Proposed tax form question could ask charities to report board member demographics

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An amendment to the Income Tax Act could see registered charities reporting information about the demographic makeup of their boards – but charities and researchers are unsure who will be responsible for protecting and analyzing the information. 

In February, Senator Ratna Omidvar gave a second reading of Bill S-279. Should the Bill pass, charities would be required by law to submit additional information about their board members, specifically whether they identify as belonging to one of the four designated groups in Canada’s Employment Equity Act: women, Indigenous peoples, visible minorities and people with disabilities. 

The independent senator, who represents Ontario, proposed that “the minister responsible for the Canada Revenue Agency should incorporate one question on this matter into the annual T3010 forms that charity organizations are required to file annually to maintain their status.” 

This information would then be aggregated to provide a snapshot of the demographic makeup of charity boards across the country, within specific regions, or with certain subsectors, Omidvar said. 

Statistics Canada would also have access to the data, but it is unclear who would be responsible for aggregating, analyzing and publishing it.

“At first blush, I was excited. More diversity data is generally good,” said Romain Williams, co-founder and executive director of the Inclusivity Institute for Better Data (IIBD), a non-profit research organization which aims to produce research and data about the unique experiences of Black and racialized communities in Canada.  

“But I found it a little difficult to view the bigger picture. I had some questions as to who is collecting this information, where it is going, and about privacy and [data] standardization.” 

At Carleton University, Paloma Raggo is an assistant professor and principal researcher at the Charity Insights Canada Project. She and her research team conducted extensive analysis of T3010 data. 

“My initial reaction was great — more data is better than no data,” Raggo said, adding she was pleased policymakers were aware of data challenges in the non-profit sector. 

However, she pointed out that adding another requirement wouldn’t necessarily improve the quality of the data charities provide, which is often inconsistent or poorly completed. 

“We are swimming in data, (but) there is no capacity to analyze that data, and very few researchers are working on this,” said Raggo.

“A law without infrastructure support is just going to increase the data burden in the sector.” 

Where did Bill S-279 come from?

In 2019, the Senate Special Committee on the Charitable Sector – of which Omidvar was the vice chair – published a report on what was needed to strengthen the sector as a whole. 

The Committee published 42 recommendations, calling on multiple federal departments and ministers. 

One of the recommendations asked that “the Government of Canada, through the Canada Revenue Agency, include questions on both the T3010 (for registered charities) and the T1044 (for federally incorporated not-for-profit corporations) on diversity representation on boards of directors based on existing Employment Equity Guidelines.” 

In 2020, at the peak of the pandemic and in the wake of George Floyd’s murder, Omidvar then wrote an open letter to leadership in the Canadian non-profit and charitable sectors, requesting that organizations consider collecting data about the demographics of their board members voluntarily. 

She also suggested that “large sector membership-based organizations, like Imagine Canada, Community Foundations of Canada, the Ontario Nonprofit Network and the Philanthropic Foundations of Canada can request that their members disclose this data on a voluntary basis,” or “make the disclosure of such information a criterion for all members, thus making it mandatory within their associations.”

The article caught the attention of Anil Arora, chief statistician with Statistics Canada, who then conducted a voluntary survey for charities to disclose information about the diversity of their directors. 

However, this one-time survey “lacks statistical significance […] due to its crowdsourced nature,” Omidvar said in her speech to the Senate in February. 

The Bill would make such data collection mandatory across the country, and data would be collected annually. 

“This has to be done by law and not by any other methods,” Omidvar said in a follow-up interview. 

“Our research concluded that for charities to disclose [this information], it would take an amendment to the Income Tax Act.” 

Similar legislation already applies to federally regulated corporations, the senator said, which must list their board members’ diversity and prepare a diversity plan every year. 

“I am not going that far,” she added. 

This demographic data will also help track diversity progress over time, said Jean-Marc Mangin, president and CEO of Philanthropic Foundations of Canada (PFC). 

“PFC is supportive of the efforts to better understand diversity in the sector. We play a modest role in the background,” Mangin said. 

“I was a sounding board to support Senator Omidvar’s effort, and she is the driving force behind this. She will be retiring from the Senate later this year, and this will be an important legacy for her.” 

Demographic information must be handled with sensitivity

As it stands, the designated groups within the Employment Equity Act do not recognize the most marginalized communities, said the senator.

For instance, there should be a separate category to capture the experience of Black communities in Canada, who currently count in the visible minorities category, she said.

There is no mechanism to capture who belongs to the LGBTQIA+ community, she added.

There are additional layers to consider, such as immigration status, which “asks people to out themselves to a certain extent,” Raggo said. 

Nonetheless, that information would also be necessary to understand the intersectional makeup of the sector’s directors, she added. 

Charities disclose their directors, trustees and officials through a separate T1235 form, confidentially submitted as part of the return. 

Public information includes the director’s name, position on the board, and when they started and ended their term. 

Confidential information includes their residential address, phone number and date of birth. 

Should charities begin to collect demographic information about their board members, this information will also remain confidential, said Omidvar. 

“In no way can anyone find out what the demographics of the Scarborough Food Bank [board] are, for example, as it will be aggregated up to the CRA,” she said. 

“Individual charities’ governance will not be able to be disclosed. But we could see what governance in the food bank sector overall looks like and how it differs regionally.” 

While the CRA already collects confidential information about charity board members, this additional demographic data would also need to be shared and analyzed, and it’s unclear who this data would flow to and who would have access to it. 

Public members can submit requests for certain information, so there would need to be a process for handling such requests so that sensitive information is not at risk, said Raggo.

“I want to thank the Senator for being strategic and putting this forward when not a lot of organizations are supporting these kinds of initiatives,” said Hildah Juma, executive director of the Black Talent Initiative. 

However, this demographic information needs to improve communities tangibly rather than focusing on reaching certain benchmarks or checkmarks, she added.

“I understand where the Senator is coming from to root this in existing policy,” Juma said. 

“But the ‘designated groups’ still need a lot of work. Who is in a ‘designated group,’ and what phrases are we avoiding when we say that? We’re disregarding systemic and colonial barriers.”

Should the Bill be passed, communities need to be meaningfully included in the discussion on how this should be implemented, she said. 

“Let’s pass this Bill as a great first step and bring the data to the table. But there needs to be revisions to the Bill to close the trust gap with communities.” 

What would charities and non-profits need to do if the Bill passes?

Having researched the composition of charitable boards, the IIBD has found that many boards do not represent the communities they claim to serve – which aligns with Senator Omidvar’s hypothesis. 

Boards vary greatly: small charities have three to five people on their board, while grassroots non-profits might only have one person in a director or trustee position. There are also organizations entirely managed and run by volunteers, said Williams.

Microlearning – short pieces of digestible content – can help charities and non-profits better understand how to fill this information in, Williams said. 

“I’m very concerned about implementing measures to ensure accuracy, completeness, and integrity in the data collection,” she added. 

Standardizing how charities report this information will be essential to meaningful analysis and comparability across sectors and regions. 

Raggo’s research team regularly analyzes publicly available T3010 data. But they didn’t know what they were in for when they began working with these datasets. 

“Up to 30 per cent of the data had incorrect or missing information,” she said. She gave the example of how charities and non-profits had inputted registration dates: some used slashes, some used hyphens, and others used text. 

All of that had to be changed manually before processing or analyzing the data, Raggo said.  

She believes that the sector still needs support to fill in the T3010 form, especially if there will be additional reporting requirements. 

Senator Omidvar, however, does not see this as a serious concern. Larger charities will likely have an accountant to fill this data in, and sector-wide organizations, like Imagine Canada and PFC, should also support with capacity, she said. 

What happens once the information is collected?

“It is not my plan to analyze the information but to make the information available for analysis,” Senator Omidvar said. 

“The legislation only goes so far, and then the community picks it up. It’s not up to me.” 

For both Williams and Juma, this data also needs to be contextualized. “I couldn’t afford to volunteer growing up – I needed to find a job and earn money,” Williams said. 

“The problem with people not wanting to be in non-profits is not being able to afford it – you won’t find racialized people able to volunteer because a lot of us come from societies where we need to send money back home.” 

The Foundation for Black Communities provided $400 in remuneration when inviting people to participate in one of their initiatives, which Williams said is a good incentive to invite diverse voices. 

“People already don’t have enough time, and sitting on these boards takes time out of our lives and professions,” Juma added. 

“Compensation will be a big discussion if you want to see that diversity.”

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