The Have and Have-not World of Charity

“Working for a just distribution of the fruits of the earth and human labor is not mere philanthropy. It is a moral obligation.

POPE FRANCIS

A friend came over the other night to cook dinner. Technically, we were cooking dinner together, but at that moment my job was reading news of interest out loud from the front section of the print edition of the Globe and Mail. Despite best efforts, one story—a story about a gift to charity—was in danger of bringing tears to these skeptical eyes and melting this cold, cold heart. Unusual.

This Working Girl’s typical response to news stories about philanthropic activities—as often as not stories about a $50 million endowed gift to this hospital or that university—is a silent eye roll, followed by an ache of frustration. How big an endowment does a body need these days? And what about the lives of the many sick, poor and marginalized people that need help now? What is being done to eradicate their pain or the sources of that pain?

That people give to charity at all is great, but are their gifts working hard enough to make the world a better place, as we are so fond of saying in the industry?

But this gift … the subject of the Globe story … this gift was quite remarkable indeed.

The Globe reported that an anonymous man, a residential school survivor, gave $10,000 to Shelter House in Thunder Bay, part of the money he received from the federal government’s residential school settlement. The settlement was to help make up for the years of physical, emotional and sexual abuse he, and so many other children like him, suffered as a result of a government policy of assimilation implemented for over a century at the hands of shockingly sadistic schoolmasters.

The average residential school settlement is $40 thousand.

This man gave the money to support the Thunder Bay shelter’s Street Outreach Service (SOS), which enabled two staff people to drive around the city streets from 2:00 pm to 2:00 am checking on the well being of at-risk people, offering them service, referrals, whatever is needed to help keep them safe. The program costs $125,000 a year to operate but had been cancelled due to lack of funding.

His gesture has prompted donations of $75,000 to support the SOS program. Not quite the $125,000 needed, but a big help nonetheless.

The shelter’s executive director Alexandra Calderon was moved. As the Globe and Mail reported,

“My first reaction was, “I’m sure you need this money more and you should take it and keep it for yourself,’” Ms. Calderon said. “He said, ‘No, no, I want to make sure my friends are safe and that SOS is out there so that if they need help, or a ride, they can get one.’” Both Ms. Calderon and the man … then broke into tears.

That the city in question happens to be Thunder Bay is not lost on this writer.

As a result of the recent deaths of three Indigenous people, one of whom was just 14 years old and another 17 years old, “the Thunder Bay police is under investigation by the Office of the Independent Police Review Directorate, a civilian watchdog organization, regarding allegations of “systemic racism” concerning how they handle Indigenous death and disappearance cases. The Thunder Bay Police Services Board is also under investigation for how it supervises the police. That investigation is being carried out by the Ontario Civilian Police Commission,” according to the Toronto Star.

Clearly, the good people of Thunder Bay need someone looking out for them.

Yet, the gift was a far cry from the typical million dollar “major gift” making headline news these days, a gift usually made to billion dollar hospital or university campaigns, gifts far removed from the streets of Thunder Bay or any other city for that matter; a gift often concocted in a boardroom, not a homeless shelter.

But my reverie in the “nature of our better angels” was short-lived.

For as I closed the page on the front section of the newspaper, the two solitudes of charity was, once again, brought in to sharp relief.

Because laid out before me was a full-page ad signed by Imagine Canada, a leading lobby group for the charitable sector, and charities such as Western University, University of Waterloo, Dalhousie University, Carleton University, University of Toronto and York University.

The ad—a bit of lobbying ahead of the federal government’s fall Fiscal Update—was in the form of a letter to the prime minister. It called for “removing the Capital Gains Tax on gifts of private company shares and real estate.”

Excerpts as follows:

“The fall Fiscal Update presents a unique opportunity for your Government to stimulate charitable giving and ensure our tax system is competitive with the United States.

It … removes an inequity in the current tax system between the donation of publicly listed shares and private corporate shares.

It’s a great way to celebrate the 150^th Anniversary of Confederation and leave a wonderful legacy to all of Canada’s charities for the next 150 years!”

There had been moves to lobby for similar tax exemption ahead of the 2016 budget, an effort rejected by the federal government at that time.

Inequity in the charitable sector is growing beyond most people’s comprehension. The top 1% of charities has 99% of the sector’s resources. Organizations with large bank accounts can spend more to raise more, just like the universities listed above. Those with smaller savings—as government funding stalls or is reduced, as in the case of the Thunder Bay shelter—are finding it harder to survive.

That the lead charity lobby group would focus its resources on the “inequity between people who donate publicly listed shares and private corporate shares” and remount a fight they lost less then 18 months ago shows where the leadership’s current interests lie—more money for already wealthy charities. Indeed, because of the number of university Presidents and Vice Chancellors whose signatures appear on the ad, there is clearly something in it for them. A couple of years ago, the University of Toronto ran the largest capital campaign in Canada’s history at $2 billion.

There are a few things worth noting:

• The charitable rate for a full-page ad in the Globe and Mail is $25,000, not including a HST or the premium for placement.
• Canada already has the most generous charitable tax credit system in the world.
• Charitable giving in this country has grown every year for the past ten years. There doesn’t seem to be a drastic need to “stimulate” charitable giving beyond the billions individual charities already spend on soliciting donations.

The ad suggests an additional $200 million a year in revenue could be generated by the new tax exemption. What the $200 million figure is based upon, I can’t tell you or judge its veracity.

The audience for the proposed tax exemption is clearly prospective donors who feel they need the motivation of a capital gains exception in order to make their gift. And it assumes there’s about $200 million worth of those prospective donations being left on the table.

If the federal government enacts this exemption, the wealthiest charities, charities like universities and their billion dollar campaigns, the ones dealing with negotiating transfer of private company shares, will be the primary recipients.

Is it churlish to deny such a benefit and its potentially trickle-down impact on society at large?

In a word … no.

Because removing money from the federal Treasury for any kind of “boutique” tax benefit like the one being suggested means the government has less resources to spend on the other priorities—social welfare, inequity, a new relationship with Canada’s Indigenous people, climate change, homelessness, childcare and so on.

The ad suggests the exemption would be a bargain because it would cost the government “only $50 to $65 million” a year to “[forego] the capital gains tax.”

The tax exemption takes money away from government whose mandate is to help all the people and gives it to charities whose mandate is to help some of the people, in this case the wealthiest people and the wealthiest charities.

If—and it’s a big if because they would likely deem it “too political” —Imagine Canada had taken out a full page ad encouraging the government to spend $50 to $65 million a year on assisting Indigenous people at the street level, the end game financially would be the same. The ask is still for $50 to $65 million of taxpayer money. It’s not that the ad would be too political. It’s simply the wrong constituency for Imagine Canada.

The constituency Imagine Canada has organized and lobbied for in this instance is a tiny group of people, probably less than 1,000 people on a good day, who apparently feel they need to pay less tax.

And this, my dear and Gentle Readers, is a perfect metaphor for the increasingly complex dynamics of a gargantuan charity sector. It’s the old “rich get richer” paradigm.

But what do we, the progenitors of making the world a better place, have to say to those parents whose children are dying on our streets, who are shunted away in a poorly resourced child welfare system in a society where, increasingly, the circumstances of your birth determines your future. That a tax cut to people who donate private company shares to charity is going to help them?

Imagine Canada and the other signers of this memo to the prime minister suggest that a tax credit for people who give private company shares is a “way to celebrate the 150^th Anniversary of Confederation and leave a wonderful legacy to all of Canada’s charities for the next 150 years.”

The occasion of Canada’s sesquicentennial has ignited a much-needed and vigorous debate about how this country has developed and the nature of the legacy we want to leave to its future citizens.

To many, the action of our gentleman donor in Thunder Bay embodies a sense of duty and responsibility to our community that is profoundly generous and worth striving towards. A legacy of greater charitable tax benefits for the wealthy that helps wealthy charities, championed by the leaders of those wealthy charities, pales in comparison to the inspiring richness and intense civic-mindedness of his gesture.

And make no mistake. The continued lobbying for the re-distribution of wealth from the have-nots to the haves is, in its very essence, political—and not in a good way.

Photo: A homeless man collects change on Queen St. West in Toronto. Brett Gundlock/National Post

Gail Picco, a strategist who has worked in the nonprofit sector for 25 years, is one of Canada’s foremost experts on the increasingly complex dynamics at play in the charitable sector. She is the author of What the Enemy Thinks, a recent novel set in the nonprofit sector and of the recently published, Cap in Hand: How Charities Are Failing the People of Canada and the World published in January 2017. Gail works as a Principal with The Osborne Group in Toronto and serves as Chair of the Board of the Regent Park Film Festival. http://www.gailpicco.com