By Susan Phillips (with help from 68 leaders in the sector).
Released in June 2019, the report of the Special Senate Committee on the Charitable Sector presented the federal government with 42 recommendations for policy and regulatory change that would strengthen the impact of the charitable and nonprofit sector in Canada. To date, there’s been little uptake.
We often hear that the sector plays into this neglect — that it can’t agree on the main issues, identify a clear set of priorities for action, or present effective ways for governments to address them. So, as the story goes, if governments don’t know from the sector if or how they should act, they’ve license not to act.
It’s true that Canada’s sector is diverse. It spans organizations working in health, social services, arts and culture, faith, the environment, sports, international development, racialized and vulnerable communities, and more. But is it also true that the sector is undecided or divided on policy priorities? I set to find this out. Last December and January, I emailed the following two questions to 86 Canadian sector leaders: (1) What’s the most important policy or regulatory issue that the charitable/nonprofit/philanthropic sector needs to have addressed? and (2) What should be done and by whom?
To my surprise, particularly given the season, 80% responded. They include presidents of some of Canada’s major private and community foundations, national and provincial infrastructure organizations, large operating charities, advocacy organizations, fundraisers, philanthropists, consultants to the sector, and dynamic, young leaders from racialized communities. In short, for any Canadian government seeking policy advice from the sector, these 68 people are thought leaders whose experience and insights merit serious consideration.
Better data about philanthropy and the charitable sector would enable donors and philanthropists to make more informed giving decisions, and allow governments to stimulate giving more effectively. Photo by Kaleidico (Unsplash).
Three key priorities
As many participants noted, it’s difficult to pick out just one issue because of the multiple and serious challenges facing the sector. But, they did this. The vast majority of their responses converged around three key priorities. In reverse order of the number of mentions, these are:
#3 Collect better data about philanthropy, the sector and the results of its work (11/68 or 16% of respondents). Better data would enable donors and philanthropists to make more informed giving decisions, and allow governments to stimulate giving more effectively. The data would help governments and other funders avoid duplication of funding. And they would help the sector reconfigure services post-pandemic and collaborate for greater impact, as well as conduct research & development and innovate.
The responsibility for improved data about the sector is seen as a shared one. While there’s support for the Special Senate Committee recommendation (#16) that the federal government (through Statistics Canada) collaborate with the sector to collect and share data in a timely and consistent manner, responsibility for supporting data gathering extends beyond Statistics Canada to involve other governments and the sector itself. Encouraging such action will likely require a coordinated effort on the part of the sector’s leading umbrella organizations.
Funding and service reform have been discussed for 20 years. Little has been achieved. Photo by Scott Evans, Unsplash.
#2 Secure access to more stable and adequate funding for charities/nonprofits (26 or 38% of respondents). Charities and nonprofits deliver a wide range of public services and help maintain the social fabric of our country. But they often do so with short term and inadequate funding that doesn’t cover the real costs of services. This leads to a perpetual ‘starvation cycle,’ resulting in precarious jobs and an inability to plan strategically or to innovate. COVID-19 has exposed the consequences of societal inequities. But it has also exposed the precarious status of the care systems that address them, and the need to make those systems more robust.
While there is a short-term urgency to help charities and nonprofits survive the devastating effects of the pandemic, the roots of the problem are longstanding and systemic. We need to look to longer-term solutions – solutions that involve more than money. These include: rethinking service delivery and making better use of shared services; reforming the terms and conditions of government contracts, grants and contributions; reducing the dependency on public sector funds by facilitating revenue generation through ‘business’ activities; expanding foundation grantmaking, both in amounts and scope; enhancing support for organizations led by and serving Black, Indigenous, and racialized communities; and introducing measures to stimulate giving.
None of this is new: funding and service reform have been discussed for the past 20 years. That so little has been achieved is a sign of the invisibility of the charitable and philanthropic sector on policy agendas, and of public assumptions that these organizations will somehow just ‘carry on.’ The pandemic, however, has moved us to a critical juncture. Canadians and our governments need to determine if we’re content to continue ignoring the societal inequities and failures of service delivery systems that the pandemic has revealed. Or are we ready to take on real systems change? As part of that change, improving the sustainability of the sector will rely primarily on action by the federal and provincial governments, with foundations and donors enhancing their granting and giving.
The necessary changes require action by the Minister of Finance, with support from the Minister of National Revenue/Canada Revenue Agency. Photo of Connaught Building by Michel Rathwell, Wiki Commons.
#1 Modernize the regulatory framework for charities (27 or 40% of respondents). A comprehensive overhaul of the Income Tax Act (ITA) is needed to bring the sector into a modern financing and regulatory framework – and is linked to priority #2. Such an overhaul includes making the notion of ‘charity’ less restrictive, removing the ‘own activities’ stipulation (specifically the ‘direction and control’ requirement), and more easily facilitating revenue generation through business activities. These issues and the proposals have been discussed for years and recommended by the sector (and lawyers working with the sector), as well as by the Special Senate Committee.
The need for comprehensive regulatory reform has become acute however. In order to assist society’s most vulnerable and advance meaningful change, charities and foundations must work more closely with grassroots groups and with Indigenous and racialized communities. Yet, antiquated regulations are hindering such work.
The necessary changes to the ITA require action by the Minister of Finance, with support from the Minister of National Revenue/Canada Revenue Agency. Strong cross-sector leadership will be essential to encourage the federal government to follow through.
We need a deeper and current understanding of what the sector does for Canadian society. Photo by Caleb Chen, Unsplash.
The underlying need for a fundamental change is government-sector relations
As already noted, these needs and the inaction in addressing them are not new. Their persistence points to a more basic, underlying need: the establishment of a mature and informed relationship between government and the sector. Such a relationship is built on more than regulatory oversight. It requires ongoing consultation and confidence. It relies on a deeper and current understanding of what the sector does, could do, and needs to do better to increase and enrich the well-being of Canadian society. These requirements run through the majority of the responses, and apply equally to the federal and provincial governments.
One means of establishing such a relationship is a policy “home” in government – a key department or position in a central agency that can focus on the contributions and capacity of Canada’s nonprofit and charitable sector.
My conclusion
Sector leaders have a clear set of priorities for action — better data, improved sustainability and a modernized regulatory framework, all as part of a more visible, constructive and ‘mature’ relationship with governments. The ultimate aim is to strengthen the ability of the sector to innovate, serve vulnerable communities, continue as a major employer that provides 1 in 10 full-time jobs, and build social capital in an increasingly unequal society.
In addition to a clear message about what needs to be done, the respondents provided a clear message on how it needs to be done. There’s an urgent need for sector organizations and leaders to work together to bring a coordinated, strategic, evidence-based approach to governments and to raise the sector’s visibility and understanding among the Canadian public.
And, as these leaders consistently said, “It’s time.”
Susan Phillips is a Professor in the School of Public Policy and Administration, Carleton University and an Editor of “PANL Perspectives.” Phillips is on Twitter and LinkedIn.
Saturday, March 13, 2021 in Public Policy & Advocacy, Social Justice & Change
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