In the April 2010 edition of this newsletter we reported on a private members bill, Bill C-470, introduced by Albina Guarnieri, Member of Parliament for Mississauga East, that would have given the Canada Revenue Agency the discretion to revoke the charitable status of a charity where the charity had paid a single executive or employee annual compensation over $250,000 and that would have required disclosure of the salary and benefits of the top 5 employees working with the charity.
We are pleased to report that Ms. Guarnieri proposed amendments to her Bill which were adopted by the Standing Committee on Finance before the Bill was sent back to the House for 3rd reading. The changes eliminated the proposed $250,000 salary cap. The amended Bill did, however, proceed with the requirement that salaries be disclosed, although that requirement was also modified.
The revised Bill provides that the Minister shall, unless otherwise justified, make available to the public in such manner as the Minister deems appropriate the name, job title, and annual compensation of any executive or employee who is paid total compensation in excess of $100,000 per year. Thus, the disclosure is generally mandatory. As well, this disclosure is no longer limited to the 5 highest paid employees working for a charity – all employees earning in excess of $100,000 will now have to be disclosed. The words “unless otherwise justified” were apparently included to allow for non-disclosure of salaries in circumstances that warranted it, for instance, if charity personnel are working in geographic areas where such disclosure would put them at risk. If Bill C-470 is passed by Parliament and the Senate, the changes would apply to 2012 and subsequent years.
While we are pleased with the elimination of the salary cap, overall the continued existence of this Bill is extremely disappointing for the charitable sector. Given the transparency with which the charitable sector as a whole operates, the surprise introduction of this Bill was not warranted. The current T3010B Annual information return filed by all registered charities requires charities to indicate the pay range of their top 10 highest paid employees. It was submitted to the Committee that these rules are more than adequate and provide disclosure without invading the privacy of individual employees and subjecting them to a scrutiny that those working in other sectors do not have to face. We are surprised by the elimination of the top 5 highest paid employees limit and we are unaware of any discussion of either this change, or its implications, by Committee members during their clause-by-clause examination of the Bill.
A review of the transcripts of the committee hearings and the dialogue among Members of Parliament surrounding this Bill reveals that there is a lack of understanding about how the charitable sector operates. What is even more disappointing is that the commentary suggests a general mistrust of charities. It is evident from this dialogue that the sector needs to do a better job advocating for itself and making public the valuable work that it is doing and the fact that it is doing it in a professional and efficient manner.
We understand and applaud the need for transparency and accountability. We also recognize the right of the public to know about the misadventures of charities as are often reported in the Canadian press. However, those misadventures reflect the actions of a few. The amazing and very positive work of many organizations goes unnoticed and unreported. Charities need to get their good news stories into the public domain to avoid further unwarranted surprises in the future.
We will continue to update you on the status of Bill C-470 as it proceeds.