In what is becoming a quite regular occurrence, the latest Parliamentary session saw introduction of a Private Member’s Bill related to charities. Bill C-458, sponsored by Kitchener-Waterloo MP Peter Braid and given first reading in the House of Commons in late October, calls for an annual National Charities Week in late February and extension of the period for which charitable receipts can be claimed for a calendar year into the first 60 days of the following year.
On their face, the measures proposed in the Bill are not as troublesome as the provisions contained in the last charity-related Private Member’s Bill, C-460. That Bill passed the House of Commons but died on the Senate Order Paper when the last election was called. Bill C-460 would have imposed salary reporting requirements on registered charities that would have been administratively cumbersome for both the organizations themselves and for the Canada Revenue Agency (CRA) and which could have had untold consequences for staff recruitment and retention by charitable sector groups.
Bill C-458’s goals are laudable. It is designed to foster increased charitable giving through the awareness-raising associated with having a designated week for charities and by aligning treatment of receipted charitable donations with current practice with respect to the treatment of Registered Retirement Saving Plan (RRSP) contributions. The latter changes would, as with RRSPs, create a 14- month receipt eligibility period for each calendar year.
It might be wise, however, to temper enthusiasm for the Bill until some possible effects of its proposed measures have been thoroughly studied. Among the things that ought to be considered are:
- any administrative burden that the provisions might place on either the CRA or charities themselves;
- how the changes would impact on charities that have structured their fundraising campaigns to coincide with traditional holiday giving; and
- with respect to timing, the impact of placing charitable donations in direct competition with RRSP contributions.
Many large charities have sophisticated fundraising infrastructure in place and will be easily able to modify their systems to accommodate changes to solicitation materials and receipting practices stemming from the extension of eligibility 60 days into a subsequent calendar year. Smaller organizations, or those that rely heavily on volunteers, may not even be aware of the change and may not respond as quickly in adopting to the new rules. All-volunteer groups are always difficult to communicate with when regulatory change occurs, so an education effort by the CRA would be desirable, if not essential.
While such education and systems changes may seem like a small matter, not moving quickly enough to update their dealings with donors and administrative practices could further disadvantage groups who are already often out-resourced and dwarfed by bigger players in the fundraising marketplace.
As well, the costs of any changes to processes, either within charities, or in the CRA should be factored into assessing the merit of adopting a fourteen-month giving window.
It should also be recognized that it may be difficult to judge the impact – positive or negative – of this change after the fact. If the change is implemented in conjunction with other measures, and even if it isn’t, determining an effect on giving patterns or donation amounts may be not be feasible owing to the plethora of other factors that can influence donations in any given year. In light of this, establishing some assessment criteria prior to implementation would be worthwhile.
Also, the current approach, adopted by many groups of tying their campaigns to the December holiday season needs to be dealt with. If the intention is merely to extend the period during which a high volume of donations is generated, that may be more easily said than done. Experience with “donor fatigue”, which was noted a number of years back after spate of international disasters happened in quick succession, suggests that there may be an absolute limit to people’s willingness to give no matter how repeated the “asks” and how compelling the case for support.
Moving donations out of December into the New Year could be even more problematic, given the number of organizations that use cash flow models based on a large influx of funds at the end of the calendar year. Also worth considering is the significant portion of the population most apt to give who typically travel south in the early months of the year.
Potential further drawbacks to encouraging donations in the way contemplated by the Bill are that it may put donation expenditures in competition with RRSP contributions. Indeed, many taxpayers borrow money to finance RRSP contributions in the early months of the year, making it unlikely that they would have extra cash to devote to charitable gifts. Also, as many people are faced with large credit card bills after the holiday season, this might reduce the chances that they would have resources available for giving in the proposed 60-day window.
Bill C-460 fell because it never made it through the Senate – commonly called the “chamber of sober second thought”. With a majority government in place and the next election not expected until 2015 that is unlikely to happen with Bill C-458. That’s all the more reason to ensure that any potential unintended consequences associated with it are aired and understood at an early stage. If some of the possible shortcomings of the Bill are manifest, the damage could be hard to undo.