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Thursday, 18 March 2010

PROPOSED LEGISLATION FOR MORE PUBLIC TRANSPARENCY IN THE CHARITY SECTOR


As we learned from the Globe and Mail article linked below, Albina Guarnieri, Liberal MP, is proposing legislation that would require that every registered Canadian charity discloses the yearly salary of its five highest-paid employees for public scrutiny. The proposed legislation would also give the National Revenue Minister full power to de-register a charity at its discretion, if any of the charity’s employees are found to earn more than $250,000 per year.

It is not very often that we agree with more government control but in this particular case, it is clear that such legislation is not only warranted but long past due. In fact, although we think that this would be a good first step toward exercising some control over charitable organizations that abuse public donations and tax payer money, we feel that the legislation does not go far enough.

Let us be very clear: we all would like to believe that most charitable organizations do a marvelous job at the community and/or at the international level. However, because too many individuals who run organizations have abused the public trust and naïveté and used their charity status to make themselves lucrative careers at the tax payer’s expense, we think that the rules should be even more stringent. Bonuses, traveling expenses, fancy dinners, conventions at luxurious hotels throughout the world, car allowances and other such benefits, should not only be separately reported for each executive and high-paid employee, but scrutinized with a magnifying glass by the Minister of Revenue. Furthermore, organizations that operate under the duality of non-profit and charity status and entertain incestuous relationships with sister organizations to circumvent lobbying laws and confuse the revenues and expenditures, should be very carefully audited and immediately de-registered for any serious irregularities.

C.A.G.E., through some devoted volunteers, is presently coordinating the research and preparation of a very detailed report concerning two such organizations that have abused the charitable status of one to further the objectives of the other. When the report is finalized, it will be presented to MP’s first and then released to the media.

We are also convinced that non-profit corporations that benefit from a tax exempt status should be transparent to the public under the same rules as apply to charitable organizations. There is very little information available to the public when it comes to non-profit corporations. It is all too easy for such organizations to camouflage their high revenues by distributing them in the form of salaries, bonuses and other expenses and benefits to their directors and employees in order to show a net zero balance.

The Globe and Mail article informs us that there are 85,000 registered charities in Canada. It is admittedly a very important sector of our economy! Even if only some of them abuse the system, not only does it do great injustice to the taxpayers but also to the very causes they claim to embrace and those who donate so generously. In this case, more stringent government control and oversight is clearly warranted, but much broader public transparency would be the best defense against abuse of the public trust.

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