Mr. Speaker, I would like to begin by thanking the Speaker for his charitable ruling. I would also like to thank the member for Newton—North Delta for seconding Bill C-470, an act to bring more transparency and charity to our nation's charities.
Every year, Canadians dig deep into their pockets to contribute billions of dollars to some 85,000 registered charities. That is one charity for every 300 Canadians. Most of the donors are far from millionaire philanthropists. They choose to make a financial sacrifice for what they hope is a worthy cause. They choose to save less for their retirement, their own children's education or some other personal investment or expenditure because they believe their dollars will be put to a higher purpose: helping sick children, aiding the poor and curing disease.
It is the goodwill and trust of these donors that must be a priority for this Parliament. However, the donors are not alone in putting their trust in charities. In the most recent year, the taxpayers of Canada contributed almost $3 billion in federal tax credits, so every Canadian has an interest in how this money is spent.
Last year, the Toronto Star shocked donors and taxpayers with the revelation that the head of one of Canada's largest charities, the SickKids Foundation, took home $2.7 million in salary and severance in a single year. Money intended for sick children was instead building a private fortune because of the lack of legislation. However, he is not alone in making charity pay. Others of the same charity reported making $430,000 and $290,000. In fact, one out of every dozen staff members was making over $160,000 U.S. to raise funds by asking others to sacrifice.
I refer to U.S. dollars because the only reason this information is public is because the United States is years ahead in transparency and this charity was registered in the United States as well as in Canada. Canadian laws keep donors in the dark about where their money is going. We know that 2,147 individuals earn more than $120,000 a year at charities. We do not know how much more. We can suspect that it might be a lot. We can suspect that because the average salary at charities is $71,000 compared to only $51,000 in private business.
It might be that people working in call centres are making $70,000 a year. However, it is more likely that they are making near-minimum wage while executives are earning many hundreds of thousands and driving up the average. Why should we not know? Why should donors not know? Why should taxpayers not know?
Six years ago, the United States recognized that it too had a significant problem with salaries at charities. At that time, the internal revenue service announced a new enforcement effort to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders. At the time, the IRS said:
We are concerned that some charities and private foundations are abusing their tax-exempt status by paying exorbitant compensation to their officers and others.
That was 2004. Where are we in Canada? The Library of Parliament has to scrape together bits and pieces to get any picture at all as to how executives at charities are spending money and, particularly, how much they take home for themselves.
I will read to the House some of what little we know. Some of our charities spend money on dining club memberships, golf memberships, fitness memberships, business-class travel, so-called flexible expense account provisions and even scholarship programs for their own kids. It is reported that of those who receive benefits, there is an average of $6,000 in retirement benefits, $4,000 in fringe benefits, $4,000 in auto benefits and another $4,000 in health benefits.
That is what we know from only one charity in one thousand responding to a survey. It is also far beyond what most donors could even hope for themselves.
The Province of Ontario requires charities that receive direct money from the province to disclose salaries above $100,000. Even in this small category, the top salary was more than half a million dollars.
We know that Canadians and taxpayers are contributing billions every year. We hope that most of it is spent with frugality and purpose. We know that some of it is spent on luxury rather than on charity.
I believe that the Minister of National Revenue has the moral imperative to ensure that donors know exactly how their dollars are spent. Bill C-470 is a basic first step.
Years behind the United States, Bill C-470 would not deal with many of the practices that have grabbed attention in recent years. From fundraising organizations that get a $180 commission for signing up a donor, regardless of the amount contributed, or to other high-class fundraising techniques that cost more than 30¢ of every $1, all that is left up to the minister to explore.
Bill C-470 would require charities to disclose the salaries of its five highest paid employees. In addition, a charity could be deregistered by the Minister of National Revenue if it pays any employee more than $250,000 in a single year. The threshold of $250,000 is more than a minister or a deputy minister earns to run a federal department. More important, it is about five times what the average donor earns.
At present, the revocation of a charity that violates the requirements of the Income Tax Act is at the discretion of the minister. Bill C-470 would not reduce that ministerial discretion. It would simply add to the existing grounds available to the minister.
An effective date of 2011 is included in the legislation so that charities would have time to adjust.
Bill C-470 would give the minister a much needed additional tool in the interests of the millions of Canadians who donate billions of dollars to charities every year.
Bill C-470 would also give charities a powerful incentive to maintain the trust of their donors while giving the minister the responsibility, the capacity and the discretion to respond to breaches of that trust.
I will respond to some of the usual resistance we can expect from those who do not wish to disclose and others who may want to maintain the luxury to which they have become accustomed.
First, on disclosure. Governments across Canada are forcing disclosure of top salaries of all those who rely on the taxpayer for their income. It does not matter whether one is the chief executive of a crown corporation or a transit worker with a lot of overtime, the person could find his or her name and income published. The principle is clear. If people take home taxpayer money, they cannot hide how much. As Canadian charities distribute almost $3 billion a year in tax credits, taxpayers have every right to know whether the salaries they are subsidizing are excessive.
Even more important, however, is the individual sacrifice of the donor. Publicly-traded corporations need to disclose their top salaries to the public. Why should donors not be told how much the top five employees at their chosen charity make? What is the excuse for that secrecy?
Perhaps a donor may decide that his or her money is better spent on charities that take less home for themselves. Charities that are really in it for the cause would benefit at the expense of charities that operate like a business, marketing a cause like it was a COLA, and being richly rewarded for every dime that comes in.
We all know people who have visited the offices of some charities and looked at the marble and grandeur and said that they do not need our money. All Canadians should have the same right to compare and direct their generosity to where it is most frugally managed.
One can only expect a hail of complaints and cries of impending doom from charities that pay more than $.25 million. They will say they need that money to attract top fundraising talent, people who know how to market a charitable cause.
I would submit that they will not because all 85,000 Canadian charities will be under the same rules competing for the same donor dollar. Therefore, charities would not need to keep upping the ante to keep the top people from going down the street because the charity down the street would have the same cap. The result would be that more money would end up where the donor actually intended it to go, not in the paycheques of executives but in the programs that the charity is there to serve.
Filings in the United States indicate that some very large Canadian charities are run by people earning very reasonable salaries. The CNIB, United Way and World Vision all reported top salaries far less than the $250,000 limit proposed in Bill C-470. Clearly, it is not necessary to pay people exorbitant sums to attract talent. However, we have an obligation to assure Canadian donors that whenever they donate to charity their dollars are not siphoned into luxury lifestyles.
This bill also aims to replace doubt and cynicism about the management of charities with the confidence that the personal financial sacrifice of donors is managed by people who are paid well but no so well as to make a mockery of the concept of charity.
Bill C-470 is about charity, transparency and respect for the generosity and sacrifice of millions of Canadian donors.
