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    An Open Letter to the Prime Minister Regarding Canada’s Charitable and Nonprofit Sector

    Originally posted February 20, 2018 on the Imagine Canada blog by Bruce MacDonald.


    Dear Prime Minister:

    I am writing on behalf of the charitable and nonprofit sector, at the mid-point of your government’s mandate, to share my thoughts on the progress that has – and has not – been made on several important mandate letter commitments. As Imagine Canada is the national umbrella for the sector, my comments focus on issues and commitments that affect the sector as a whole, as opposed to those that relate to the missions of particular organizations or subsectors.

    Several mandate letters contain commitments of broad applicability to our sector, including the mandate letters issued to the Ministers of Employment, Labour and Workforce Development; Families, Children and Social Development; Finance; National Revenue; Innovation, Science and Economic Development; Justice; National Revenue; Public Services and Procurement; and the President of the Treasury Board. As many mandate letter commitments overlap, they are organized thematically below.


    Legal and regulatory reform

    The mandate letters to the Ministers of Finance, National Revenue, and Justice all made reference to modernizing the regulatory and legal frameworks that govern charities and nonprofits more broadly.

    The process of legal and regulatory reform is important for many reasons. Limits on charities and nonprofits income-generating and investment activities have been identified as a potentially significant hurdle in implementing a social finance and social innovation agenda; organizations that want to participate as partners or funders may find themselves prevented from doing so. As another example, the rules on the ‘direction and control’ of charities’ resources reinforce an outdated, paternalistic approach to working with communities in Canada and abroad that is at odds with the government’s own approach to, for example, international development partnerships. The 17th century framework under which we operate needs to be re-examined in light of 21st century realities.

    We were very encouraged that the mandate letters seemed to open the door for a conversation on fundamental and meaningful modernization. We were also very pleased when the Minister of National Revenue appointed an advisory panel to hold consultations on political activity and other regulatory issues charities might choose to raise. We strongly support the advisory panel’s recommendations pertaining both to political activity and broader legal and regulatory reform.

    We are very concerned, however, that almost a year after the advisory panel reported to the Minister of National Revenue, there has been no formal response from your government to the recommendations specific to political activity, nor has there been any indication of a process to examine the broader modernization question. There is a real risk that the momentum and goodwill generated by the advisory panel process will be lost. We would welcome a clear indication as to when the government intends to respond to the advisory panel and move forward with its commitments in this area.

    We note with great interest and enthusiasm that the Senate has voted to form a special committee with a mandate to study the effect of laws, regulations, and policies on charities and nonprofits, as well as the sector’s broader impact. We trust that a government response specific to political activity will be forthcoming before then, but we believe the Senate process will provide a forum to begin exploring some of the larger issues. We encourage the government to acknowledge the Senate’s undertaking and to indicate the government’s readiness to act where possible on recommendations made by the special committee.



    The Minister of Innovation, Science and Economic Development was asked to improve the quality of publicly available data.

    As you may be aware, Statistics Canada no longer generates or disseminates data about the charitable and nonprofit sector as a whole. Previous data products, such as the National Survey of Nonprofit and Voluntary Organizations, and the Satellite Account of Nonprofit Institutions and Volunteering, gave us crucial information about the sector and its economic and employment impact. The most recent available data indicates charities and nonprofits generate more than 8 percent of GDP and employ two million Canadians. These data, however, are now more than a decade old.

    We have been in discussions with Statistics Canada and the Minister’s office as to how this situation can be rectified. Canada was once a world leader in generating information and data about this sector and we hope it can be again. The commitments your government has made in the policy areas included in this letter make it imperative that we have current, good quality information about the sector. There appears to be recognition of the importance of this issue, but no urgency to find the resources required to collect the relevant data.


    Grants and contributions

    You asked the President of the Treasury Board to encourage departments to devote a fixed percentage of program funds to experimenting with new approaches to existing problems and measuring the impact of such efforts.

    We are pleased that Treasury Board has provided flexibility for increased experimentation by departments. We hope departments will take advantage of this flexibility and that Treasury Board will collect and share information about how this policy has been put into action.

    You also emphasized the importance of evaluation in asking the President of the Treasury Board to work towards a “strengthened culture of measurement, evaluation, and innovation in program and policy design and delivery.” There is a potential stumbling block here as impact evaluation and measurement are too often not treated as allowable costs in grant and contribution agreements. Furthermore, the overall administration of grants and contributions – which is too often short-term, focuses on outputs rather than outcomes, and risk-averse – limits the extent to which innovation can occur. We understand Treasury Board is reviewing its policies on transfer payments and we encourage your government to ensure that grants and contributions are administered in such a way that they encourage innovation.


    Social Finance and Social Innovation

    The Minister of Families, Children and Social Development, and Employment, Labour and Workforce Development were tasked with developing a Social Innovation and Social Finance strategy. The Minister of National Revenue was also asked to assist in this process.

    We are pleased a Social Innovation and Social Finance Steering Group, supported by Employment and Social Development Canada, was appointed last summer and has undertaken a consultation process. Although we recognize that several Steering Group members have an understanding of the charitable and nonprofit sector, we are disappointed the sector is not directly represented in the membership of the Steering Group. Nevertheless, Imagine Canada submitted a brief and recommendations to the Steering Group and participated in consultation sessions, and we know other charities and nonprofits have also done so.

    We understand the Steering Group will likely report this summer and we look forward to seeing its recommendations. We trust that the government will give serious thought as to how it can properly invest in and resource the Strategy in order to stimulate innovation within the sector. We believe that a whole-of-government approach will likely be required.



    The Minister of Public Services and Procurement was mandated with modernizing the federal procurement system in such a way as to help achieve a number of government priorities, including social procurement.

    We are pleased Public Services and Procurement Canada has begun to consult on how social procurement might be embedded in a range of government procurement activities. While it is still early in the process, we hope significant progress can be made towards this goal.

    We are also hopeful Bill C-344 will be adopted. Where they have been used, community benefit agreements have proven an effective way of achieving multiple benefits through public expenditure without increasing procurement costs.


    Youth employment

    The Minister of Employment, Labour and Workforce Development was mandated to “[i]ncrease the number of good quality, permanent jobs for younger workers,” in part by increasing investment in the Youth Employment Strategy and improving its impact.

    Charities and nonprofits are significant employers of young Canadians. Any reforms to the government’s youth employment initiatives will, we hope, recognize this fact and ensure charities and nonprofits are not disadvantaged. We are very pleased the Expert Panel on Youth Employment recognized that charities and nonprofits should be part of any program or policy design – not just from the perspective of providing services to youth, but from the perspective of being major employers of youth. Members of Imagine Canada’s policy working group on youth employment in the sector have been asked to participate in consultations with the Minister of Employment, Labour and Workforce Development. We hope this marks a commitment to seeking input from all sectors as economic and employment policies are considered.

    We are all dedicated to strengthening the economic and social prospects of the communities we serve. Charities and nonprofits are eager to continue working with you and your government to improve the framework under which we operate so that we can build on our existing impact and contribution.


    We appreciate your consideration of the issues raised here, and look forward to hearing your thoughts.


    Yours truly,

    Bruce MacDonald

    President & CEO
    Imagine Canada