that the charity would face revocation of its charitable status, quite a stiff penalty that I am sure every charity would want to avoid.
On the face of it, $250,000 seems to be a reasonable pay threshold for 2010. Should the bill go to committee and it is discovered that a very large charity cannot hope to find a CEO for that amount, I would be amendable to amending the bill slightly.
However, as my colleague has pointed out, there is also a further safeguard in that the minister is not obliged to force the cap of a $250,000 salary, so one cannot exclude the possibility that in some few cases there may be very large charities that, in order to be effective, may have to exceed that limit. The discretion would be in the hands of the minister to allow that and/or there could be amendments to permit it under certain circumstances.
Recent media reports have revealed that some of our larger charities, such as Big Brothers Big Sisters of Canada and the United Way of Canada, would not run afoul of the law without current executive pay incentives. Therefore, on the surface, $250,000 seems to be a good starting point for Bill C-470.
Once again, I would like to congratulate my colleague, the hon. member for Mississauga East—Cooksville, on her excellent work on behalf of Canadians. I have certainly heard from my constituents about the $2.7 million example I mentioned earlier. I am sure that many of the members of the House have as well.
I hope all members will listen to those Canadians and vote to send Bill C-470 to committee.