Social Policy in Ontario

Charities launch self-policing code

Posted on October 22, 2007 in Uncategorized

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TheStar.com – GTA – Charities launch self-policing code
October 22, 2007
Kevin Donovan, Staff Reporter

Canadian charity leaders have launched an ethical code they hope will give good charities standards to follow and eventually weed out some of the bad apples.

“We hope this will help give donors confidence in the charity they are being approached by,” said Georgina Steinsky-Schwartz, president of Imagine Canada, the umbrella group that speaks for charities in Canada.

Officials at Imagine Canada credit the Toronto Star’s ongoing charity investigation – which has exposed problems in the sector – as an important factor in helping them develop the code and the compliance program that will come into effect in January.

The code is a compact series of rules dealing with thorny issues such as fundraising and proper disclosure to donors. At a meeting in Toronto last week, representatives of many charities expressed frustration with the lack of rules provided by the federal regulator of charities – it does audits of individual charities pointing out what they should and shouldn’t do but won’t make the rulings public.

According to the code, charities that sign on will not be allowed to use commission-based fundraising. Star research has shown this can lead to aggressive telemarketing and door knocking because the fundraiser only gets paid if you donate (and is often paid more if they persuade you to donate more).

The Sick Kids Foundation and World Vision were using commission fundraisers, but stopped the practice after a Star investigation.

Imagine Canada is also tackling the wild claims of philanthropy made by some charities. In the Star’s ongoing investigation, reporters have found agencies that falsely claim to be curing diseases in Canada, fighting AIDs in Africa, feeding the poor and helping save the lives of patients who need organ transplants.

“The charity will not make claims that cannot be upheld,” reads the code. Each charity that signs up will be expected to clearly tell the public what programs they are running, where they are located, and how much money is spent on those good works.

The code also demands transparency on donations.

Donors will have a right to learn how much of each dollar is spent on fundraising. In a recent Star story, Mothers Against Drunk Driving admitted it was wrong to count millions of dollars in telemarketing and direct mail expenses as charitable works. MADD has ended the practice and curtailed much of its telemarketing. MADD representatives say the charity hopes to adopt the code.

The code is voluntary, but Imagine Canada says it intends to review an applicant charity’s operations before giving its seal of approval, which the charity can use when seeking donations.

Donors will be able to complain to Imagine Canada about possible breaches of the code, and the charity in question could have its approval revoked if there is a serious problem.

One sticky issue Imagine Canada is grappling with is how to tailor the code’s information demands to the size of a charity.

Small charities with revenues under $50,000 likely don’t need much regulation; 41 per cent are at or below that level. It’s the bigger charities, which do the most fundraising, that donors typically question. About 43 per cent of charities are in the $50,000 to $500,000 revenue level; 16 per cent are over $500,000.

The code will not take effect until January.

Eleven large charities have come forward as Imagine Canada’s “flagship members.”

Imagine Canada’s Steinsky-Schwartz said each charity will have to submit documentation proving that it abides by the code. With 82,000 charities in Canada, registrations will be a slow process, but she said it is a positive start.

As for the “charities” that exist only to take money from the public and not deliver good works, she hopes the code will help.

“You can’t stop all of the crooks, but if we create a situation where we can help the donor more, then hopefully the crooks won’t be able to get away with this sort of activity,” she said.

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