The Road Ahead: Can the
Voluntary Sector Cope?
The times are indeed a changin' and for more than just bank
commercials. Ask any one associated with the voluntary sector
- both non-profit organizations and charities. These people know
there is an increasing belief that the voluntary sector can take
on many government functions. This belief exists at the same
time all groups are experiencing drastic changes in how they
are funded. A number of other themes are also emerging.
Donors have a palpable fatigue about giving - even at current
levels - let alone increasing their donations. Organizations
are more than ever scrutinized for results that are to be achieved
on the basis of sound and financially effective management. In
turn this has brought about accelerating competition for the
philanthropic dollar. At the same time there is a recognition
of the changing effectiveness of fund raising techniques. For
example, mail campaigns are not working as well as they used
to do. So, groups look at commercial activities to fill the funding
gap. Advocacy activities are enhanced to exhort the public and
government to help meet the needs through the voluntary sector.
All of these issues mean the voluntary sector is under the microscope
of public examination. But it is an unfocused, fragmented view.
And, as the old saying goes, the devil is in the details. An
example of both the prevalent concern and the lack of an examination
of what is truly going on is the recent book by Walter Stewart.
It is too bad that Mr. Stewart didn't pay those pesky details
more attention or you would be able to read his book: The
Charity Game: Greed, Waste and Fraud in Canada's $86 Billion-A-Year
Compassion Industry. Instead, the publisher had to withdraw
the book, and as of October, 1998, it has not been reissued.
This is too bad because much of what Stewart has to say is important.
Unfortunately, the incomplete and inaccurate treatment of many
topics make it far less than the reasoned vehicle it might have
been calling for the modernization of Canadian charity law.
It is this profound need to bring regulatory consistency to the
rules for charities and non-profits which must be made a high
priority for the sector, the public, and government. Blame will
not work. While deregulation is the prevailing norm, for the
voluntary sector to effectively take on the government functions
pressed upon it, time and resources must be found to enhance
the regulation of charities and non-profits.
The Voluntary Sector Roundtable is therefore to be highly commended
for weighing into this fray with a significant project to look
at charitable activity. Its recently published Charitable
Activity: Under The Canadian Income Tax Act: Definition, Process
and Problem is a "must read" for anybody working
in the voluntary sector. As the title page indicates, the paper
is not a legal opinion. Instead it canvasses issues raised by
laws of general application and the case law. In nearly 50 pages,
the report examines how best to enhance the sector's capacity,
restore public confidence, and maintain the high standards of
integrity which have long characterized charitable and non-profit
organizations.
In its concluding pages, the Voluntary Sector Roundtable report
sets out a series of critical issues and policy concerns to be
examined in defining charitable activity.
Fiscal Policy - government needs to undertake a critical
cost-analysis when examining the definition of charitable activity.
Special considerations must be given to quasi-public organizations
like hospitals and universities.
Political Concerns - changes to charity law must balance
tax advantage against the non-profit sector's increased and broadly-based
roles.
Public Perception of Fraud - there are widely-publicized
reports of "bad apples" in the voluntary sector. These
undocumented rumors undermine the work of the majority of groups
which have integrity and dedication.
Advocacy and Public Education - organizations working
for the betterment of society feel they have special expertise
and their voices should be heard, both in advising government
and raising public awareness. Policy should help level the playing
field.
Competition With The Private Sector - as charities move
to diversify their revenue base, the distinctions between activities
of the voluntary and business sectors blur, resulting in issues
of "unfair competition".
Flexibility of Definition - the focus in any examination
of the definition of charitable and non-profit activity should
not be on broadening or narrowing the definitions, but on updating
them to reflect current social values and priorities.
Constitution Questions - jurisdiction for the voluntary
sector is both federal and provincial. Suggested supervisory
schemes include a coordinated federal-provincial supervisory
body, delegation by the provinces of their functions to a national
nonprofit agency, and some type of self-regulatory or advisory
body.
Changing The Players - the risks to existing charities
and other voluntary organizations in examining the definition
of charitable activity are significant, but the considerable
gains in modernizing the definition are seen as worth the risks.
Everyone interested in the work of voluntary organizations must
become informed about how they want these and a host of other
issues resolved. Without that effort, the road ahead will be
very rocky indeed. The full report is available on the Voluntary
Sector Roundtable website at http://www.vsr-trsb.net
.
Laird Hunter is a lawyer with the firm Worton & Hunter
in Edmonton, Alberta
