Government debates how to encourage charitable giving
OTTAWA, ON—A government review of charitable giving has touched off debate over the role and benefits of charities.
The finance committee of the House of Commons began its study of tax incentives for charitable donations in January. The committee is hearing from witnesses during February and March.
This review follows a unanimous vote in March 2011 to look at the issue. MP Peter Braid (Kitchener-Waterloo) brought a motion to the House of Commons in late 2010, as a way of encouraging government support of charities.
Braid told the House of Commons, "…charities are vital to the well-being of our society. They touch the lives of all Canadians. They inspire us through the arts, enlighten us through education, heal us through health institutions and medical research, nourish our faith, support us through hard times and make us the caring and compassionate society of which we are very proud."
Difficult economic times and an increased need for services have taken a toll on charities. Fewer people are making donations. The number of tax-filers making donations to charities has fallen from 29.5 per cent in 1990, to 22.7 per cent in 2009, according to Christian think tank Cardus.
Cardus recommends an "immediate and substantial increase to the charitable tax credit rate" in its brief to the committee.
Ray Pennings, director of research for Cardus, points to the benefits of charities.
"Try to imagine what society would look like without the contribution of the charitable sector. The charitable sector enriches society. It's a public good that they're delivering, delivered more effectively."
However, there are some who want tighter restrictions on charities, or to maintain the status quo. Human Resources Minister Diane Finlay talked about linking government grants more tightly to outcomes, in an interview with The Globe and Mail. Finley is looking at the Big Society movement in Britain, where volunteers are being asked to provide services to libraries and schools, to reduce government expenditures.
Barry Bussey, vice president of legal affairs at the Canadian Council of Christian Charities (CCCC), welcomes an open discussion on the role of charities. "This initiative is an opportunity for churches to be able to share with the public all the work we do to make Canada a better place." The CCCC appeared before the committee on February 14.
Some groups oppose increasing tax breaks for charitable donations, such as Canadians for Tax Fairness. In its brief, it argues that tax breaks disproportionately benefit those with higher incomes. "It is a particularly bad idea at this time when the government is dealing with a deficit and can ill afford to forgo tax revenues. And it is especially objectionable when the government plans to make major cuts to spending on public services and social programs."
But Pennings points out that if the charitable sector is unable to provide services, there will be an increased demand on government. "The leveraging of volunteer hours and the efficiency of charities outstrips what the bureaucracy could do," says Pennings. "Also, government programs tend to be cookie-cutter solutions. Charities can address far smaller niches, thus allow more diversity, more effectively."
Religious faith plays an important role in charitable giving. Canadians who attend religious services weekly donate an average of $1,038 annually, compared to an average of $294 among those who don't attend weekly. Also, 94 per cent of weekly attenders make charitable donations, according to Statistics Canada numbers for 2007.
A >poll reported in The Globe and Mail reveals that 46 per cent of larger donors agree that giving is an important part of their faith.
"Faith institutions are incubators of public virtue," explains Pennings. "There is a social oxygen emanating from faith institutions that benefits us all."
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