New charity rules a good first step – comment/editorial – New charity rules a good first step
May 06, 2008

When Canadians give money to charity, they have a right to expect that the bulk of their donations will go to good works. And many well-un charities ensure just that.

But an ongoing Star investigation into the charitable sector has revealed that some charities engage in questionable fundraising practices that leave little money for the causes they claim to advance.

So it is good news that the federal Charities Directorate, part of the Canada Revenue Agency, is proposing new guidelines that would clearly set out how charities ought to conduct themselves. Under the proposed guidelines, it would be considered “generally acceptable” for charities to spend up to 35 per cent of their donations on fundraising activities. Anything higher than that would risk attracting the scrutiny of the regulator.

(Stunningly, the Star investigation found some charity campaigns pay out between 70 per cent and 90 per cent of donor dollars to fundraising companies or in-house fundraisers.)

The proposed rules also list dubious practices the regulator would view as “increasing the risk of unacceptable fundraising.” These include: paying commissions to fundraisers based on volume; spending more money on fundraising than on charitable works; turning over most of the money raised to a fundraising company; and misrepresenting how donations are spent.

A spokesperson for Imagine Canada, an umbrella organization for the country’s charitable sector, says its members welcome clearer guidance from the government on how to report fundraising costs. But the spokesperson also noted that these guidelines are still preliminary. (The Charities Directorate has promised to post more details shortly, and is accepting comments until the end of June.)

Nonetheless, the proposed guidelines are a welcome step toward improving transparency and accountability in the charitable sector. But whatever their final form, they will have to be accompanied by stronger enforcement if Canadians are to have confidence their donations are not just being used to seek more donations.

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