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Taken together, Canada's registered charities represent about 13per cent of Canada's total economic activity - bigger than the Gross domestic Product of British Columbia, bigger than Canada's entire agriculture industry.

To put it in another perspective, the $86-billion spent by Canada's registered charities in 1993 on salaries, office space, fundraising, light, heat, and goods and services was equivalent to 68per cent of the entire budget of the federal government. If one adds to that the unknown billions spent by the 66,000-plus non-profit organizations, the total sum spent by Canada's tax-exempt organizations probably runs close to the entire budget of the national government.

If these figures seem awesome, then it is even more amazing to realize that this huge sector of the economy - with all the impact it must have on the balance sheet of the nation - is governed by a handful of court interpretations, a few paragraphs in the Income Tax Act and a potpourri of vague regulations. The result is an almost complete absence of oversight by the federal government which creates, in turn, a climate of poor management and pliant ethics.

This is not to condemn the majority of charities. Most do conduct their affairs in exemplary fashion. Yet about a quarter of the charities whose T3010 forms were examined for this study were found wanting.

Up until very recently there has been great reluctance by the leadership of the charity industry and government officials to face the problems they know exist. On the one hand, charities traditionally shy away from any hint of scandal for fear it will affect giving; on the other, governments have been fearful of the negative political consequences of being seen to criticize an industry apparently run by volunteers.

The Canadian Centre for Philanthropy, for example, put out an invaluable report in 1993 that used thousands of T3010 forms to analyze the size and economic impact of Canada's 73,000 charities, but was silent on suggesting that there might be anything wrong about how some are operating. There was no ethical evaluation at all, leading the reader to assume that all must be well.

All is not well. Unfortunately, it has been left almost exclusively to the media to highlight the difficulties, usually when mismanagement by particular charities has been so blatant that it has surged into public focus. Even the Auditor general's very penetrating criticisms in 1990 elicited very little response from government or the charity leadership.

The Canadian Centre for Philanthropy's report, however, may ultimately become the catalyst for change for it shattered a key myth. From time immemorial Canada's charities have been collectively described as the "volunteer sector," as though both large and small organizations were driven primarily by private donations of time and money. The study by the Canadian Centre for Philanthropy, however, did not delve into the role of volunteers; it dealt mainly with money, and work for pay. It disclosed that charities are one of the economic engines of the nation.

The Canadian Centre for Philanthropy study revealed that Canada's registered charities have about $109-billion in assets and employ 1.3-million people, almost 12per cent of Canada's entire work force. It revealed governments, not private citizens, were the primary sources of revenue, dishing out $49billion in taxpayers dollars every year. Private donations amounted to a paltry $10billion by comparison.

Thanks to the study, there is no longer any way of avoiding the reality behind the myth. Canada's charity sector is an industry, and a giant one at that, comparable in size to Canada's car makers. Accounting for 13per cent of GDP, it has to have a profound influence on the economic well-being of the nation. If it is well-run, the economy obviously benefits. If it is badly run, if there is for example 15 to 20per cent waste, the financial loss to the nation must run into the tens of $billions. It makes sense, then, that if charities are big business they should be measured by the performance yardsticks of big business: ethical standards, management efficiency and productivity. These are the measures by which a shareholder determines whether he or she is getting value for dollar.

Unfortunately, there are no mechanisms within the charity industry to ensure adequate performance. there are few government regulations to ensure it either.

This becomes of particular concern as governments off-load to charities the social services they traditionally supplied. To finance this shift in responsibility, the federal government in its 1996 budget proposed substantially to increase tax breaks for charitable donations.

This move looks good politically, but is it sound economically? A tax break to a specific sector of society is still in effect a levy on all taxpayers who must continue to finance the remaining government services. The lost taxes must therefore provide better value in society than if they had continued to be collected and used by government departments and agencies.

The problem is that while government departments must adhere strictly to management and performance guidelines overseen by Treasury Board, there are no such controls on charities.

There are no guarantees - quite the opposite - that charities will be dollar-for-dollar more efficient than government.

It follows then that if the federal government insists on transferring responsibilities to charities, it must ensure that they are capable of effectively meeting the challenge. It must ensure that they at least match the management standards of government departments.

Even better, charitable organizations should have to meet the standards of disclosure and performance demanded by shareholders of public companies. All Canadians, after all, have equity in all charities because they directly or indirectly subsidize them through government grants and contributions, and through tax credits and tax exemptions.

The federal government has a moral as well as fiscal responsibility for the charity industry. it is Revenue Canada that gives charities their "registered" status in the first place and most Canadians see this as a kind of endorsement. They assume that a registered organization soliciting their money has passed some kind of test for competency.

That is not now the case. Their faith is misplace.

What's needed is legislation, specifically tailored to the charity industry. It must primarily be at the federal level, for it is Revenue Canada that dishes out the tax incentives, so it must also be Revenue Canada that must first try to ensure that taxpayers' interests are being looked after.

While some provinces are now attempting some regulation on the way charities operate within their jurisdictions, the fundamental problems are national in scope.

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In fairness, after 395years the Elizabethan description of charitable activities was modernized slightly when Lord Macnaghten summarized charitable purposes under four main categories:

• relief of poverty;
• advancement of education;
• advancement of religion;
• other purposes beneficial to the community.

Canadians are justly proud of their British traditions, but to allow a 400-year-old law and a 105-year-old court interpretation to provide the raison d'etre for an $86-billion industry does not seem very progressive. Yet so it is. Revenue Canada circulars advising on the requirements for charitable status still cite Macnaghten's interpretation of the 1601 statute.

Just for starters one can see that "relief of poverty" is overwhelmingly inadequate as the only social-conscience category of the four cited by Macnaghten. Charles Dickens' Hard Times or Oliver Twist may have been on the good judge's mind when he chose it, but what about aiding the sick, the defenceless, the abuses, or the hungry? surely "relief of suffering" would be a more comprehensive description of what Canadians expect of charities than just "relief of poverty?"

The advancement of education and religion would appear to be more relevant to 20th-century Canada, but in the absence of any statutory or judicial direction, Revenue Canada has interpreted both with great latitude. For example, most Canadians (like the Elizabethans) would see education as an endeavour to impart the intellectual tools necessary to function in society or to participate in the arts and sciences. For Canadian charities it has come instead to often mean simply the imparting of information - any kind of information.

This, of course, opens the barn door wide. Information may be truth, or falsehood. Information may involve personal vision, personal predilection, personal or group bias. Even an absolute lie is information.

Revenue Canada takes into account no such niceties of meaning and lumps them all together. The Junior jays (offspring of the major league professional baseball team Toronto Blue Jays) have equal claim on charitable status as the University of Toronto. The B.C.Holistic Society occupies common ground with the Cancer Research Institute. The Right to Life Inc. is lumped in with the Birth Control and Venereal Disease Information Centre.

Indeed, many narrowly aimed lobbying organizations have obtained charitable status simply by stating as their avowed purpose that they are informing the public. the Nuclear Awareness Project of Oshawa, for example, describes itself as being "established to educate the public about nuclear issues and sustainable energy alternatives." In other words, it is an anti-nuclear pressure group.

There are hundreds, perhaps thousands, of other charities busily "educating" the public on one side or another on the highly polarized issues of abortion, animal rights, women's rights, tobacco, and so on. The courts have ruled such activity political, and therefore not charitable, but so long as an organization does not admit to spending its resources on political activity on its T3010form, Revenue Canada winks at the obvious lobbyists.

The latitude with which Revenue Canada interprets education as a charitable purpose is well illustrated by the charitable status of the Quimby Foundation of Red Deer, Alberta, which issued tax receipts on $69, 526 in donations in 1994. Founded in 1979, this organization is dedicated to preserving and promoting the writings of Phineas P. Quimby (1802-1866), a noted but now almost forgotten 19th-century American clockmaker, daguerreotypist, mesmerist, and spiritual leader of a movement calling itself the New thoughters. [3]3

The "advancement of religion" category also has its problems. In some countries, separatist movements sometimes cleave along religious lines. Thus in 1993 the Babbar Khalsa Society of B.C. obtained charitable status even though Babbar Khalsa had been previously identified by India as an active terrorist group seeking an independent Sikh homeland.

It should be also noted that Canadian Talwinder Singh Parmar led Babbar Khalsa before 1992 and was a prime suspect in the Air India bombing before being killed by Indian police.

Thus, despite the pre-existing international dossier linking Babbar Khalsa to terrorism, the B.C.society was able to obtain charitable status simply by stating that it was a "charitable society that promotes, teaches and maintains the character of Sikhism in its dual aspects through circulation of publications, periodicals and church gatherings."

Revenue Canada has since revoked the society's charitable status although only, it should be noted, on the basis of a bookkeeping infraction.

As for the fourth category - "other purposes beneficial to the community" - this is a catch-all phrase that permits charitable status to be given for just about any reason. Thus we find on the list of charities registered by Revenue Canada such improbabilities as:

• The Canadian Society for the Study of Names;
• Canadian Naturopathic Education and Research Society;
• American Civil War Reenactment Society;
• A Portrait of Canada Inc.;
• Back to the Farm Foundation;
• Nuclear Awareness Group;
• The Governor General's Foot guards;

It would appear that the Revenue Canada officials try not to be judgmental. The department issues an advisory giving examples of what it considers to be a charitable activity but applicants are under no obligation to follow them. Possibly with an eye to the Canadian Charter of rights and Freedoms, departmental officials seem to interpret charitable activity with the greatest latitude.

This confusing situation, however, is not the fault of bureaucrats reluctant to make rules. It stems rather from not having proper legislation, or even a theoretical basis, to go by. It comes from having to rely on interpretations of a law derived from British society of the 16thcentury rather than from Canadian society of the 20th.

The net result is that regulations designed by Revenue Canada to govern charities are generally ad hoc in nature, inadequate, often ambiguous, and almost always open to a variety of interpretations.

Recommendation:	The federal government should engage in a public debate to determine what Canadians of today consider to be acts of charity.
Recommendation:	The concept of charitable organization should be redefined by a Canadian statute of the 1990s rather than a British one of the 1600s.
Recommendation:	Any new legislation pertaining to charities should closely explain what is meant by education and religion.
Recommendation:	Any new legislation should avoid defining charitable activities in broad terms of indeterminate limit.
Recommendation:	Once charity-specific legislation is drafted, Revenue Canada should completely overhaul its regulations and cast them in precise language.
Recommendation:	Revenue Canada should revoke the charitable status of those organizations that obviously exist primarily to lobby the government or the public.
Recommendation:	Revenue Canada should issue an information circular that specifies in detail what it considers to be lobbying and therefore "political" activity.

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During an April television broadcast of W5, reporter Elliott Shiff dramatically demonstrated how incredibly easy it is to obtain registered charity status. He got the application form, filled it out, sent it in, and eight weeks later the Elliott Shiff Charitable Organization was born.

Nothing could be simpler than the single-sheet Revenue Canada charity application form. It requires: names and addresses of the proposed charity and two officers, a statement of its purpose, and a "constitution" which can consist of a single piece of paper signed by three people stating that the organization is not for the personal gain of its members and it will use its "profits" to further its objectives.4 That's it.

To get a passport, a driver's licence, a credit card, or open a bank account, an individual needs at the very least submit documentary evidence of identity. To get into the business of soliciting money from people (and governments) and issuing tax receipts, no proofs of any sort are required, not even so much as a social security number.

It is a situation tailor-made for abuse. An out-and-out crook known to the police can start up a charitable organization or foundation. He can even use his own name or convenience alias without fear. Revenue Canada officials so strictly interpret the Privacy Act that they will not release charity application forms for fear of disclosing the names and addresses they contain.

Crooks aside, this opens the door wide for those who would start up a charity purely for their personal gain. By withholding the applications forms, Revenue Canada makes it impossible to compare the names of a charity's current paid executive officers with the names on the original application.

In other words, once the donations were rolling in, Elliott Shiff could have started paying himself a salary - as high as he wishes -without anyone ever being the wiser.

In 1990 the Auditor General warned that some charitable foundations were lending donations back to the donors. He cited an unnamed corporation that gave $5million to several foundations whose directors were related to the corporation. The foundations immediately loaned the same sums back, as well as the interest charges. such a practice is a perfect vehicle for money laundering.

Charity applicants and directors, needless to say, do not receive background checks. Revenue Canada requires o credentials for soliciting money and spending it on good works, no matter how technical the charitable task.

That may have been the problem with The AIDS Society for Children (TASC), set up in early 1995 by persons entirely unknown to existing AIDS organizations. The Ottawa citizen reported in September,1996, that it had raised $200,000 but had spent nothing toward building the homes for AIDs victims that had been in its mandate. [5] P> The mission statement of TASC promised it would be "undertaking technical, statistical and scientific research for a cure and understanding of HIV/AIDS for children." but the only biographical information on the charity's directors is the occupations listed on its T3010 form: "operations manager, financial consultant, office manager."

At least these individuals knew they were directors of the charity. When W5 journalists, looking into the affairs of a Saskatoon charity called the Christmas Gift Foundation contacted three named directors, the three said that they had no affiliation with the charity and two had never even heard of it before.

Revenue Canada, in fact, has no guarantee that the "executive officers" named on charity documents actually agreed to the roles. It assumes that the information is supplied honestly. There is no verification process. The names could be chosen from Vernon's Directory, for all it knows.

How many phony executive officers are there among Canada's 73,000 charities? Hundreds, thousands? Are those lists of names that one sees on T3010 forms really people, or just names? One cannot count on Revenue Canada to know, even though all it would take is a simple phone call to find out.

Even more incredibly, while a charitable organization must be resident in Canada, its directors and principle officers do not have to be. The T3010 form of the Osborn Foundation of Canada - address a post office box in Toronto - lists all five of its trustees as being from Collinsville or Tulsa, Oklahoma. All of the money it raises in Canada - $151,667 in tax receiptable giving in 193 - is sent out of the country and, since the line for "qualified donees" is left blank, we don't know to whom or to where.

The only other useful detail on the T3010 form of the Osborn Foundation is that the president of the Osborn Foundation is that the president of the organization, T.L.Osborn and two other Osborns, all live at the same address in Tulsa. Their occupations are all listed as "clergy/author." The executive director of the charity is yet another Osborn, also of Tulsa.

Had Revenue Canada done a little detective work, it would have discovered that the Osborn Foundation was incorporated 28years ago by self-proclaimed minister T.L.Osborn who became famous in Tulsa for the World Museum he built adjoining his Interstate Temple, which he filled with antiques, priceless works of art (Reubens, Dore) and rare automobiles (1923 Silver Ghost) gathered from around the world. [6] The Osborn church in Tulsa remains a family affair involving daughter LaDonna. Assets are estimated to be in the $millions.

Recommendation:	Names and addresses on charity application forms, as on T3010 forms, should be publicly available.
Recommendation:	Revenue Canada should demand identity documentation and signatures of the directors and officers of a charity when they are first named on application or T3010 forms.
Recommendation:	Revenue Canada should keep the names and addresses of all charity officers and directors on an electronic database accessible to the public.
Recommendation:	A telephone spot-check of the named officers and directors of a charity should be undertaken by Revenue Canada on an on-going basis to ensure their bona fides and current involvement.
Recommendation:	The Solicitor General's office should consult with Revenue Canada on the setting up of a joint task force to comb the charity industry for indications of covert criminal activity.
Recommendation:	Registered charities should be required annually to affirm that they have actual operating premises in Canada.
Recommendation:	All directors of a registered charity should be Canadian citizens or landed immigrants residing in Canada.

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On the face of it, this seems a most laudable regulation. The public expects that a charity should spend most of its revenues on its avowed good works, and that only a reasonable amount - say, 20per cent - should be used for management, administration or other office-type operations.

Indeed, nothing alienates donors more rapidly than the discovery that a charity is spending a disproportionately large amount of its revenues on non-charitable activities. The primary idea of donating to a charity is to help a worthy cause, rather than to provide employment to executives and staff, or income to landlords or fundraising agents.

Unfortunately, the spirit of the regulation - as it would be understood by the general public - is honoured more in the breach than in the observance.

Firstly, in fairness to the charities which have to interpret the regulation, Revenue Canada is vague as to what it considers administrative spending. In the regulations the separation between charitable and non-charitable administrative activity is often blurred.

Indeed, Revenue Canada cannot always agree even within itself. On the one hand, the department decrees that a charity's office space rental and supplies are purely administrative while on the other makes these expenses eligible for GST rebates because they contribute to charitable activities.

Ultimately, the distinction on a T3010 form between charitable and administrative expenses depends on the judgment and good conscience of the persons filling it out. This means, of course, there is no check on the unscrupulous.

Separating non-charitable expenses from charitable is, for the most part, a meaningless exercise. Revenue Canada defeats the 80-per-cent rule by having it apply only to tax-receiptable donations. The rules does not apply to money raised from Girl Guide cookie sales, for example, or coin banks, or lotteries, or bingo nights. It does not apply to returns on investments, sales of goods and services, gifts from other charities. Most importantly, it does not apply to government grants.

If one assumes that the 80-per-cent rule was intended at least nationally to set a performance standard for charities, then this is a huge loophole. Any handful of T3010 forms are likely to reflect a pattern whereby the more that charity revenues come from government, business activities or non-receiptable gifts, the less likely is the 80-per-cent benchmark to be met. Indeed, one sees it slip to 70, 60, 50 40, 30per cent. and lower.

For instance, in 1992 the Canadian Rights and Liberties Federation of Ottawa issued tax receipts for only $945 but raised $102,166 through bingo nights, product sales and so on for which it did not issue receipts. it spent only 18per cent of its revenue on its charitable activities; the rest was eaten up in fundraising, management and administration costs.

The Canadian Hospital Association (CHA) receives no donations, earning most of its revenues from membership fees, investments and the sale of its products and services. Of the $3,960,188 in revenue it raised in 1992, only 55per cent went to its declared "charitable programs" - whatever these were.

(According to its 1994 annual report, the CHA's principal revenue and expenditure activities are lobbying government, organizing conferences, running for-tuition educational programs and selling goods and services. it is not clear where the business activities end and the charity begins.)

In 1994 the can-Am Indian Friendship Centre of Windsor also received no tax receiptable donations. Most of its $1,090,729 in revenue came from government, of which only about 60per cent went to charitable activities.

Habitat for Humanity (Waterloo) raised $1.6million from 1990 to 1994 but in that five-year period spent only $383,000 - or about 30per cent - on its charitable activities. [8]

Iliqvik Inc. of Dorval, Quebec, set up to "promote, assist and establish services for adult Inuit" received almost all of its $322,098 in revenue from government and spent it all on management and administration. Nothing is listed as going to charitable programs.

Other examples abound, although the Standards Council of Canada is especially interesting. In 1994 it received $33,000 in donations, $6million in government grants and $3million for services sold. Of the $8,877,974 in resulting revenues, $8,515,864 was spent on management and administration and only $8,916 on charitable activities.

Expresses as percentages, the above figures show that the Standards Council spent 99.999per cent of its revenues on management and administration and 0.001per cent on charitable activities.

This, surely, is an organization that is all business. According to its T3010 form, however, the whiff of charitable activity it engages in is to "offset the cost of hosting International Technical Committee meetings."

Nevertheless, the Standards council - which is also a government agency - is within the present 80-per-cent rule since it applies only to its $33,000 in donations, not to its $8.8million in other revenues.

The net effect of this laxity in regulating how much charities must spend on charitable activities is that it makes a mockery of the federal government's move, expressed in the 1996 budget, to devolve the provision of more and more government health and social services to charities.

Already governments at various levels are giving $49billion yearly to charities to carry out programs that could otherwise be done by government agencies. Without an effective 80-per-cent rule - or its equivalent - there is no guarantee how much of this money is actually reaching the people in need.

The full dimension of the problem is brought home by the 1993 statistic that showed that only 9.7 per cent of all charitable revenues comes from tax receiptable donations. That means there are no Revenue Canada rules which govern how charities should spend the 90.3per cent of revenues - $78.1billion - that they get from other sources.9 The one thing that is worse than no regulation at all is a regulation that simply doesn't work.

Recommendation:	Revenue Canada should establish standardized accounting practices for charities which make a clear distinction between charitable and non-charitable management and administration activities.
Recommendation:	if an 80-per-cent rule, or similar percentage-performance rule is to be applied to charities, then it should be calculated on all revenues.

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In defining the revenue sources on which to base the percentage of spending that must be on charitable activities, Revenue Canada excludes donations from other charities. In the same breath, it declares that if one charity gives money to another, this act of giving is considered a bona fide charitable activity.

the combined effect of these two regulations is that a charity which is financially subordinate to another charity is exempt from the 80-per-cent rule.

This creates an enormous problem. It means, for example, that every charity that relies on an umbrella organization like the United Way to fundraise for it is not answerable as to how much it spends on executive salaries, office space, or administration. there is nothing to stop it from spending next to nothing on actual charitable activities. The same holds true if a charity receives its principal income from a charitable foundation.

Put another way: no United Way agency is required by government regulation to spend any of the money it receives from the United Way on charitable activities. Not one dime.

While one might hope that the United way - or any other donor charity - would require some evidence of adequate performance by a recipient charity, the donating public has no independent guarantee that this is demanded or provided.

Because this study was based on the non-specific selection of T3010 forms of charities, it is not within its scope to identify systematic or widespread abuse of this loophole.

The only way to determine the extent of the problem is to do a targeted analysis that tracked gifts from one charity to another. This is hard to do in that the T3010 form does not require identification of the source of gifts from other charities.

Nevertheless, the regulatory flaw is so large and so obvious that it invites exploitation. Conceivably, it permits two or more charities dependent on tax receiptable donations to evade the 80-per-cent rule simply by giving funds to one another.

Alternatively, it invites a situation where non-charitable businesses may deliberately seek charitable status in order to receive money from other charities as "qualified donees." This is surely why so many lobby groups have sought and obtained charitable status even though existing rules firmly forbid charities from using more than 10per cent of their resources on "political activities."

The Canadian Council on Smoking and Health (CCSH) serves as a good example. It is an aggressive lobbyist of government on anti-tobacco issues, and a long-time recipient of operating grants from the Canadian Cancer Society and the Heart and Stroke Foundation (475,000 in 1994). It would not qualify for this money, nor for most of its grants from Health Canada, if it did not have charity status.

All three charities actually profit from the activities of the Canadian Council on Smoking and Health. Its extensive lobbying of the public, the media, and of politicians on the deadliness of tobacco helped in 1994 to stampede the government into a $60-million Tobacco Demand Reduction Strategy which has returned to these organizations a plethora of expensive research projects of dubious value.

for example, Health Canada's contribution to the CCSH's "clearinghouse program" - a kind of in-house lending library of anti-smoking literature - jumped from $115,000 to $1,078,807 from 1994 to 1995. The Canadian Cancer Society and Heart and Stroke Foundation, along with other anti-smoking lobbyists and other medical groups, have received similar infusions of cash for a variety of Health Canada projects.

The Tobacco Demand Reduction Strategy has made available a great deal of new money for researchers in the cancer, heart and lung fields leading one to suspect that the major charities that serve these researchers prefer the confrontational tactics of the anti-smoking lobbyists. Reasonable debate leading to reasonable solutions is likely to kill the golden goose.

(this also leads to the disturbing thought that political decisions on what medical research should get funding priority may be driven by Health Canada bureaucrats choosing which medical lobbies get the so-called "health promotion" grants.)

A good example of how substantial amounts of cash move from one charity to another in somewhat mysterious ways is to be found by examining the T3010 forms of the Ontario Lung Association (OLA). In both 1993 and 1994 it took in about $2-million (line 101) from other registered charities and each year gave about $650,000 to the Canadian Lung Association. [10]

The T3010 forms of the Canadian Lung Association for the same two years do not show receipt of the OLA gifts. Line 101 of the form is blank in both instances. The audited financial statements of the Canadian Lung Association do not help in locating the missing sums either.

Presumably, whatever its travels, the $650,000 got to one of the research programs that the Canadian Lung Association supports. Its voyage, however, was long for it moved through at least three charities and possibly four or more. One wonders how many cents on the dollar were lost to administration and handling en route.

Finally, a very small example. Quick Build systems of Saskatoon's only source of revenue is from another registered charity. Its stated purpose is "to provide cabinets and furniture exclusively for congregations of Jehovah's Witnesses." While the money involved is small - $47,046 - one really has to wonder whether one is dealing with charitable or selfish intent.

In the final analysis, it comes down to a matter of common sense. If the principle is that 80 per cent of tax receiptable donations are to be used on actual charitable programs, the rule should apply not just to the charity that raised the money, but also to the charity that spends it.

The objection, of course, will be that it is impossible to separate tax receiptable revenues from other revenues received by the donating charity. This is all the more reason to use all gifts to a charity as the basis for calculating what percentage of income should be used on actual good works.

Recommendation:	The financial gifts of one charity to another should be subject to the 80-per-cent rule (or its equivalent).
Recommendation:	The T3010 form should require the identities of those registered charities giving gifts (line 101) as it currently does the identities of "qualified donees" (line 113).
Recommendation:	Revenue Canada should track the transfer of money from one charity to another on an electronic database with a software program capable of tracking the transfers.

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While charities may be organized in a number of legal ways, those with permanent paid staff are usually non-profit corporations formed under federal or provincial legislation. As such they are expected to issue annual financial statements which are available to their boards of directors, members and volunteers.

Revenue Canada demands that these financial statements be sent to it along with the T3010 forms but, even though these are public documents or should be, it holds them in confidence. If a person wants to see the financial statement of a charity, he or she must demand it of the organization itself.

It can be worth the trouble. The financial statements of unincorporated charities can be checked against their T3010 forms while the T3010 forms of incorporated charities can be checked against financial statements that have been subjected to arms' length audits. The results can be fascinating.

when the 1994 financial statement of The Toronto Humane Society is examined it shows a total income of $5,316,184, expenditures of $6,698,876, and a consequent "deficiency" of revenues of $1,382,692. The financial statements for 1993 and 1995 show similar "deficiencies." it appears that the Humane Society is struggling.

The T3010 forms tell a different story. For 1994 revenues are recorded at $6,838,022 and expenditures at $6,753,427 for a net surplus $84,595. Similar numbers also turn up for 1993 and 1995.

What's going on?

The auditor's comments on the 1994 and 1995 financial statements contain the explanation. As any sophisticated investor active on the stock market knows, an auditor of a company's financial statement expresses disapprobation by cautions in the introductory remarks and in accompanying notes. Ernst & Young thus writes:

A quick glance again through the financial statements locates the missing revenues on separate pages under the title "Statement of Changes in Financial Position." This is so unusual that even a sophisticated investor - presuming that "deficiency in revenues" means operating losses - might miss it were it not flagged by the auditor.

Older people of an earlier generation - those near death who might be thinking of leaving a legacy or bequest to a charity especially in need - are not as a rule sophisticated readers of financial reports, if they read them at all.

Fund-raisers, armed with photocopies of revenue and expenditure statements that always show a $1million-plus shortfall in revenues to "prevent cruelty and suffering" in animals, are undoubtedly very persuasive.

The T3010 form of The Toronto Humane Society also shows that it paid its employees a total of $2,996,765. The line asking for details of executive salaries and benefits is blank.

When it comes, however, to putting out financial statements, the Canadian Executive Service Organization (CESO) probably merits first prize for novelty.

This charity's mandate is to supply volunteer business advisers to aboriginal communities and to third world nations. Its 1994 annual report would have the reader believe that it took in some $25.9million in revenue of which only a third was from government. Project spending is shown to be $25.7million.

The organization's T3010 form tells a different story. In actual fact it received $8.4million from the federal government in comparison to $421,248 in public and private donations. Instead of $25.7million it actually spent only $7.8million on its charitable programs (plus $1.17million on management and administration).

The discrepancy between the T3010 information and that of the annual report is explained by the latter's inclusion of the estimated value of the host country's provision of food and lodging for the Canadian volunteers and the value of their unpaid work set at $350 a day - or $91,000 a year. The resulting $16.4million is then entered on both sides of the ledger to give inflated revenue and expense figures. The net effect is an exaggerated impression of the relative size of CESO's donor base vis-à-vis its government funding.

In a note to the annual report CESO management takes full responsibility for its financial statements. it is just as well.

If Canada's 73,000 charities all included the cash worth of their volunteers in their accounts, there would be chaos. What per-hour value would one put on the services of a pensioner, for example, or on the time contributed by persons who may be employed, or not employed? Would one give triple time for statutory holidays and Sundays?

Church congregations would be among the richest charities by such measure - surely they could count at least $10 in time and muscle for every dime on the collection plate.

In any event, the T3010 form shows CESO to be a generous employer. Out of its $2.76-million payroll, its five executive officers shared a combined payout of $490,900.

Inflating the donor numbers on a financial report is not gender specific. The Women's Legal Education and Action Fund Inc. (LEAF) of Toronto, which specializes in bringing women's rights issues before the courts, has long been doing exactly the same thing.

This time the revenue totals on both financial statement and T3010 form match, and it is thanks to the professional scrupulousness of LEAF's auditors that we discover that the $1,283,227 in "Donations" LEAF brought in for 1993 is not quite what it seems.

The key number on the T3010 form is the $518,451 for gifts for which official receipts cannot be issued. Note 6 in the auditor's report (Arthur Andersen & Co.) breaks down the $1,283,227 in annual donations as $764,776 in "cash" and $518,451 in "legal services."

Like CESO described above, LEAF has used the notional dollar value of the services contributed by its supporters. This gives the impression that it is more financially self-reliant than it actually is.

In fact, if the Monopoly money is subtracted out, it turns out that 34per cent of LEAF's funding comes from government rather than 24per cent.

LEAF's financial information also illustrates another problem. Revenue Canada has no requirements as to who should fill in a T3010 form; non-profit organizations incorporated in Ontario, however, must use independent professional auditors to review their financial statements.

LEAF's T3010 form, prepared by a staffer, shows $658,489 paid to employees carrying on charitable activities. If one does the arithmetic on Schedule1 of the financial statements, the auditor discloses that this figure includes $127,448 in salaries to fund-raisers.

On this one point Revenue Canada is explicit: fundraising is NOT a charitable activity. If the department is actively monitoring the T3010 forms and financial statements it receives, why did it not spot this problem?

Such a situation would not likely even occur if Revenue Canada demanded that T3010 forms be filled in by qualified chartered or public accountants. Such persons have reputations to project and the training necessary to do the job right.

This is all the more important when a charity is incorporated federally. Unlike Ontario, the federal government does not require the auditors of not-for-profit corporations to be professional accountants, apparently believing that the cost of such expertise is too high for small organizations.

The reasoning ignores the reality that since the auditing task for mall charities is relatively small, the cost of using professional accountants is low. Indeed, one would think many accountants would volunteer their services.

In any event, if one is searching for charities that might be mismanaging their financial affairs, the first thing to look for is a financial statement or T3010 form that has been prepared by someone other than a professionally qualified accountant.

Recommendation:	Charities should be required by federal or provincial authority to conform to specified "generally accepted accounting principles" when preparing the financial information in their annual reports.
Recommendation:	All charities, incorporated or unincorporated, should be required to release a public annual report that includes a financial statement.
Recommendation:	charities should be required to use the services of professional accountants, volunteer or paid, to fill out their T3010 forms.
Recommendation:	All charities should be required to mail out their completed T3010 forms to their boards of directors and members so that these responsible individuals have the opportunity to make appropriate comparisons.
Recommendation:	Revenue Canada should routinely make comparisons between the financial statements of charities and the financial information on their T3010 forms.
Recommendation:	Charities should be specifically forbidden from entering the value of gifts of services as revenues on their T3010 forms.
Recommendation:	Federally incorporated not-for-profit organizations should be required by regulation or legislative amendment to use the services of a professional accountant as auditor.
Recommendation:	Directors who willfully, or through chronic neglect, fail to ensure that a not-for-profit organization's financial reporting meets legislative and regulatory standards should be liable to fines or other penalty under federal law.

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The 1994 annual report published by Wildlife Habitat Canada (WHC) is a case in point. it is a model of excellent reporting and depicts a tightly run organization engaged in a number of excellent conservation projects across Canada.

It lists its revenues as $2.1million from its "stamp program," $600,000 from Environment Canada, $296,742 from project contributions and $231,449 from other sources.

Nevertheless, in 1995 I stated in the House of Commons that Wildlife Habitat Canada raised only $9,000 in tax receiptable donations in comparison to government grants totalling $2.7million. This prompted a sharp challenge from the charity's executive director, Mr.David J. Neave.

My reply of February26, 1996, tells the rest of the story:

Dear Mr.Neave,

I certainly do not want to give a misleading impression about any charity, and if I have done so with respect to Wildlife Habitat Canada (WHC) I will take suitable steps to rectify the situation.

Indeed, I will have just such opportunity shortly for I am preparing an elaborate case-study report on selected charities. I could include Wildlife Habitat Canada among those examined.

You have suggested a meeting, but before we do that it might be helpful if I were to respond in writing to your letter and you respond in turn to mine. That way the facts are "on the record" and can then be examined by the readers whom you copied so they can form their own judgments.

Firstly, in your letter you stated that funding is derived primarily from the "sale" of a WHC conservation stamp which is used to validate waterfowl hunting licences. $2.7million is raised by this means and represents (according to literature) 80 to 90 per cent of WHC revenue.

You further say in your letter that "the funds derived from this self-induced sportsmen's levy are neither taxpayer dollars nor Environment Canada dollars" and consequently that my "assertion that WHC's funding is derived from a federal grant is misleading."

In fact, however, sportsmen have no choice but to buy the stamps. They must be purchased to validate a licence by order of the Federal Government as defined by regulations formulated under the authority of the Migratory Birds Convention Act.

In other words, purchase of the stamps is a user tax, not a sale, and is by government directive rather than "self-induced" by sportsmen. By coincidence, I received only this past week a letter from the Ontario Federation of Anglers and Hunters complaining about a "victim tax" that would be imposed on anglers should they be required to purchase a stamp for their fishing licences, the money from which is to go to sea lamprey control.

The point is this: No matter whether government collects a tax and then gives a grant, or whether government authorizes an organization to collect a tax equivalent to the value of a grant, it is still a grant - it is still money derived from the taxpayer and allocated by the government.

Far from being misleading, my assertion that the WHC is financed by "over $2million in federal grants" is spot on.

Indeed, one might feel that it is misleading to suggest that the WHC is actually engaged in the "sale" of the validation stamps in any sense, for that word implies that the WHC is producing them as a product for a market. However, not only is there no actual market, production of the stamps and permits is paid for by the government's Wildlife Service at a cost of $175,000 annually.

Look through I might, I was unable to find this $175,000 reflected on the WHC financial statement. Yet, surely, this also is a government subsidy - an unacknowledged program grant, if you will.

As for the WHC financial statement, it raises more questions than it answers. The $495,459 in "other income" reported on the T3010 form would appear to include $296,742 reported as "project contributions," explained in a footnote as contributions from "various corporate and government agencies" to fund ongoing projects.

Here, again, we have what appears to be hidden subsidies from government in the form of grants to on-going projects, and it would be useful to know in detail what these are. It is not obvious why this funding would consume any portion of the WHC's $85,211 in fundraising costs.

The print and plate-making program for 1994 - the only other possible target for fundraising - only brought in $116,958 which seems a rather modest return on money spent. Nevertheless, if this is where the $85,211 in fundraising costs went then it does appear I overstated the case. However, on the financial statement in addition to the fundraising entry there is another of $346,037 for "fundraising and communications administration." How can one separate fundraising costs from fundraising administration? These figures need to be clarified if I am to offer a true picture of how much is being spent per dollar raised.

Finally, when I add up program administration and corporate expenditures I come up with $1,285,870. When this is compared to the $1,984,066 spent on the actual wildlife "landscapes" it would appear that only 34per cent of the charitable dollar gets to the charitable purpose.

Thus Wildlife Habitat Canada could be seen by the general public as very expensive to operate for the results achieved. Indeed, were the WHC raising its revenues by tax receiptable public donations, rather than by government grant, it would be in violation of Revenue Canada's 80-per-cent rule.

I would appreciate your comments on the foregoing.

As of Oct.1, 1996, Mr.Neave had not replied.

Recommendation: Governments should be up front with consumers when they impose user taxes and not hide them behind a charity.

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The IDRC receives no public or corporate donations. In 1994 about $10million was earned from investments and service contracts. The rest - $142,000,000 - came in the form of direct government funding.

Arguably the least-known government agency, the IDRC receives only a single-sentence reference every year in the Estimates saying that it is the responsibility of the Minister of Foreign Affairs. That's all.

The IDRC's mandate is to stimulate scientific research in developing countries for their own benefit. It operates in anonymity because the law that created it in 1970 failed to provide for accountability. Consequently, the IDRC enjoys these remarkable advantages:

it does not have to table in Parliament a corporate plan and budget summary as is required of other Crown corporations. [12]
No government department or agency is allowed to operate and spend taxpayers' money with so little scrutiny. The extent of the IDRC's accountability is to release an audited financial statement once a year, and to fill in all the space on its charity financial information (T3010) return.

It is true the IDRC does have to table an annual report before Parliament, but since few MPs know what the IDRC is, there is little reason to ask to see it. Were any to do so, they would find descriptions of programs that all seem noble and high-minded, but how are they conceived? How are they tracked? Are the contracts for research projects in developing countries sole-source or subject to open bidding? What are the successes; what are the failures? On such questions the annual report is silent.

According to its T3010 form, in 1994 the IDRC spent $115-million outside Canada. Details of this spending are sketchy in the annual report, but financial support for a computer firm in Singapore, and attempts to introduce E-mail use in Vietnam, are surprising targets for Canadian aid to Asia.

Indeed, $100million-plus in Canadian taxpayers' dollars to encourage research and development in the third world seems a little excessive when dollars are scarce for such assistance at home. Industry Canada's entire program of science and technology grants was only $21million in 1994, cut to $12million for 1996-97.

The IDRC is obviously a charity in name only. It probably has more to do with advancing Canada's trade and foreign affairs interests than with philanthropy. It would appear to be a charity purely for the tax breaks.

If the federal government can confer charity registration on one of its own agencies for such a specious reason, it is hardly in the position to demand nobler notices of Canadians outside government.

The National Arts Centre is another government charity. It receives $22 million a year in government funding in comparison to a paltry $42,300 in tax-receiptable donations. When $14.7million in "other revenue" is added in, donations from the public fall to 0.001per cent of revenue.

the Standards Council of Canada is yet another such Crown charity with minuscule public involvement. Its percentage of public donations to other earnings is 0.004 per cent. The Canada Council is a similar case. All of these are fully funded government agencies set up to provide certain services. They are charities purely for the small change.

Hospitals and universities appear superficially different but in fact are much the same. Though the services they provide are charitable in nature, they are funded almost entirely by government.

In 1993, for instance, The Toronto Hospital received $393 million in government funding in comparison to $1.8 million in tax receiptable donations. When compared with a total income of $502 million, public donations fall to only 0.003 per cent of revenue.

And so it is with most hospitals. Like federal Crown charities, the ratio of public donations to other revenues is exceedingly small.

Hospitals, colleges and universities, however, account for a huge portion of government funding to charities. In 1993 it was $17 million to hospitals and $16.5 billion to teaching institutions, much of it in the form of grants and transfers administered by the provinces.

In April 1996 the federal Department of finance finally recognized that Canada's mega charities were not charities in the ordinary sense. It issued a position paper that proposed that for the purposes of the GST "public colleges, universities, school authorities and hospital authorities" be classified separately as "public institutions."

The problems of mega charities, however, are not limited to the GST. Like the Crown charities, details on financial operations are few. The T3010 forms of hospitals and universities, with lines jammed with eight- and nine-figure numbers, are eloquent more by what they do not say than by what they do.

Indeed, hospitals are especially notorious for concealing financial details from their boards of directors, even when these are elected officials. In Ontario it took a direct order from the provincial government in 1995 before the majority of hospitals would release the salaries of their top officials, even though this information had been required (and ignored) on T3010 forms for years.

Other information, however, is not forthcoming. Hamilton-area politicians, for example, have been stonewalled when trying to get details of the severance package given to the former head of Chedoke-McMaster Hospitals. It is believed to be $969,600.

Curiously, federal government officials appear to support this type of secrecy. When Privacy Commissioner Bruce Phillips appeared in June 1995 before the Standing Committee on Government Operations, then considering a private member's bill which would force charities to disclose executive salaries, he argued that the bill would have the effect of "eroding the privacy rights" of the executives of Crown charities like the IDRC or the National Arts Centre.

"For example," said Mr. Phillips, "if we refer to the chairman of the National Arts Centre, under your bill that person's precise salary would be available for public disclosure. A similar institution elsewhere in the public service such as a crown corporation, for example - Canadian Arsenals or Atomic Energy - would not be covered by your bill. So you would have two different levels of privacy rights for two people who are both employed by the public service."

One might wonder what's wrong with all top executives of Crown agencies disclosing their salaries, given, that they are paid by the taxpayer.

In any event, the IDRC, the National Arts Centre and the majority of Canada's hospitals and teaching institutions - even though they spend about $35 billion yearly in government money - remain untouchable in terms of mandatory and meaningful public disclosure.

This raises the question as to whether the administrators of these institutions are sharing in the cutbacks affecting services. Are hospital beds being lost, and nurses let go, to maintain a few salaries at levels sometimes double that of the Prime Minister of Canada?

Would not considerable money be saved if the management of these mega charities were required to submit to performance audits?

Perhaps the same question should have been posed of the Canadian Red Cross Society. With revenues of $99,527,284 (that's half a $billion) mainly from government, it is a charity that certainly should have been carefully monitored. Now it is up to the Krever Inquiry to decide how well it has been managed. It issued a position paper that proposed that for the purposes of the GST "public colleges, universities, school authorities and hospital authorities" be classified separately as "public institutions."

The problems of mega charities, however, are not limited to the GST. Like the Crown charities, details on financial operations are few. The T3010 forms of hospitals and universities, with lines jammed with eight- and nine-figure numbers, are eloquent more by what they do not say than by what they do.

Indeed, hospitals are especially notorious for concealing financial details from their boards of directors, even when these are elected officials. In Ontario it took a direct order from the provincial government in 1995 before the majority of hospitals would release the salaries of their top officials, even though this information had been required (and ignored) on T3010 forms for years.

In its 1994-95 annual report, the IDRC acknowledged (rather tardily, some might say) the need for full accountability. It was reacting to an Auditor General's study of the year before that had shown many deficiencies in the way the IDRC operates and reports.

Among other things, the Auditor specifically complained that the IDRC's annual report did not indicate how much it spent on salaries and administration, and on grants to institutions in the developing world. This is peculiar in that this information is on the IDRC's T3010 form.

Odder still (come to think of it) in the course of the full 52 pages of discussion on the IDRC's corporate policy, return on investments, contract financing, business partnerships, and so on, the Auditor General never once mentioned the word "charity."

Could it be he did not know?

Recommendation:	All Crown agencies should be subject to the same guidelines and requirements for openness, accountability and performance review as all other government departments or agencies.
Recommendation:	The federal government should discourage Crown agencies from seeking charitable status for purely mercenary reasons.
Recommendation:	The federal government should extend the concept of "public institution" to embrace all charities that receive 90 per cent or more of their funding from governments.
Recommendation:	More elaborate financial reporting requirements should be demanded of charities receiving more than $10 million in revenue.
Recommendation:	Ceilings should be put on the remuneration of the senior executives of public institution charities.
Recommendation:	Public institution charities like hospitals and universities should be subject to periodic management-performance reviews by outside auditors appointed by the government.

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FUNDRAISING: HEAR NO EVIL, SPEAK NO EVIL

At first glance, it doesn't seem that there is any way for Revenue Canada to have an impact on the ethics of fundraising by charities. It certainly does not now fall within its mandate.

Fundraising is a delicate issue. The public expects there to be costs associated with any campaign to heighten public awareness of a charity's programs, and to encourage giving. The public also expects those costs to be reasonable.

It is not difficult to find charities that have spent 50 cents for every dollar raised, be it through product sales, lotteries, social events or mail and telephone solicitations. The profit on donations received depends on the expertise of the fund-raisers, number of volunteers used, and whether it is a first-time or follow-up campaign.

Where the most notorious difficulty arises is when charities, anxious for quick dollars, resort to the so-called third party fund-raisers. These are usually for-profit marketing firms which make their money by taking a cut of the donations - and usually a very substantial one at that.

In early January CBC's Marketplace did an excellent report on the high cost to charities of using telemarketing firms. These are companies which specialize in telephone solicitation.

In interviewing the officials of several charities, the program found a great deal of dissatisfaction over how little was retained of the money raised when telemarketers were used. Not all charities were candid, however. When it came to discussing telemarketing with the Canadian Hemophilia Society, the Marketplace reporter ran into difficulties:

....In contrast to Kids' Help Phone, the Hemophilia Society's financial statements lack the kind of detail that spells out how much it spends on fundraising. We tried to obtain that information from the society's president, Dur Han Wong-Rieger

(To Ms. Wong-Rieger) How much does telemarketing cost the organization? WONG-RIEGER: Well, I think overall it's, you know, a hard question to say In the end it provides us with a substantial portion of our revenues, so in the end it is a very cost-effective way for us in order to continue to raise monies.
NUNN: but can you give me the figures for what you raised and what it cost you to raise it?
WONG-RIEGER: Again, I mean, I think if you look in terms of our net revenues from telemarketing....
NUNN: We never did get an answer to our question.....

The answer was available. All the reporter had to do was obtain the charity's T3010 forms. He would have found that in 1994 the Canadian Hemophilia Society raised $1,715,613 in tax receiptable donations for a 59 per cent fundraising cost of $1,012,090.

Not all the lines were filled out on the 1994 form but for 1992 they were. Here we find a total of $2.6 million was raised for a 77 per cent fundraising cost of about $2 million. The fee paid to "fundraising agents" was $1,350,621.

It should be emphasized that only the national office of the Canadian Hemophilia Society is involved in for-hire fundraising. A check through the T3010 forms of the provincial chapters of the Hemophilia Society found that most raise their funds mainly through the efforts of their own volunteers, and their costs are generally very low.

It is obvious what's wrong with expensive fundraising, be it by third parties or by charities themselves. The amount of donor-dollars available from the Canadian public is finite and if some charities pay excessively high costs to get them, there is less for other charities equally in need.

Examples are easy to find. Goals for Youth of North York is dedicated to help in school dropouts. Its T3010 form shows that in 1993 it paid an outside fundraising agent $84,194 while raising only $102,857.

In 1994 the Metro Toronto Branch of the Victorian Order of Nurses (VON) spent $132,385 to raise $168,779. Indeed, given that the VON is fully funded by government to the tune of more than $15 million, it is not at all clear why it should be seeking donations from the public, or receiving them from the United Way.

No one knows the extent of doubtful fundraising practices. A hint that it may be very widespread is conveyed by the report presented in August, 1996 by the Canadian Centre for Philanthropy entitled "Charitable Fundraising in Canada."

This study, based on a questionnaire sent out to 3,430 non-religious charities by the polling firm, Decima Research, reported that 86 per cent have no fundraising staff; smaller charities are more likely to offend than larger ones; the average cost is 26 cents on every dollar raised; and so on. It would appear that fundraising practices are not such a serious issue after all.

However, the really valuable statistic from the study is the fact that only 1,516 charities responded to the questionnaire. The survey's upbeat conclusions ignored the 56 per cent that did not reply.

It was not for lack of trying. In the Appendix on "survey methodology" (p. 90) the study reports that every charity that received the questionnaire was first contacted by telephone; the questionnaire was then sent in a postage-paid return envelope along with a letter from the director of the Canadian Centre for Philanthropy explaining its importance; a reminder letter was sent two weeks later by Decima Research, with another reminder three weeks later if necessary.

Nevertheless, only 44 per cent returned the questionnaire. Despite the pleas and the importance of the subject, 1,914 charities - over half - turned a deaf ear.

Could there be any more eloquent evidence that there is something very wrong with Canada's $86-billion charity industry?

Such a poor sample invalidates the study. The conscientious charities answered; those that were either indifferent or which had something to hide did not. It is too bad the study did not list them.

The Canadian Centre for Philanthropy is a competent, highly motivated organization. But it was mistaken to think that the techniques of a pollster could give it a useful overall picture of charity behaviour, especially on such a delicate ethical issue as fundraising.

Should there still be any doubt about the limitations of a poll when the response is poor, one example stands out. The study reported that "charities raise 30 per cent more from individuals than from government, foundation grants and corporate donations."13 The Canadian Centre for Philanthropy's own 1994 study - based on an analysis of all the T3010 forms submitted in 1991 by Canadian charities - found that individuals account for "9.5 per cent of charities' total revenue" and governments for 56 per cent. [14]

As matters now stand, an operational activity such as fundraising is seen as a provincial responsibility, not a federal one. While most provinces pay the problem little heed, the Alberta government has exerted some control over fundraising through its Public Contributions Act. This legislation, however, was struck down by the courts following a 1993 challenge by Epilepsy Canada which claimed the Alberta law violated the Canadian Charter of rights and Freedoms.

The Alberta Court of Appeals found that "the protection of consumers from misleading solicitations, the diversion of funds to fund-raisers and the promotion of efficient charities - were not sufficient (reasons) to limit freedom of expression." [15]

This is a bizarre ruling and underscores the folly of continuing to leave the regulation of charities to the discretion of the courts. However, the judges further said that they felt that there were "less intrusive" ways of controlling charities than the Alberta Act. They may be right.

If one accepts the principle that Revenue Canada properly should concern itself with setting ethical and management standards for charities to ensure that society is getting a good return on the forgone taxes, then legislation should be written and rules set that govern the ratio between fundraising costs and donations received. Even a very generous 50-cents on the dollar standard would curb much of the excessive profit-taking of third-party fund-raisers.

Just broadening the categories of revenues to be calculated into the 80-per-cent rule would help. The T3010 forms of the Canadian Hemophilia Society shows that its excessively high fundraising costs were regularly offset by an annual $900.000 in government grants. when only tax receiptable donations are considered, the Hemophilia Society's percentage of charitable program spending is 89 per cent. when the government grants are included in the calculation, the percentage drops to 59 per cent.

An 80-per-cent rule that applied to all donated revenues (as recommended in "Spending In spirit but not in Deed" pp. 20-23) would make it much less tempting for a charity to make quick extra dollars by farming out fundraising to expensive for-profit enterprises.

Finally, whatever is done, a provision must also be made for charities which genuinely have fundraising failures. There are risks when only volunteers are involved, and one would not want to see regulations that penalize good intentions.

Revenue Canada currently allows for such failures by permitting charities to respect the 80-per-cent rule "on an overall basis" for a maximum of seven year. In other words, charities are allowed six years of sin.

This is an especially generous provision considering that Revenue Canada keeps T3010 forms on file for only five years.

Recommendation:	charities which fail to meet the 80-per-cent rule for charitable spending due to an unexpected shortfall in fundraising should alert Revenue Canada to this situation on a separate document when they submit their T3010 forms.
Recommendation:	Revenue Canada should set up a data base to track charities which fail to meet the 80-per-cent rule, issue a warning after three years, and revoke registration after four.
Recommendation:	The T3010 form should be revised such that charities are required to show the percentage cost of fundraising specifically aimed at public and corporate donations for that year, both tax-receiptable and non-tax-receiptable.
Recommendation:	As it is a Charter of rights issue, the federal government should appeal the 1993 decision of the Alberta Court of Appeals to the Supreme Court.
Recommendation:	In consultation with the charity industry and the provinces, Revenue Canada should formulate guidelines pertaining to fundraising practices.

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THE DIRECTORS: A QUESTION OF COMPETENCE

The one really valuable bit of information in the fundraising study of the Canadian Centre for Philanthropy is the indication that charity boards of directors are not generally in charge of key elements of operational policy.

Of the 44 per cent of charities that replied to its questionnaire, the study found that only about half the boards of directors - or only about a quarter of those receiving the questionnaire - gave formal approval to policies relating to the costs of fundraising and the release of donor lists.

Since boards of directors have the ultimate responsibility for charities, this finding is alarming. Fundraising, and especially the privacy of donor lists, are key ethical issues. When writing a cheque to a charity, one would expect that the directors had set a policy of confidentiality. The flood of mail solicitations often subsequently received from other organizations shows that this is often not the case.

Many boards of directors might explain their inattention by saying that they trust the judgment of the charity's paid management. And therein may be the ultimate problem.

Firstly, however, Revenue Canada does not willingly release the original application forms when organizations seek registered status. Thus the public cannot easily find out who the requisite three people are who have taken responsibility for the charity in the first place.

Subsequent T3010 forms are not necessarily helpful either. The form asks for the identities of the "executive officers" of a charity; it does not specify directors. Consequently, with the small charities, the list of names that turn up may only have a loose affiliation with the charity. They may simply be supporters rather than actual directors responsible for its good management.

The International Council for Adult Education of Toronto is an example. Its declared purpose is to facilitate the "sharing and exchange of experiences in adult education and to promote international development through adult education." In 1994 it received $80,000 in tax receiptable donations and $1.2 million from government. Of the 22 persons listed on its T3010 form as executive officers, only two were from Canada. The remainder had addresses in Chile, Kenya, Hungary, Kenya, Zaire, and so forth.

Obviously an executive committee - be they "directors" or not - whose members are scattered over the globe cannot have a substantive impact on a charity's management. Yet Revenue Canada has no residency rule for executive officers. They can be from anywhere.

Moreover, Revenue Canada does not define the responsibilities of directors and executive officers other than that they be independent and at arm's length from each other. There is no requirement that they in any way actually oversee the charity's day-to-day management.

This is a significant oversight. No matter what the noble aims, charities and non-profit organizations still take money in and they spend it. they pay suppliers and hire staff. They keep books. They provide goods and services. Indeed, they are businesses in every operational sense.

It may be that financial or management savvy has been regarded as too onerous a requirement for directors of a start-up charity, or of organizations with revenues of less than $10,000 a year. When revenues are $100,000-plus, however, one would think it would be a necessity.

Larger charities and non-profits are often incorporated. This limits the financial liability of executive officers should the organization be faced with possible litigation, as in the current tainted-blood controversy involving the Red Cross. It also provides some definition of the responsibilities of not-for-profit directors.

In the case of Ontario, for-profit corporations, directors and other officers must meet the Business Corporation Act standard that requires that they "exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances." The assumption here is that the "prudent person" will be someone of relevant experience selected by shareholders.

There is no such statutory standard set for the directors of charities and non-profits. Instead, a common law test has determined their responsibilities. It is worth quoting:

.... A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience . . . A director is not bound to give continuous attention to the affairs of his company . . . a director is, in the absence for ground for suspicion, justified in trusting [full-time]1 officials to perform such duties honestly. [16]

This "test" appears to reflect acknowledgment by the courts that directors of charities are likely appointed otherwise than by shareholders sensitive to the link between expertise and profits. A charity director may simply be a volunteer, or a name in the community sought for prestige. It could be whoever is handy at the time. Knowledge and experience are bonuses, not prerequisites.

If the foregoing quotation is examined to its logical extensions, the pitfalls are obvious. For example:

• If directors with no business experience are named to the board of a charity they will not be considered responsible for any business failures;
• Directors with no financial experience will not be responsible for any financial irregularities;
• Directors with no managerial experience will not be responsible for managerial failures;
• Directors with no fundraising experience will not be responsible for fundraising failures.

And so on. The degree of responsibility depends on the degree of competency.

The rest of the quotation tells the rest of the story. If a charity director has no aptitude to direct the charity in one or all ways, he still can fulfil his responsibilities simply by trusting the full-time officials. He can leave everything to paid management. Until someone else with a relevant ability discovers things are going wrong, all a charity director really has to do is trust the paid staff.

This situation is not theoretical. It is the way it is and examples are to be found in every community of charities that have bungled their finances because of the policies of well-intentioned but inexperienced directors. Similarly, there are charities everywhere whose directors are so inexperienced that they are virtually ignored by paid management.

Some charities, in the interests of political correctness, might like it that way. The Ottawa-based National Anti-Poverty Organization (NAPO) - which is nothing more than an admitted full-time lobbyist in defiance of Revenue Canada rules - proudly proclaims that its by-laws decree that two-thirds of its board of directors must be "low-income" individuals.

Indeed, meetings of the board must be an expensive proposition since not one of its 22 members live in Ottawa. The top six executive officers are listed in the following locations: president (Vancouver), 1st vice-president (Dartmouth), 2nd vice president (Yellowknife), treasurer (Montreal), secretary (St. John's). The remainder live everywhere in between.

"We are the poor," wrote one of the NAPO board members.17 that's fine, but it is hardly in itself a credential for overseeing at long range a non-profit business with a $168,753 payroll for a handful of staff.

The most extreme example of a charity with a politically correct but non-functioning board of directors is a home for the mentally handicapped near Vancouver. Seven out of ten of its directors are reportedly themselves mentally handicapped. [18]

The fact that incompetent directors will be absolved of blame should things go wrong make it prudent for a charity involved in controversial activities to seek incompetency. Conversely, people with the appropriate skills may be deterred from serving on a charity board because of their disproportionate burden of responsibility.

The stakes are potentially high. Provided they know what they are doing, charity directors are liable to the penalties imposed by the plethora of provincial statutes governing the workplace and, in certain instances, for lost wages.

As it happens, the courts in Canada have not so far imposed personal liability on directors of non-profit corporations. This makes the outcome of Krever inquiry into the Red Cross tainted-blood controversy all the more interesting. [19]

When good people do volunteer as directors, they also take a risk by having to rely on paid management to supply them with honest and candid information. There's no guarantee they will get it. Large charities routinely withhold information from their boards of directors, with hospitals again being one of the most notorious examples.

This problem can be partly countered if an organization has some sort of constitution that spells out the obligations of the directors and the paid staff. This is a help, but not a guarantee as exemplified by the recent scandal in the United States involving top executives of the United Way misusing funds.

The onus is still on the competent directors. If they suspect paid staff is not cooperating responsibly, then they must pass bylaws enforcing discipline, including firing. Otherwise they could be accused of willful blindness.

Recommendation:	Provincial and federal legislation must be amended more clearly to define the responsibilities of the directors and officers of not-for-profit corporations.
Recommendation:	Revenue Canada should set guidelines pertaining to the roles and responsibilities of the directors and executive officers of unincorporated not-for-profit organizations.
Recommendation:	Revenue Canada should require that the majority of the directors and executive officers of charities be resident in Canada.
Recommendation:	Revenue Canada should require charities to have founding documents that define the obligations of directors and paid staff.

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SECRET AUDITS, FEW PENALTIES

When is the public entitled to know that a charity is misbehaving? Answer: Never.

What are the chances that a charity which violates Revenue Canada regulations will be appropriately disciplined? Answer: Almost none.

The only mechanism Revenue Canada has to discipline charities that mismanage or abuse the public trust is revocation of charitable status. This may take up to two years while the organization continues to issue tax receipts, and even longer if it fights it through the courts.

Indeed, even after an organization has lost its registered status it can continue to call itself a charity and solicit non-receiptable donations from the public. This is a particularly insidious problem. Unscrupulous organizations can continue to cash in on their former registered status indefinitely.

As long ago as 1990, Canada's Auditor General pointed out that without a selection of meaningful penalties it was difficult to ensure that charities were complying with the regulations that govern them. Despite subsequent nudging by the Auditor General in 1992, and by an MP's private member's bill in 1995, Revenue Canada has insisted that revocation is sufficient as the one and only penalty.

When it comes to possible non-compliance with the regulations, there are all kinds of possibilities: failing to properly fill in the T3010 form, engaging in forbidden partisan politics, having directors in conflict of interest, giving money to non-charitable organizations, spending everything on administration, and so on. Major or minor, the only penalty for any of these infractions is revocation of charitable status.

It is a little like a Criminal Code with transportation to Australia as the only punishment.

Nevertheless, Revenue Canada recently reported that over a three-year period the registrations of 3,770 charities were revoked. This is hardly an achievement, however, since for 3,550 of these it was because they had failed to file their T3010 forms. They had become inactive.

By way of contrast, only 20 charities in the same period had their status revoked as a result of the department's initiatives. That's an average of about seven a year.

At first blush, one might conclude that these low numbers mean that the industry is essentially well-behaved. Not so. revenue Canada's own information belies that impression.

Of the 1,900 charities subjected to departmental audits over that same three-year period, "education" letters were sent to 72 per cent and formal requests for corrective action to a further 12 per cent. In other words, the auditors found something wrong with 1,625 of the 1,900 charities examined. [20]

If one is permitted to use the opinion pollster's technique of extrapolating a general result from a sample, we can apply the 12 per cent figure for worst-case charities to the 486 billion value of the entire industry. The inference then is that $10.3 billion worth of charities are in serious trouble.

What kind of trouble? The gift-giving public can never know. Not only are the details of a Revenue Canada charity audit confidential, but it is also a secret between Revenue Canada and the charity in question that an audit has even taken place.

How, then, can a person who has evidence of a charity's possible improprieties find out whether there is substance to them or not? Is there any point in reporting one's suspicions to Revenue Canada?

Given that all things pertaining to audits of charities are secret, there are not many examples to go by. A personal experience involving the relationship between the non-profit lobby group, the Non Smokers' Rights Association (NSRA), and a charity, the Smoking and Health Action Foundation (SHAF), will have to suffice. Both organizations operate from the same address and share the same person as chief executive officer.

In February, 1994, I wrote to then Revenue Minister David Anderson and observed that in comparing the charity's T3010 form with the non-profit group's annual financial statement, it appeared that the charity's revenues - mostly in the form of government grants - were being used to pay the salaries and operating costs of the advocacy organization that shared the same premises and apparently the same paid personnel.

The documentary evidence was compelling. The NSRA spent next to nothing on salaries and its own brochure admitted that the foundation was funding the non-profit organization:

SHAF is a separate but related non-profit, registered, charitable health foundation. SHAF supports the important work of the NSRA not directly related to law reform, including research and public education. For example, SHAF funds the critical non-law reform work of our office staff including education and our extensive, highly praised work with the media.

Since the courts have decreed that educating the public to a particular point of view is "political" in nature and therefore not a charitable activity, and "work with the media" for an avowed lobby group could be nothing other than lobbying, it appeared that the NSRA/SHAF was caught dead to rights.

In his April reply, the Minister stated that he could not discuss the affairs of a particular charity, but noted that:

. . . a charity that would use its resources to finance the activities and expenses of another organization which is not a qualified donee would be contravening the Income Tax Act. . . . When a charity devotes a substantial amount of its resources to advocating a particular cause, it is deemed by the courts to have a purpose which is "political" and hence, not charitable.

A few weeks later the joint executive director of the Smoking and Health Action Foundation ($81,000 a year) and president of the Non-Smoker's Rights Association (unpaid) complained angrily to the media that Revenue Canada auditors had arrived at the door to examine the books of the two organizations.

It was just as well he did make noisy protest. Not only does Revenue Canada never admit that it is acting on a specific complaint, it never reports having done so. Had he not reported it to the media, the public would never have learned of the audit.

Then silence. The months passed, then a year. The only detectable change in the operation of the twin organizations was that the T3010 form ceased to record the salary of its executive director, last seen at $91,500, now blank.

The point is simply this. Were my concerns founded, or unfounded? If founded, what was done about them? If money was siphoned improperly from the charity to the non-profit organization, was there a requirement to pay it back? Was at least a warning issued?

There is no way of knowing.

It is a strange situation. Revenue Canada auditors are the only persons outside a charity itself that can gain access to its books to find out whether it is conducting itself responsibly. They are the only government agents who can assure potential donors that their confidence in a charity is well placed, or give early warning if it is not.

What is the good in knowing that 240 charities were asked to clean up their acts between 1993 and 1994 if Revenue Canada refused to name them?

Moreover, given that Revenue Canada regulations are sufficiently loose to accommodate an entire spectrum of mismanagement, surely these 240 charities must have sinned in such overt style that the public ought to be warned.

It is not to be. The only way ordinary people can find out that a charity has been mismanaged is if its actions have been so gross that its status has been revoked; then they have to spot the announcement to that effect in the Canada Gazette.

Ordinary people do not read the Canada Gazette. Consequently, an organization can lose its status and continue to operate as though nothing had changed. Unless the media stumble upon the fact, no one will know it is no longer a registered charity in good standing.

In side-stepping the Auditor General's 1990 complaint about the lack of a range of penalties aimed at specific infractions, Revenue Canada commented:

. . . charities often rely on volunteers and that any monetary penalty assessed against a charity necessarily reduces the resources available for the benefit of the charities beneficiaries. [21]

Then in 1992:

. . . voluntarism should not be discouraged through undue threat of penalties for non-compliance.... [22]

These explanations for being soft on charities are fallacious given that charities of any appreciable size are run by paid executives, not volunteers. They ring even more hollowly with the unincorporated charities in that these are subject to virtually no oversight and no controls.

Lack of adequate penalties invites mismanagement; lack of public accountability invites abuse.

Recommendation:	The appropriate legislation should be amended to permit public disclosure of the findings of Revenue Canada auditors when they examine the books of charities and non-profit organizations.
Recommendation:	The results of Revenue Canada audits should be made available on the Internet.
Recommendation:	Monetary pay-back penalties should be devised for charities that violate Revenue Canada regulations.
Recommendation:	Revocation of charitable status should be summary and not subject to delay by appeal to the courts.
Recommendation:	Revocation of charitable status should be announced by placing advertisements in the appropriate national or community media outlets at the expense of the organizations named.
Recommendation:	The Criminal Code should be amended to make it a criminal offense for an organization to continue to pose as a charity after its registration has been revoked.

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THE HIGH COST OF NOT-FOR-PROFIT

Charities and non-profit organizations are identical twins with only one clear distinction. The former are exempt from most taxes and can issue tax deduction receipts; the latter have tax-exempt status only.

It would seem sensible that charities and non-profit groups should also be distinguishable by purpose but here, at this most elementary level of consideration, there is ambiguity. Revenue Canada defines non-profit organizations as groups dedicated to the public good that are not charities.

It is always unsatisfactory to describe something by what it is not, but it is even more difficult in this case since there is no statutory definition of a charity. Thus Revenue Canada defines one type of organization by comparison to another type that isn't itself defined.

Were the concept of a charity spelled out in a made-in-Canada law, government officials would be better able to separate out groups with narrow interests catering to specific minorities as non-profit organizations rather than as charities. Such a distinction is implied by Revenue Canada's "public benefits test" which tries to determine whether an activity is charitable or not by decreeing that:

. . . those people who are eligible for benefits are either the public as a whole or a significant section of it in that they are not a restricted group or one where members share a private connection, such as social clubs or professional associations with specific membership. . . [23]

This "test" gets into trouble by specifically excluding social clubs and professional associations. This means that clubs like the Lions, Rotary and Shriners - which support all kinds of good works in their communities - are normally excluded from charitable status.

Conversely, the "test" fails to weed out groups with obviously narrow interests like the Calgary Sportsmens' Rod & Rifle Society or the Fine Arts parents' Association. Both are charities.

Why, for another example, should the Ontario Federation of Anglers and Hunters be a non-profit organization when the Saskatchewan Wildlife Federation is a charity? Both are very active in a variety of conservation projects of admitted selfish benefit to hunters and both lobby for this group. Both aggressively attacked the federal government's gun control legislation, with the charity going so far as to launch a $250,000-fundraising campaign to "fight the Liberals in the next election." (current regulations expressly forbid charities from engaging in partisan politics.)

The real problem surrounding non-profit organizations, however, is the fact that their financial information returns to Revenue Canada are secret. The T3010 form of a charity is a public document whereas the T1044 form of a non-profit organization is not.

Thus, the Canadian Automobile Association (CAA) can run an elaborate multi-million dollar business in roadside assistance without being formally accountable to the general taxpayer who indirectly subsidizes every dead-battery rescue because the CAA does not have to pay taxes.

And so it goes with all non-profit organizations large and small: The Canadian Chamber of Commerce, Alliance Quebec, the Ontario Hospital Association, the Toronto Better Business Bureau, and so on. Even when such organizations are incorporated, their accountability is only to their directors or members, not to the public.

Thus the Ontario Hospital Association was perfectly within its rights to sell its Blue Cross subsidiary in 1995, and pay departing president Dennis Timbrell $583,000. Thus the public had no right to complain when the Toronto Better Business Bureau directors gave retiring president Paul Tuz a $1-million golden handshake in order to pare down the organization's surplus funds to protect its tax-free status. [24]

Beyond the issue of lack of public accountability is the deeper philosophical question: Why should the general taxpayer be subsidizing organizations like the CAA in the first place? What principle underlies the idea that motorists with breakdowns should enjoy cheap tax-exempt service as opposed to home-owners who have to summon plumbers, or furnace repairmen?

Why - to take another case - should the taxpayer be subsidizing the fitness sessions of Bay Street executives working out during their lunch hours at the Toronto YMCA?

Looked at another way, the CAA and the YMCA provide services to the general public that produce revenues that pay their overheads and the salaries of their employees. Any surpluses over expenses can be ploughed into higher salaries, capital works, and new ventures. Equivalent businesses without not-for-profit status do exactly the same thing except they must pay taxes.

Happy Harry of Winnipeg certainly appreciates the problem. Harry Bohna, owner of Happy Harry's Used Building Materials, is directly in competition with the Habitat Re-Store, a not-for-profit enterprise which also buys and sells recyclable building materials, passing its net earnings along to Winnipeg Habitat for Humanity, a well-known charity that provides housing for the poor.

Mr. Bohna's complaint is that the Re-Store's link to the charity gives it unfair competitive advantages, including exemption from business tax, entitlement to GST rebates, and the opportunity to use employees whose wages are subsidized under government social programs.

"When a charity gets into your business you're dead," he says. "It's happening right across the country."

Indeed, Mr. Bohna says he and others in the used-materials business are now facing the choice of either shutting down or "joining them" - seeking non-profit status or charitable registration in order to survive.

Mr. Bohna's situation illustrates the fallacy of thinking that taxpayers dollars are being saved when governments off-load services to not-for-profit organizations. In fact, because the taxpayer continues to underwrite their costs through grants and exemptions, such organizations are actually arm's length government agencies - and possibly not very efficient ones at that.

The Habitat Re-Store's financial statement for 1992 shows that to operate its business it received $61,160 in grants, $2,183 in monetary donations, $71,137 in "in-kind" donations and $188,979 in sales for a total revenue (rounded) of about $327,000. Business expenses totalled $288,000 leaving a balance of $39,000 of which $27,000 went to the charity's "tithe."

Given that the Habitat Re-Store received a total of $134,480 in grants and gifts in the first place, that means that only 20 per cent of donations were used for charitable purposes.

If one deducts the "in-kind" donations from the equation, one finds that Winnipeg Habitat for Humanity would have been $36,000 further ahead if it had not been in the used-materials business in the first place.

The foregoing examples lead to the most compelling question of all: how much money is lost to the economy because 139,000 less efficient and less accountable not-for-profit organizations are taking market share away from tax-paying for-profit enterprises?

There is no answer. In his 1990 report, the auditor General observed that current legislation is unable to limit the business activities of charities. He could have said the same of non-profit organizations.

There also is very little data. Revenue Canada only began collecting financial information returns from non-profit organizations of more than $200,000 in assets in 1992.

The tax loss could be huge.

Recommendation:	The federal government should seek public input to determine what Canadians expect of a non-charitable revenue-receiving organization that is exempt from paying taxes.
Recommendation:	The whole concept of the non-profit organization should be examined, particularly where such organizations are incorporated and carrying on business activities in competition with for-profit enterprises.
Recommendation:	The Ministries of Revenue, Finance and Industry should undertake a study to try to determine the net negative effect on the economy that results from tax-exempt organizations competing in the marketplace with for-profit organizations.
Recommendation:	Except where specified elsewhere in legislation, the distinction between charity and non-profit organization should be determined by whether the principal activity is for the good of the general public, or for the benefit of a specific interest group.
Recommendation:	The annual financial information return (form T1044E) of non-profit organizations should be publicly available from Revenue Canada in the same way as the T3010 form for charities.
Recommendation:	All tax-exempt organizations should be required to meet like standards of disclosure and accountability.
Recommendation:	Community service organizations with open memberships should be eligible for registered charity status.

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THE GST: BURDEN OR WINDFALL?

The application of the Goods and Services Tax (GST) to Canada's charities does not properly form a part of this study. It is a matter of government policy and the Excite Act which sit outside the legislative framework that now or in the future governs the regulation of charities.

Nevertheless, it merits some comment, mainly because it illustrates how the government perception of charities as the "volunteer sector" rather than as a giant industry, has led to at least one major decision that is questionable in terms of public benefit.

It must have seemed obvious to the architects of the GST that not-for-profit organizations should get a break on the value-added tax. After all, through tax exemptions, tax credits and direct funding almost all of the $100-billion in revenue to these organizations comes directly or indirectly from government. To force these organizations to pay the GST would seem to be a tax on taxes.

Consequently, an elaborate system of exemptions and rebates has been put in place governing purchases by charities and non-profit organizations. Similarly, many are exempt from collecting the GST on the goods and services they supply.

The cost to for-profit organizations which must compete with GST-exempt charities that supply goods and services is incalculable. As we have seen throughout this study, charities compete with free enterprise across the entire spectrum of business activity. Some charities appear to do little else but business and, as the Auditor General observed in his 1990 report, there is no effective regulatory control in this area.

Unfortunately, the data does not exist to measure the effect this must have on the economy.

On the other hand, there are figures available on GST rebates for goods and services purchased by charities. In 1995-96 it was $29 million for non-profit organizations and $114.4 million for charities. These figures do not include the public-institution charities, the so-called MUSH sector - municipalities, universities, schools and hospitals.

Excluding municipalities, the MUSH sector rebates for the same period are impressive:

• Universities - $95.7 million
• Schools and colleges - $323.1 million
• Hospitals - $235.3 million

Added together, the grand total for annual rebates to all charities and non-profit organizations is: $799.5 million. [25]

This is a lot of money. From the point of view of governments trying to rein in spending, much of it is new money.

Consider the following. The GST is a value-added tax that incorporated a number of pre-existing taxes - like the old manufacturers' tax - that were hidden in the purchase price of goods. Prior to the GST charities automatically paid those taxes whenever they bought something. Now that those taxes are part of the GST, charities can claim a rebate on them of at le