Charity vs. Nonprofit

The Canada Revenue Agency recently issued a revised version of its statement of differences between a charity and a nonprofit organization.  Since all charities are nonprofits, but not all nonprofits are charities, the public can easily become confused by the differences.  The statement covers the following areas:

• Purposes
• Registration
• Charitable registration number
• Tax receipts
• Spending requirement (disbursement quota)
• Designation
• Returns
• Personal benefits to members
• Tax exempt status

Posted August 6th, 2009.

Adoption Agency Bankruptcy Provides Governance Lessons

The recent bankruptcy of a local nonprofit organization providing adoption services provides a quick lesson in nonprofit governance.  Based on news stories, the organization had a board of three members, one of whom was the common law partner of the executive director.  There are claims that excessive amounts of money were spent on leasing luxury vehicles and on renting properties.  With this background, and speaking in generalities, and not to this specific case, how can nonprofits avoid this set of circumstances in the future?

• First, in Ontario, three board members is the minimum legal number for an incorporated nonprofit.  In ordinary circumstances, that puts considerable burden for oversight, planning, monitoring, policy development, and more, on very few bodies.  If one member has to declare a conflict of interest on every matter involving staff, even more onus is placed on the remaining two.
• Second, every nonprofit should have detailed policies on spending.  These should include reasonable limits on spending by the executive director without prior board approval.
• Third, there should be a policy requiring that cheques over a pre-determined amount (accompanied by the relevant invoice) be signed by at least one independent board member, preferably the treasurer.
• Fourth, the board should receive regular financial statements, with the treasurer making sure that revenue and expenses are backed up by proper documentation.
• Fifth, if the only members of the organization are the board members, then the board is only answerable to itself – not to a broader membership at an Annual General Meeting.  This decreases accountability to stakeholders and provides greater opportunity for an organization to get into trouble.

Posted July 20th, 2009.

 

In the Best Interests of the Child

I was watching the CBC National News last night when I saw an item on the death of Jaylene Sanderson-Redhead, 2, who was living with her mother when she was rushed to hospital in Winnipeg on June 29. She died soon after. 

According to the news item, “Jaylene had been in the care of an aboriginal child and family services agency called Awasis, but it gave custody back to Redhead last December with the condition that Awasis would supervise the pair closely”. 

In an on-screen interview with a representative of Awasis, a spokesperson was asked what the organization’s goal was.  Her answer was that the goal of the organization was to keep children with their families. 

This brought to mind a recently released report titled Best Interests of the Child: Meaning and Application in Canada.  The report was developed by a group of Canadian rights organizations and legal experts.  I taught an introductory course in social work at the University of Waterloo this past winter, and one of the topics I covered was the competing philosophies underlying child welfare services.  The “best interests” approach emphasizes the protection and well-being of the child.  The “least restrictive or intrusive” approach emphasizes the least disruptive course of action that will leave the child in the family.  Child welfare legislation across Canada uses the “best interests” approach. 

The report suggests that if we really want to act in the best interests of the child, we need to marry the two philosophies.  It brings up some issues that I believe are worthy of an extensive excerpt: 

The dire circumstance of many Aboriginal children was explicitly discussed in the workshop. It was noted that, in Canada, 1 in 10 Aboriginal children will be in care versus 1 in 200 non-Aboriginal children, even though Aboriginal children are less likely to experience abuse. The major issue for most children in the child welfare system is neglect, not abuse. How we define neglect is significant in terms of the measures taken. Neglect means that one has the tools to be a good caregiver and chooses not to do so. For non-Aboriginal children, the primary category for substantiated child maltreatment was exposure to domestic violence. 

The impact of Canadian federalism on the implementation of BIC in child welfare was noted, with a clear articulation of the need for the federal government to take a more active role. The participants identified the need for a federal children’s commissioner and overall federal responsibility and mandate to keep children, especially Aboriginal children, from falling through the cracks. 

For all children it was suggested that we should have a national family policy. Children are holistic beings; they are attached to parents, communities and extended families; but their world is often not attached to them. This starts at the top levels of government with no federal legislation that covers child welfare at a national level. Fragmentation into provincial and territorial legislation is a major problem. With no federal children’s commissioner or cabinet minister responsible for children, there is no federal overall responsibility for children. Who is there to speak for the child in terms of the state? 

Children with special needs were identified as a group in particular need and not well served by child welfare services. Although this workshop did not address this issue in depth, a lunchtime presentation addressed ways in which Aboriginal children with complex medical needs should be supported in their communities. Jordan’s principle is a key policy initiative that applies to children with disabilities; it should apply to all children, not just First Nations children. 

The issue of corporal punishment of children was also raised in this workshop. It was noted that the majority of substantiated child physical abuse cases fell within the definition of reasonable force set by the Supreme Court – the conclusion being that Section 43 of the Criminal Code perpetuates instead of preventing child abuse. This, along with the issue of domestic violence, shows that there are gaping holes in the way that the legal system deals with violence against children. 

There is an old legal adage that tough cases make bad law, so maybe we shouldn’t use Jaylene as the example of how things should be done.  But her death at the tender age of 2 years should force us to take another look at how we support children in need.

Posted July 14th, 2009.

 

 

Canada’s Nonprofit Maze

The Wellesley Institute recently published a research report, Canada’s Nonprofit Maze, analyzing some of the funding and regulatory challenges facing nonprofits in Canada.  Researchers conducted key informant interviews including charity leaders and experts as well as charity law leaders.  Conclusions included:

• Government and charitable funding has been declining, so charities are looking more toward fundraising and earned income,
• Every funding source comes with significant regulatory and financial demands, which significantly increases administrative complexity (and cost),
• Time spent on growing financial accountability requirements is detracting from charities’ ability to provide strong services, and
• Social enterprises are prevented from accessing charitable funds and, because they are not “for profit” are also excluded from business revenue sources.

Posted July 13th, 2009.

 

Caring Canadians

 

Caring Canadians 2007

 

In early June, Statistics Canada released the newest version of Caring Canadians, Involved Canadians: Highlights from the 2007 Canada Survey of Giving, Volunteering and Participating.  This statistical review of the social generosity of Canadians updates two previous studies.  The summary below is excerpted from the document.  Analysis and statistics are available by province.

 

In the three years since the 2004 CSGVP, there have been a number of important changes in charitable giving in Canada. These include:

 

•         A 12% increase in the total amount of donations, from $8.9 billion in 2004 to $10.0 billion in 2007.  Some of this growth can be attributed to the fact that there were 2.9% more donors (approximately 650,000), as the population grew by 3.7% between 2004 and 2007, while the donor rate remained virtually unchanged (85% in 2004 vs. 84% in 2007).

•         A 9% increase in the average amount that donors gave (from $400 in 2004 to $437 in 2007).

•         A reduction in the number of donations made by each individual (from 4.3 in 2004 to 3.7 in 2007).

 

Significant shifts in giving among specific demographic groups including:

 

•         A 17% increase in the average donations made by those who are religiously active (from $887 in 2004 to $1038 in 2007).

•         A 20% increase in the average donations of those aged 35 to 44 (from $370 to 443).

•         A 13% increase in average donations among females (from $374 to $422).

•         A 7 percentage point increase in the donor rate among those who have only school aged children living in the household (from 84% in 2004 to 91%) and a 56% increase in their average donation (from $335 in 2004 to $522 in 2007).

 

Provincial and territorial variations in giving including:

 

•         Increases in the donation rate for Alberta (from 79% to 85%).

•         Decreases in the donation rate for the Northwest Territories (from 79% to 68%), Ontario (90% to 86%) and Nova Scotia (90% to 87%).

•         Increases in the average amount donated in Quebec (from $176 to $219, or 24%).

 

Volunteering in 2007: What’s New?

 

Since the 2004 CSGVP, the volunteer activities of Canadians have changed in several ways. The most noteworthy changes are:

 

•         A 5.7% increase in the total number of volunteers, from 11.8 million in 2004 to 12.5 million in 2007.

•         A 4% increase in the total number of volunteer hours (from 1,983 million to 2,067 million).

•         Changes in volunteering among specific social and demographic groups including:

•         A 4% increase in the rate of volunteering among the religiously active (i.e., those who attend religious services at least once a week) from 62% to 66%.

•         An 8% decrease in the average number of hours volunteered by those with pre-school aged children only (from 125 hours to 105 hours)

•         A 16% increase in the average number of hours volunteered by those with only school-aged children (from 142 hours to 165) and a 10% increase by those with no the children in the household (from 173 to 191).

 

Changes in provincial and territorial patterns of volunteering including:

 

•         Increases  in the rate of volunteering in Prince Edward Island (47% to 56%), Nova Scotia (48% to 55%), and Saskatchewan (54% to 59%).

•         Decreases in the rate of volunteering in Ontario (50% to 47%).

•         Decreases in the average number of volunteer hours in Saskatchewan (from 188 hours in 2004 to 147 hours in 2007) and British Columbia (from 199 hours to 172 hours).

 

Posted July 6th, 2009.