The 4 Senate Recommendations You Need to Know That Could Determine the Future of Charities

In coming years, the Government of Canada must prioritize certain recommendations to build a stronger charitable sector.

Why It Matters

In order to keep up with an ever-changing world, Canada’s charitable and non-profit sector needs a refresh. Our team analyzes the four recommendations from the recent Senate report that will become linchpins for a future-fit sector.

 

In late June, the Canadian Senate released Catalyst for Change: A Roadmap to a Stronger Charitable Sector, a first-of-its-kind report for the charitable sector in Canada. With 42 recommendations in a range of areas, including standardized reporting, the Income Tax Act, and boosting volunteerism, this synthesis is the extraordinary work of senators who engaged a range of sector funders, executives, frontline professionals, volunteers, and public servants in order to understand the opportunities and pain points facing the sector today. 

Our team unpacked and analyzed these essential-to-understand recommendations and identified four in particular that must be a priority in order for this sector to stay responsive to the next decade of societal disruption. We believe that these four areas are linchpins for how well the entire report can hold up in a rapidly changing world. 

 

The Backdrop

Formed in January 2018, the Special Senate Committee on the Charitable Sector was tasked with examining and reporting on Canada’s charitable and non-profit sector. This sector has incrementally tried to improve — with mixed results — what are seen by many as complex, outdated rules and a lack of coordinated support within the Government of Canada. 

Canada’s charitable and non-profit sector is creative and resilient. From newcomer settlement to addiction services, there are an estimated 86,000 registered charities and 85,000 non-profit organizations across the country. The sector is also a significant economic contributor, generating more than 7 percent of Canada’s gross domestic product and employing more than 2 million people.

 

What we see

 

HR in an AI world

Recommendations 6 and 7 call for the Government of Canada, through Labour Canada, to work with the sector to develop a human resources renewal plan and reinstate the Human Resources Council for the Voluntary Sector. 

In the coming years, about 46 percent of work activities across all Canadian industry sectors have the potential to be automated through artificial intelligence (AI) technologies, and the charitable sector is not immune. While a number of jobs could be fully automated, the proportion of individual work activities that could be automated is significant – equivalent to a total of about 7.7 million jobs across the country. Most jobs in the next decade will be comprised of a mix of human and machine intelligence. A renewed HR Council must focus on charitable work in an AI world. Are we ready for that?  

 

Legacy and planned gifts in a crowdfunded world

Recommendation 31, among a few others, calls for the Government of Canada to direct the Canada Revenue Agency (CRA) to implement a pilot project that would allow registered charities to make gifts to non-qualified donees — i.e. organizations that are not able to issue an “official donation receipt” for Canadian Income Tax purposes, such as not-for-profits or projects. These gifts would take place under certain limited circumstances, where the gifted funds are subject to careful monitoring and used for exclusively charitable purposes.

In 2019 alone, there have already been approximately nine million crowdfunding campaigns launched around the world, with this fundraising method growing at a rate of 35 percent year-over-year. The total value of crowdfunding this year has reached $9 billion already, and that’s a trend that’s grown, on average, 30 percent year-over-year. In fact, there is a whole generation of Canadians whose formative gift-giving habits have been shaped by giving to non-qualified donees. They can’t tell (nor do they care) about the distinction.

If the recommended pilot project is run by the CRA, gifting to non-qualified donees will go from edge to mainstream. The design and development of such a CRA pilot project must include the fast-growing space of crowdfunding or risk missing out on the next generation of donors. 

 

Surveys in a data-everywhere world

Recommendation 16 calls for the Government of Canada to prioritize data about the charitable and non-profit sector in all Statistics Canada economic surveys. It also calls for increased collaboration between Statistics Canada and the charitable sector in order to determine what additional data could be consistently collected and disseminated to support the evidence base for decisions made by organizations in the sector.

We now live in a data-everywhere world. Between the internet, social media, email and text communications, platform companies, and connected “smart” devices, we collectively generate a mind-blowing amount of data everyday. This is growing at an ever-increasing rate as more of our world becomes digitized and “datafied.” Surveys are useful but insufficient — surveys offer us insights into what has happened, but only retrospectively and only on limited topics. There is far more data outside the survey and census world than in it. Effective decision-making by charitable organizations requires data that is both within and outside of the sector — looking beyond surveys  must be the focus for Statistics Canada. 

 

Social finance in a changing finance system

Recommendation 14 calls on the Government of Canada, through Employment and Social Development Canada, to support innovation across charitable and non-profit organizations, including through the advisory group managing the Social Finance Fund

At $755 million over 10 years, the Social Finance Fund is Canada’s largest commitment to growing the impact ecosystem through intermediaries. While investments into community loan funds, credit unions, community foundations, chartered banks, or private equity funds might seem like obvious choices, lending, payment, and cryptocurrency fintech companies have seen the most growth in Canada in the last 12 months. To give you a sense of how fast the finance system is changing in Canada, awareness of bitcoin (the largest cryptocurrency) grew from 64 to 85 percent from 2016 to 2017 alone. In the same period, ownership of bitcoin expanded from 2.9 to 5 percent, with the 18-to-24 age group growing the most — from 6 to 14 percent. 

Not only that, but “open banking” is coming to Canada, as well, which means that for the first time, citizens can authorize third-party service providers to access their financial transaction data using secure online channels. The benefit is that it allows them to access new products and services that can enhance their lives.

The finance system is undergoing radical change. Government of Canada’s roll out of the Social Finance Fund must align with what’s emerging in the finance industry today. 

 

What to watch

It would be a waste if this Senate report becomes obsolete in five years.

There is extraordinary energy and momentum around renewing the sector’s relationship with the Government of Canada. The trick, though, is to ensure that this renewal not only includes what has shaped the world of today but what is shaping the world tomorrow. This might include catalyzing non-obvious relationships, as an example, between the charitable sector and Bank of Canada’s Digital Currencies and Fintech work. It is these types of relationships that will matter in the next decade in order to shape a charitable sector that offers Canadians the best possible solutions and services. 

 

Go deeper

Care to explore the full list of Senate recommendations? Read through the Senate’s Catalyst for Change: A Roadmap to a Stronger Charitable Sector report for a full guide.