3 Radical Ideas From the Senate that Nonprofit Leaders Should Know

How can we fuel funding and innovation in the charitable sector?

Why It Matters

The charitable and nonprofit space has been thirsty for innovation for a while — but long been limited by the governmental regulations and restrictions boxing it in. Three recommendations from the Senate Special Committee on the Charitable Sector, however, could change that. Centre for Social Innovation founder and CEO Tonya Surman weighs in.

Canada’s not-for-profit organizations are fuelled by two million employees and another 13 million volunteers across the country. Joining them are the 254,000 (and growing!) people working in Canada’s social enterprises

I am always so blown away by the dedication and ingenuity that comes out of our sector. Every day I see people struggling to make change in a system set up to reward for-profit ventures while treating our space with scrutiny and suspicion. I challenge any corporate leader to do what this sector has done, and I often imagine what it would look like if we’d had fewer barriers and more support. 

Well, maybe the next not-for-profit with a big idea won’t have to imagine it.

In January of last year, the Senate Special Committee on the Charitable Sector asked a simple but radical question: “Why is it so hard to do great works of charity?” To find the answer, they held 24 public hearings and heard from 160 witnesses, myself included. 90 more people submitted written testimony, and nearly 700 people completed an online questionnaire on the topic. 

The result of all of this work was issued on June 20th as a report called Catalyst for Change: A Roadmap to a Stronger Charitable Sector

I cheered as I read the committee’s 42 recommendations. It is not an overstatement to say that adopting the recommendations in this report could change the country overnight. But as someone who sees nonprofits struggle with funding constraints for innovative solutions daily, the three recommendations outlined below had me cheering the loudest.

 

Recommendation 11

That Government of Canada initiatives that support the sustainability of for-profit sectors, particularly with respect to overhead and infrastructure costs, be extended to the charitable and non-profit sector.

To understand what a huge deal this is, let us look at the present reality.

15 years ago, before co-working was the widespread phenomenon it is today, I saw how much my colleagues were struggling to make meaningful change while maintaining massive overhead as they rented everything from office space to photocopiers. So I co-founded a not-for-profit called the Centre for Social Innovation, putting everyone under one roof and creating opportunities for sharing and collaboration. 

As we created this new model of co-working, we were hindered at every turn. As a not-for-profit, we were excluded from government enterprise growth programs, had no access to venture capital funds, and were ineligible for innovation grants. I carried around a pocketful of cheques for several weeks because no one would even give us a bank account. 

These barriers slowed us down and wasted energy, and they continue to limit what we are able to do. We are proud of what we’ve accomplished despite these barriers, but we know that it shouldn’t have been this hard and that we could have done more. 

The nonprofit world has never wanted special treatment — all we’ve asked for is to be treated the same as for-profit ventures. Adopting this recommendation would level the playing field for the people who have chosen to dedicate their lives to caring for people and planet, and it would allow us to look for more ways to be self-reliant.

 

Recommendation 19

That the Government of Canada through the Minister of National Revenue seek the advice of the Advisory Committee on the Charitable Sector with respect to modifying CRA restrictions on accessing other forms of capital by charitable and non-profit organizations; and that all federally funded initiatives with respect to innovation that are available to for-profit organizations be available to and promoted among charitable and non-profit organizations.

To hear the Senate use the word “innovation” when talking about the not-for-profit space is nothing short of revolutionary. This represents a huge cultural shift that is so needed. 

Speaking of innovation, I want to shine a light on the fact that this committee was the first to hold an e-consultation in over a decade. By making space for innovation, they also made space for an additional 695 people to share their ideas, experiences, and perspectives. 

Recommendation 19 would help fuel innovation in a field that, at the moment, often has too many constraints around it to do so. The not-for-profit world doesn’t need to be told what innovation is or isn’t. We’ll tell you when we get there. But for God’s sake, give us the latitude to be able to be creative. 

The not-for-profit space is filled with brilliant people who are experts on issues like climate change and global inequality. But more than just being able to identify the problems, they are also some of the best minds to come up with solutions. We just need to unlock their ability to do that. 

 

Recommendation 28

That the Government of Canada direct the Canada Revenue Agency to develop and implement a pilot project to assess the viability of granting registered charities greater latitude in undertaking revenue-generating activities (provided the proceeds are used to further charitable purposes) through the implementation of a “destination of funds” test.

Reading this was so heartening. Right now, if a charity generates any revenue — even if this revenue is then used to further the charity’s purposes — it could kickstart a de-registration process that would force them to divest all of their assets. Under a “destination of funds” model that the Ontario Nonprofit Network has been advocating for, charities would be able to generate revenue so long as those funds were used to fulfill a public benefit. 

This type of latitude would allow us to build an economy where success isn’t measured in financial profit alone. An economy where it’s possible to support yourself doing work you love. An economy where your investments benefit the causes you care about. 

 

Looking ahead

These recommendations could create an incredible jumping off point and opportunity for Canada. Imagine if every contribution and grant agreement had a built-in percentage designated for innovation. Think about how much money we would save taxpayers. Think of how many lives would be improved. Think of the impact on the planet. 

Since 2004, CSI has seen over 5,000 not-for-profits, charities, and social enterprises put their hearts into creating a world that puts people and planet first. Across the country, their efforts have been multiplied by countless more. 

For the last several decades, all of this good work has been hindered by a broken system. If the next generation of not-for-profits is allowed to innovate, just imagine what they’ll be able to accomplish.