Do You Know Where Your Charitable Donation Is and What it Has Been Doing?
Part One: Religious Charities in Canada
Let’s start with a question: “What is greater than the combined dollar amounts the Provinces of Saskatchewan, Manitoba and New Brunswick are spending on health care in the current fiscal year 2006 – 2007.”
Do you give up? Well here is the answer. The amount of money Canadians donated to charities back in 2004 (8.9 billion dollars) exceeds this year’s combined health care budgets for Saskatchewan, Manitoba and New Brunswick (8.7 billion dollars) by about 200 million dollars. This revelation about the generosity of Canadians was made in the report Caring Canadians, Involved Canadians; Highlights from 2004Canada Survey of Giving, Volunteering and participating published by the Ministry of Industry in 2006.
Surely few of us would say that the 8.7 billion spent on health care in these three provinces is an insignificant amount. I suspect that even fewer of us would argue that we need to eliminate checks in the system to ensure that the money is well spent. Most of us I suspect would want to make certain that we obtained the biggest bang for our buck. That is why we have auditors, accounts committees and opposition parties that oversee public spending, all in an attempt to make sure that the resources we provide are well spent.
But what about the money we donate to charities? In 2004 that amounted to 8.9 billion dollars in Canada. Can we honestly say that we know for certain that all of that money is being well and properly spent? Or do we just assume that everything is okay; that someone else is looking after it. Andrew Carnegie is reported to have once said: “It is more difficult to give money away intelligently than it is to earn it in the first place.”
And what would you say if I told you that the lion’s share of the money given in 2004 went to religious charities. In fact the report put out by the Ministry of Industry clearly states that a staggering 45% of the 8.9 billion charity dollars given in 2004 went to religious organizations, while only 10% went to social service organizations.
Charities and this includes many if not all religious institutions, benefit not just from the generosity of their own donors but also from the Canadian taxation system. Through the taxation system all Canadians whether or not they have a religious belief support donations to religious organizations in the form of missed taxation revenue which could otherwise have been directed to improved health care, education or reducing third world debt, to give but a few examples. Many I’m sure would therefore agree that whether or not we contribute to an individual charity we all as Canadians have a duty to make sure that our investments are being efficiently managed.
Religious Charities – Part Two: One Priest’s Perspective
After twenty two years in active parish ministry, I can honestly say that I have seen and learned a thing or two. I also want to share with you that seminary and a parish internship never came close to preparing me for the amount of time I would be called upon to spend on money related matters. Now when I talk about money matters, I don’t mean helping people who are down on their luck. Sadly the occasions to engage in that form of pastoral care were not as frequent as I once thought they would be. No the money matters I refer to are those required to keep the doors of the institutional church open and to support the multiple levels of ecclesiastical bureaucracy
Sadly the media have made us aware of all too many instances of financial malfeasance in the church. In the U.S. one school of business conducted a survey of one Christian denomination. Eighty-five per cent of the dioceses responding reported uncovering embezzlement schemes over the past five years. In November of 2002 the Toronto Star reported that almost one in six Canadian charities spent more money on fundraising and administration that they did on charitable work. It seems that no nation, no faith group, no denomination is immune from financial scandal which can be committed by ordained clergy and laity alike. Fortunately many of these crooks are eventually caught but often only after their dishonesty has done serious damage to the Gospel message. In addition, well-meaning but inefficient operations may go on undetected until a donor or a member of the public begins to ask truth probing questions and demanding accountability from all charities benefiting from their privileged position under the Canadian tax system.
Now I want to share with you some examples which I believe illustrate the importance of all of us asking questions of the charities to which we give money. The worst mistake we can make is to assume that someone else is making sure that the money we give is being used for the reason we gave it.
Example One
My first parish was a mission parish. For those of you not familiar with the term ‘mission parish’ it simply means that it could not afford to pay a full time minister on its own, it need help from other parishes. The people of this parish were a delight to work with. Everyone pitched in whenever something needed to be done. Volunteers cleaned the church. Even the mayor who was a member of the parish could be seen vacuuming or cleaning the toilets. Within one year this church became self supporting and paid off the mortgage on the minister’s house. Within 8 years they increased the amount they gave to help other parishes, ministries and the always present Diocesan bureaucracy five fold. The members of that parish could have kept some of that money and hired a janitor to do the cleaning but no, they continued to sweep and scrub in order to help others with the money they chose to give to help others. You can imagine then my surprise when as Regional Dean I visited another mission parish that was asking for financial assistance to pay part of their minister for the next year. When I met with their Board to go over their proposed budget including the assistance they were requesting I discovered that they were asking for money to continue to pay not just their minister but also the janitor they had had for a number of years. I told them that in all fairness to the people of my parish I could not support their request as it was when the people of my parish were cleaning their own house of worship in order to save money to give to help others. This extravagance would have continued if questions had not been asked. What do you think would have happened had the good natured and generous people of my parish would have thought had they discovered that this was how their donation was being used? Do you think some might have become discouraged and cut back on their giving’s thinking that their donations were being misused?
Example Two
Another parish I served was like the parish in the first example as it too had many wonderful, faithful, and dedicated members.
Church rules require every church looking for a new minister to write a parish profile which tells prospective new minister about the church and its members.
This profile is then vetted and approved by the diocesan bureaucracy which is in large part paid for by the local churches.
The profile developed by this parish and reviewed and approved by the diocesan bureaucracy painted a fairly rosy picture of its financial situation. In part the profile said:
That the parish considered “Ensuring Financial Soundness as demonstrated by meeting our ongoing operating costs annually from parish donations” an important goal.
That “God richly blesses” the parish. “For 2000 an annual budget of approximately $116,000 was approved. The budget for 2001 is being developed at present and will likely be in the $120,000 range. The major renovation and reconstruction projects during the 1990’s were started and supported through generous anonymous donations along with special financial appeals.”
“A recent review of the parish financial statements displays a healthy financial picture with the corporation debt free as at September 30, 2000. In addition, the church has reserve funds estimated at $40,000. The church owns a condominium which earns revenue in excess of the costs to maintain the property. This property has an approximate market value of $160,000.”
On September 27, 2001 it was announced by the bishop that I had been appointed the Rector of this parish. However, I did not arrive in Alberta and begin my duties until December 1, 2001.
Just six weeks into my new position I began to learn just how far off that officially endorsed snapshot of the parishes’ financial position was. By January 14, 2002 the Vestry Board was advised that the parish was in a deficit position of $5552.52. At the Annual parish meeting on January 20, 2002 parishioners seemed unsatisfied with the financial reports and asked a lot of questions. Privately some parishioners approached me to express their concerns about the state of the parish’s finances and ask me to inquire about funds raised for mission work outside of the parish went. Over the course of the year a couple of my monthly pay checks bounced. We learned that parishioners had given approximately $4,500 to go to the Primate’s World Relief and Development Fund for work overseas, in the far north and for disaster relief. Unfortunately we also learned that none had been sent and that there was none available to send. The $4,500 had been spent on parish expenses and that there was none left to send to the Primate’s Fund. A respected local business sent the parish a notice that their account was overdue and threatened to cut the church’s credit off.
All of this came to light only because ordinary people in the parish began to ask questions and were not satisfied with the answers they were receiving. Because of this I assembled a parish team that spent a great deal of time sorting through the books and giving us a clear financial snapshot of where the parish stood. The parish had about $20,000 in overdue accounts which included the $4,500 not sent to the Primate’s Fund.
We also learned that the parish had invested about $30,000 and that this investment had lost about $10,000 in value and was now worth only $20,000. I suggested to the parish Vestry that this investment be sold and the funds used to pay off all debts including sending the money donated but not sent to the Primate’s Fund. A courageous and responsible vestry agreed and the church was now prepared to begin again. By the end of 2003 the parish had a positive bank account of approximately $6,000 thanks to parishioners who asked questions and gave generously.
May God give us the courage to ask questions and not settle for answers which just don’t make sense to us. None of us can ignore that we all are responsible for what God has entrusted to our care. Stewardship involves not just giving, it also involves making certain that the gift goes to do the work that God and the giver intended it to do.
Example Three
On May 22 of 2006 I sent a registered letter to the Director of Finance of my Diocese requesting a copy of the 2005 audited financial statements for the Diocese. As of today, March 2, 2007 I am still waiting for those statements to arrive. Surely my request was not an onerous undertaking. The audited statements had to prepared anyway and it would involve the photocopying of approximately 6 pages, placing them in a stamped, addressed envelop and mailing them. As a member of a denomination to which I contributed in excess of $6,000 per year to all of its levels, in addition to helping to raise many thousands of dollars in additional funds to support its ministries and an ever intrusive bureaucracy, I find this method of responding to my request puzzling and frustrating to say the least.
Fortunately, Revenue Canada changed the regulations in 2005 and now any citizen can request the audited financial statements of any of the 80,000+ federally regulated charities. Revenue Canada is to be commended for this act which helps to ensure public accountability for all charities which benefit from using the public taxation system.
In the last section of report I will give you step by step instructions on how to access public information you are entitled to receive if not through the charity you support then through Revenue Canada. However, should your charity prove to be uncooperative or inefficient due to a top heavy bureaucracy then like me you may choose to redirect your charitable dollars to agencies that directly impact people's lives.
Part Three: What Churches can Learn From Others About How to Respect Donors and Their privileged position under Canadian Tax Law
Example One:
The following Donor Bill of Rights was created by the American Association of Fund Raising Counsel, the Association for Healthcare Philanthropy, the Association of Fund Raising Professionals, the Council for the Advancement and Support of Education.
The Donor Bill of Rights
“We declare that all donors have these rights:
To be informed of the organization’s mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposes.
To be informed of the identity of those serving on the organization’s governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities.
To have access to the organization’s most recent financial statements.
To be assured their gifts will be used for the purposes for which they were given.
To receive appropriate acknowledgement and recognition.
To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.
To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.
To be informed whether those seeking donations are volunteers, employees of the organization or hired solicitors.
To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share.
To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.
Example Two:
Imagine Canada (a combination of the Canadian Centre for Philanthropy and the Coalition of National Voluntary Organizations) has come up with the following code of conduct:
A. Donor's Rights
All donors (individuals, corporations, and foundations) are entitled to receive an official receipt for income tax purposes for the amount of the donation. Donors of non-monetary eligible gifts (or gifts-in-kind) are entitled to receive an official receipt that reflects the fair market value of the gift. (Note: The term 'Eligible gifts' is comprehensively defined by CRA. A full definition can be found in CRA's Interpretation Bulletin dealing with gifts and official donation receipts.1 Some common gifts, such as donations of volunteer time, services, etc. are not eligible to receive official tax receipts.) The charity's governing board may establish a minimum amount for the automatic issuance of receipts, in which case smaller donations will be receipted only upon request.
All fundraising solicitations by or on behalf of the charity will disclose the charity's name and the purpose for which funds are requested. Printed solicitations (however transmitted) will also include its address or other contact information.
Donors and prospective donors are entitled to the following, promptly upon request:
the charity's most recent annual report and financial statements as approved by the governing board;
the charity's registration number (BN) as assigned by CRA;
any information contained in the public portion of the charity's most recent Charity Information Return (form T3010) as submitted to CRA;
a list of the names of the members of the charity's governing board; and
a copy of this Ethical Fundraising & Financial Accountability Code.
Donors and prospective donors are entitled to know, upon request, whether an individual soliciting funds on behalf of the charity is a volunteer, an employee, or a hired solicitor.
Donors will be encouraged to seek independent advice if the charity has any reason to believe that a proposed gift might significantly affect the donor's financial position, taxable income, or relationship with other family members.
Donors' requests to remain anonymous will be respected.
The privacy of donors will be respected. Any donor records that are maintained by the charity will be kept confidential to the greatest extent possible. Donors have the right to see their own donor record, and to challenge its accuracy.
If the charity exchanges, rents, or otherwise shares its fundraising list with other organizations, a donor's request to be excluded from the list will be honoured.
Donors and prospective donors will be treated with respect. Every effort will be made to honour their requests to:
limit the frequency of solicitations;
not be solicited by telephone or other technology;
receive printed material concerning the charity.
The charity will respond promptly to a complaint by a donor or prospective donor about any matter that is addressed in this Ethical Fundraising & Financial Accountability Code. A designated staff member or volunteer will attempt to satisfy the complainant's concerns in the first instance. A complainant who remains dissatisfied will be informed that he/she may appeal in writing to the charity's governing board or its designate, and will be advised in writing of the disposition of the appeal. A complainant who is still dissatisfied will be informed that he/she may notify Imagine Canada in writing.
B. Fundraising Practices
Fundraising solicitations on behalf of the charity will:
be truthful;
accurately describe the charity's activities and the intended use of donated funds; and
respect the dignity and privacy of those who benefit from the charity's activities.
Volunteers, employees and hired solicitors who solicit or receive funds on behalf of the charity shall:
adhere to the provisions of this Ethical Fundraising & Financial Accountability Code;
act with fairness, integrity, and in accordance with all applicable laws;
adhere to the provisions of applicable professional codes of ethics, standards of practice, etc.
cease solicitation of a prospective donor who identifies the solicitation as harassment or undue pressure;
disclose immediately to the charity any actual or apparent conflict of interest; and
not accept donations for purposes that are inconsistent with the charity's objects or mission.
Paid fundraisers, whether staff or consultants, will be compensated by a salary, retainer or fee, and will not be paid finders' fees, commissions or other payments based on either the number of gifts received or the value of funds raised. Compensation policies for fundraisers, including performance-based compensation practices (such as salary increases or bonuses) will be consistent with the charity's policies and practices that apply to non-fundraising personnel.
The charity will not sell its donor list. If applicable, any rental, exchange or other sharing of the charity's donor list will exclude the names of donors who have so requested (as provided in section A8, above). If a list of the charity's donors is exchanged, rented or otherwise shared with another organization, such sharing will be for a specified period of time and a specified purpose.
The charity's governing board will be informed at least annually of the number, type and disposition of complaints received from donors or prospective donors about matters that are addressed in this Ethical Fundraising & Financial Accountability Code.
C. Financial Accountability
The charity's financial affairs will be conducted in a responsible manner, consistent with the ethical obligations of stewardship and the legal requirements of provincial and federal regulators.
All donations will be used to support the charity's objects, as registered with CRA.
All restricted or designated donations will be used for the purposes for which they are given. If necessary due to program or organizational changes, alternative uses will be discussed where possible with the donor or the donor's legal designate. If the donor is deceased or legally incompetent and the charity is unable to contact a legal designate, the donation will be used in a manner that is as consistent as possible with the donor's original intent.
Annual financial reports will:
be factual and accurate in all material respects;
disclose the total amount of fundraising revenues (receipted and non-receipted)2;
disclose the total amount of fundraising expenses (including salaries and overhead costs)3;
disclose the total amount of donations that are receipted for income tax purposes (excluding bequests, endowed donations that cannot be expended for at least 10 years, and gifts from other charities)4;
disclose the total amount of expenditures on charitable activities (including gifts to other charities)5;
identify government grants and contributions separately from other donations; and
be prepared in accordance with generally accepted accounting principles and standards established by the Canadian Institute of Chartered Accountants, in all material respects.
No more will be spent on administration and fundraising than is required to ensure effective management and resource development. In any event, the charity will meet or exceed CRA's requirement for expenditures on charitable activities. (The Income Tax Act sets out a requirement that all registered charities spend 80% of their receipted donations from the previous taxation year -- excluding bequests, endowed donations that cannot be expended for at least 10 years, and gifts from other charities -- on charitable activities; in addition, charitable foundations are required to expend 4.5% of their assets in support of charitable programs6)
The cost-effectiveness of the charity's fundraising program will be reviewed regularly by the governing board.
The Anglican Church of Canada and the Anglican Diocese of Toronto are members of Imagine Canada and subscribe to its stricter standards. Likewise they adhere to standards that treat donors respectfully.
I issue a challenge to other charities, especially religious charities who should already adhere to a higher standard to officially adopt Imagine Canada's standards and to register with them. They should also post their audited financial returns on their web sites.
Part Four – Finding the Information You Are Entitled To Have
If you cannot get the information you want from the charity you are investigation or support, don’t despair. The Federal Government has set up a web site to help you. Click on this link and you will be taken directly to that site.
http://www.cra-arc.gc.ca/ebci/haip/srch/sec/SrchLogin-e;jsessionid=F52JHcn6v4VspbgYpnQ2JqtYsSD9CG6tM2GDmnJ9MTSGt5xlXQwT!-927481160?searchType=Registered
You will be given the option of search four categories:
Canadian Registered Charities
Newly Registered Charities
Recently Revoked Charities
Recent Annulments
Most of us will want to search the first category: Canadian Registered Charities.
You will be asked to insert the name the charity you wish to search. This can be a bit of a challenge. You must enter the current legal name for the charity and not the current operational name or a shortened version of the name.
Next you will be asked to select the charities designation from three choices:
Public Foundation
Private Foundation
Charitable Organization
As I was searching for a church I chose ‘Charitable Organization’.
The next step is to select a code number from a drop down menu. I chose the code 30 for Anglican parishes.
If you know the following information it will make your search go much quicker. Every charity has a Business Number and a Registration Number. If you have any charitable donation receipts in your files these numbers should be listed.
Here are two examples I was interested in viewing. You may wish to use them to practice getting used to the system before finding the particular charity of interest to you.
Example One: The Synod of the Diocese of Calgary
BN/registration number 119229938RR0004
Example Two: St. Michael’s Anglican Church
BN/registration number 119191187RR0001
The form will also show who submitted the return on behalf of the charity.
You may request from this person the audited year end return for the charity from this person. If as in my case that information was not forthcoming then return to the Charities Division of Revenue Canada and they will provide you with the information which you requested. Here is the contact information you will need:
1-800-267-2384 (English) or 1-888-892-5667 (bilingual)
themysticalkurmudgen
faithtowork@yahoo.ca
