Government Should Be Cautious About Helping Charities, Say Experts

August 11, 2020 Updated: August 25, 2020

Although government aid to charities can help in limited circumstances, transparency and a lack of political interference are crucial, experts say, and the federal government’s 2019 decision to put more resources into charities comes with risks.

In 2018, a Senate committee looked at how to strengthen Canada’s 86,000 charities and 85,000 non-profits. Witnesses from these sectors shared their struggles to compete with the public sector and private businesses for pay, pension, benefits, and training in order to recruit and maintain paid staff.

As a result, in June 2019 the Committee on the Charitable Sector called for a national volunteer strategy, a human resources plan, and a pension plan for the sector. The senators also proposed that contribution agreements include costs associated with the recruitment and retention of volunteers needed to deliver funded events or services.

These recommendations helped lead to the Canada Student Service Grant (CSSG), a now-cancelled program that was to be administered by WE Charity to fund activities by 40,000 volunteers.

Kate Bahen, managing director of Charity Intelligence, a Toronto-based organization that builds detailed reports on charities across Canada, told the Epoch Times this wasn’t exactly what the sector had in mind.

“The day after the contract was announced, it was the charity sector [that protested] because people had different experiences [with WE], some of the former staff. People just knew too much maybe. And over 1,000 people signed the pledge #wehaveaproblem urging the government to reconsider this decision for the delivery of this program,” Bahen said.

The awarding of the CSSG contract to WE Charity led to the ongoing political scandal the Liberals have been mired in for over a month.

Prime Minister Justin Trudeau had participated in WE Day events prior to being prime minister, while his wife, brother, and mother continued to be engaged. Finance Minister Bill Morneau, whose daughter works for WE Charity, paid back $41,000 to WE in travel expenses for a 2017 trip his family took with the organization to Kenya and Ecuador—only hours before appearing before a Commons committee on July 22. “It’s my mistake,” he said about the delay.

Neither Trudeau nor Morneau recused themselves from the decision to award the CSSG contract to WE, and both are being investigated for possible violations of the Conflict of Interest Act.

“I would say that WE Charity—it has been very successful in its network of politicians and high net worth individuals,” Bahen says. “It’s such an outlier. I cannot emphasize it enough.”

Aaron Wudrick, federal director for the Canadian Taxpayers Federation, says the WE contract betrayed minimum standards.

“The main problem with the WE situation is the obvious conflict of interest,” Wudrick says. “Competitive tenders and transparency with respect to the terms of contracts are critical to ensuring everything stays above board. We didn’t see either of these things with WE.”

He says deeper government involvement with charities has risks.

“In theory, governments can partner with the private sector if it’s good value for taxpayer money. The big danger, though, is that governments start to treat charities as appendages of government, or that charities become addicted to government support.”

Lori Turnbull, the director of the School of Public Administration and an associate professor of political science at Dalhousie University, says there may be “a perception issue” when charities receive government money.

“Sometimes people want to see an independence from government, so it could affect your relationship with your members and your donors and whatever if you take money from government. Some organizations make a point of not doing that so as to preserve their independence, which would suggest it means something,” she says.

Sometimes the government has politicized support for charities and non-profits. In 2018, the Canada Summer Jobs grant application required recipients to state their support for “reproductive rights” as a condition of receiving grant money. Revisions for 2019 still left pro-life groups excluded, according to the Catholic Civil Rights League.

Turnbull says charities do things governments don’t, and that can be a legitimate reason governments partner with them.

“Oftentimes charity organizations do things that people need that government is not necessarily doing, or not doing all of. So for instance, sometimes people think the Red Cross is part of the government—it’s not. That’s work being done by people that are not being exploited by government [even though] they might get government help.”

Bahen says the federal government’s $100 million contribution to food banks announced on April 3 is a positive example.

“What the food banks have done with that money, being able to respond quickly, was phenomenal. I think it always depends on who you engage with.”

Canadians gave $17 billion to charity last year, but Imagine Canada expects that to drop to $6.3 billion in 2020. On top of that, closures of charities’ earned income operations due to the pandemic could lead to additional losses of $2.8 billion to $4.7 billion.

Bahen wants the federal government to make foundations part with more of their $100 billion in asset holdings. Canada has the lowest annual disbursement quota in the world at 3.5 percent, one that she wants raised to 5 percent. This would result in $700 million more spent on charitable causes this year.

She would also like to see the federal government publish the financial statements of all large charities. She says access to information requests made by Charity Intelligence often return with many parts redacted.

“We submitted 110 requests for information to the charities directorate to get audited financial statements this year, and that’s crazy to me. These are big charities with websites, professional staff, and we’re just asking, ‘Could you post a PDF?’ And charities just sort of say no.”