Bill C-470: Down But Not Out
By Joel Secter

Given the attention both in the media and in the sector, most charities should know about bill C-470. The bill, proposed by Albina Guarnieri, the Liberal MP for Mississauga East was originally intended to impose a salary cap on registered charities and require them to divulge the personal information of their top earners. While the bill was supported by the three opposition parties, the sector was fairly unified in its criticism. It seems that criticism was heard as Ms. Guarnieri amended her bill to eliminate the compensation cap but provided that charities must list the names and salaries of any executive or employee making more than $100,000 (indexed for inflation).

Ostensibly, the main impetus behind the Bill is safeguarding donor trust (i.e. charitable giving) by increasing transparency and accountability in the sector. Ms. Guarnieri, speaking on disclosure, said in the House of Commons that "[t]he principle is clear. If people take home taxpayer money, they cannot hide how much. As Canadian charities distribute almost $3 billion a year in tax credits, taxpayers have every right to know whether the salaries they are subsidizing are excessive." This is an interesting rationale given that the same principle is not applied to recipients of research and development credits, film and tv credits or any other type of government credits.

That said, the changes to the bill are probably for the best. The salary cap, for example is unworkable, if for no other reason than there are outliers and one size does not fit all. Besides, while there are examples of charities mismanaging funds, such cases are the exception not the rule. Furthermore, charities that pay large salaries often gain benefits that far exceed these costs. As for beefing up disclosure requirements, supporters and opponents alike raise concerns about the potential invasion of privacy. As proof, opponents of the bill point to the annual listing of names and salaries of public servants in Manitoba and Ontario.

The question pertinent to the discussion is what amount of a charity's budget is being spent on compensation. If donors know the total amount and general breakdown paid to executives and employees, what is gained by the additional information? Furthermore, is publicising this information really worth the adverse harm that it may cause to a charity's reputation and ability to successfully fundraise? Along these lines, the amendment may have added an annual compensation category or two (i.e. $500,000-$1,000,000 and $1,000,000 and above) which would have addressed the issue reasonably and thoughtfully without encroaching on people's privacy. In other words, while the amended bill is far more measured than originally proposed, by divulging the names and compensation of those in the sector earning above $100,000 it still might have unintended consequences that could easily be avoided.