2012 will go down as something of a mixed bag of events and happenings for Canada’s nonprofit sector. Numerous changes, both proposed and now-enshrined, in law and policies for charities made for an interesting year.
The good news is, we’re all still here. Doomsday did not arrive on December 21. The bad news: world economic downturn still in effect. And it’s been impacting Canadians in their wallets and subsequently in donations to nonprofits.
In no particular order, below are the top five policy changes to the sector over the last 12 months, followed by a look ahead at what we can expect in 2013.
1. Terror is cause for revocation
In 2012, the Canada Revenue Agency (CRA)’s Charities Directorate, as part of the government’s anti-money laundering / anti-terrorist funding regime, stepped up its scrutiny of charities performing work abroad.
Amendments to Canada’s Anti-Terrorism Act now give more latitude to the directorate and its partners in policing illegal foreign activities. The government uses a multi-pronged approach to deter and educate nonprofits about what constitutes illegal work abroad. Organizations involved in sniffing out disreputable activities include, the Department of Finance Canada (Finance), the Department of Justice Canada (Justice), the Public Prosecution Service of Canada (PPSC), the Financial Transactions and Reports Analysis Centre (FINTRAC), the Canada Border Services Agency (CBSA), the Canada Revenue Agency (CRA) - Enforcement and Disclosures Directorate (Income Tax – GST/HST), the Canada Revenue Agency – Charities Directorate, the Royal Canadian Mounted Police (RCMP), and the Canadian Security Intelligence Service (CSIS). The non-funded partners now include Public Safety Canada (PS), the Office of the Superintendent of Financial Institutions (OSFI), and the Department of Foreign Affairs and International Trade (DFAIT).
For more information, read CharityVillage’s full story on the matter.
Suffice it to say, charities working abroad don’t want to end up on the wrong side of the law on this one. Thus, they need to ensure they retain complete control of funds and resources they send abroad lest they fall into nefarious hands.
The Charities Directorate’s director of the division of review and analysis, Alastair Bland, had this to say on the matter in February: “The charity must be the entity that makes the decisions and sets parameters on significant issues related to any activity undertaken on its behalf. It must be the ‘guiding mind’ on issues such as: the activity’s overall goals, how the activity will be carried out, the area or region where it will be carried out, who benefits from the activity, what goods and services the charity’s money will buy, and when the activity will begin and end. The CRA strongly recommends the use and monitoring of a written agreement to achieve this.”
2. Hawara you doing?
In a September interview with CharityVillage, the directorate’s Director General, Cathy Hawara, told us about broad plans her organization is in the process of implementing. The focus is on ensuring nonprofits are as transparent in reporting their activities and revenue streams as possible.
She said the directorate is taking a much more educational view towards charities and is trying its best to help them understand the rules under which they operate.
But transparency and tweaks to what is required of charities when they fill out their T3010 forms was the big news.
“Charities will be required to disclose additional information about their political activities, including the extent to which they are funded by foreign sources. This requires a number of changes to the charities annual information return (T3010), as well as IT changes to our database and the Charities Listings on the CRA website,” Hawara said.
3. Third to the party
In November, Superior Court Justice John McIsaac sentenced an Ontario man, Adam Gour, to 15 months in jail and fined him $280,000 for fraudulent third-party fundraising activity.
CharityVillage’s article on the subject is an illuminating and detailed look at what the sentence – which is being appealed – could mean for the nonprofit sector.
Justice McIsaac’s ruling is a legal cautionary tale to charities and nonprofits contemplating using third-party fundraising. In essence, the message conveyed by the judge is that while third-party fundraising may be “a necessary evil”, organizations need to disclose to donors how much of the money raised is going to the cause and how much is being given to the third partyers.
In his sentencing, the judge had this to say about Gour: “This offender’s fleecing of the unsuspecting public is vile and despicable. He used unknowing sick and terminally ill children and their families to line his own pockets.”
If Justice McIsaac’s ruling stands after appeal, it could mean fundraising divisions at nonprofits across the country will need to step up their transparency game.
4. The CRA guides anew
In March, the CRA updated and streamlined its guidance around nonprofit activities.
Among the modifications made were a shift in the definition of fundraising. The CRA now describes fundraising as "any activity that includes a solicitation of present or future donations of cash or gifts in kind, or the sale of goods or services to raise funds, whether explicit or implied."
Another important change to the guidance is what charities cannot claim as fundraising activity. Such activities include, seeking grants, gifts, contributions or other funding from other charities or government, and recruiting of volunteers for general operations of the charity.
Check out our list of the other major changes to the guidance.
5. Big ups to the East side
Another huge step was taken to consolidate and empower the work of Nova Scotia’s nonprofits early in 2012.
Dating back almost a year, work by numerous sector parties in the province has helped move forward an initiative to create the province’s first sector council to coordinate effectiveness and delivery of services to the population.
Led by Phoenix Youth Programs, and a draft proposal submitted to the Nova Scotia government by former HR Council for the Nonprofit Sector director Lynne Toupin, the province is about to get its own umbrella body for the charitable sector.
For more on this story and the history of the project, read CharityVillage’s articles here and here.
2013 here we come
While big changes occurred in 2012, looking to the future of life in the nonprofit community engenders potential for massive change in the way organizations are run and how donors will be affected.
So what’s in store?
1. The Extendables
On October 31, conservative MP Peter Braid submitted a private member’s bill in the House of Commons. Bill C-458, aka the National Charities Week Act, calls on the government to extend the charitable giving deadline to the end of February of the following calendar year instead of the current December 31 deadline. This would bring it in line with the end of the RRSP contribution deadline for the prior calendar year.
Advocates say the bill, which is currently awaiting second reading and debate, could help donors recuperate after the Holiday season where bills mount and charitable giving is harder to do due for many Canadians. The extra two months allows some breathing room for donors to save up again and have more to give.
They also say it helps create a second giving season which could only help nonprofits and charities.
Detractors claim that pushing back the deadline will cause confusion within nonprofits in terms of how and when to file paperwork for tax returns – traditionally done at the end of the calendar year – and that it will create disincentive for people to give during the holidays if they know they can put it off until later and use disposable income for personal gifts and the like.
Read more about the bill and the debate surrounding it.
2. Give credit where credit is (maybe?) due
Speaking of private members’ bills, the NDP also got into the act when rookie MP for Répentigny Jean-Francois Larose tabled a motion that proposes a tax credit for volunteers.
Bill C-399: The Volunteer Tax Credit prompted many parliamentarians and nonprofit sector experts to weigh-in on whether compensating volunteers is a worthwhile idea/investment.
Those backing the bill argue it would motivate more Canadians to volunteer. Opponents counter that the bill, as currently drafted, would cost taxpayers way more than any accrued benefit as the organizations using volunteers would have to dedicate significant resources to track and document their activities for accounting purposes. The bill is now in committee for discussion.
For more information, read CharityVillage’s story on the dialogue surrounding the bill and its particulars.
3. Ontarians will see revised ONCA in 2013
To the relief of many nonprofits in Ontario, in September the provincial Liberal’s decided to delay proclamation of the Ontario Not-for-profit Corporations Act (ONCA) from January to July 2013.
The act, if maintained in its current form, could have significant impact on provincial nonprofits, according to the Ontario Nonprofit Network (ONN). Ontario pushed back the proclamation ostensibly to allow for what it termed “more time to ensure a smooth implementation.”
But the ONN, which represents the province’s nearly 43,000 nonprofits, is hoping a rote proclamation in July is not in the cards. It could get its wish if the Liberal government falls in an election.
The ONN is concerned that new provisions in the act will affect who is considered a member of a nonprofit; the overriding concern is that the term “member” is being substituted for “shareholder” which could have serious repercussions on board members and voting rights for all members of a nonprofit.
Other sector experts claim the law is on the whole, a good one, and argue that delaying its passage – it was passed in 2010 – does no good.
Read the story and make up your own mind.
4. West coast shout out
Changes to British Columbia’s Society Act are also on the way.
BC’s Ministry of Finance has been reviewing the law for the past two years and indicated in 2012 that it is almost ready to implement changes to the now 35 year old law.
Similar to the ONCA changes set to take place, BC is considering amending the act to reflect similar useful provisions in the 2004 British Columbia Corporations Act (BCA). There are a host of other changes being proposed in discussion papers, though no legislation on the matter has been drafted.
The Ministry is scheduled to make policy recommendations on a direction for reform — either by amending the existing Act or drafting a new one. Legislation to amend (or replace) the Act is targeted for 2013 at the earliest, but is more likely to be in 2014.
For the full story so far, see the CharityVillage article.
5. Penny for your cause?
This year, the federal government intends to phase out that ubiquitous bronze coin, the penny.
“So?” you may ask. So this: the action represents a huge opportunity for charities to cash-in on the end of a currency era by holding so-called “penny drives” in the hopes of attracting mass donations of the coinage by Canadians who want to void their jars, piggy banks and coin purses of the soon-to-be-useless thing.
Noted charity lawyer Mark Blumberg on his Globalphilanthropy.com blog, makes the case.
“Experience elsewhere has shown that charities can benefit by getting involved in the process of withdrawing low-denomination coins from circulation,” he writes. “The Government encourages Canadians to consider donating pennies to charities… [who] are welcome to take advantage of the initiative to increase their fundraising through penny drives.”
What do charities need to do if they want to host a penny campaign in 2013?
“Charities should consult their financial institutions before starting any fundraising campaigns related to the phase out of the penny to determine best practices for collecting and redeeming the coins. This will ensure charities and financial institutions are well prepared to manage a potentially large volume of pennies, and will ease the reimbursement once the campaign is complete,” Blumberg said.
For more information on the phase-out of the penny, visit the Department of Finance’s website.
Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at firstname.lastname@example.org.
Photos (from top) via iStockphoto. All photos used with permission.
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