Canadian charities fight transparency bill

  • November 17, 2010
charity under investigationTORONTO - A bill that would see Canadian charities forced to disclose the salaries of their highest-earning employees has run up against opposition from the charitable sector.

If passed, Bill C-470 will create some “serious issues” within the sector, say officials with various charities.

Charities have been fighting  to kill the bill since it passed second reading in the House of Commons on April 21 by a 280 to 3 margin. It is set to head to the Standing Committee on Finance by the end of November, where committee members can amend it before it goes to third reading.

The private member’s bill, initiated by Liberal MP Albina Guarnieri, is seeking to make it mandatory for all registered charities to disclose the names, salaries and positions of their five highest paid employees. It would also give the government the authority to deregister a charity if any employee earns above $250,000, giving charities a “notional” cap whereby those seeking to pay their employees a salary above this would have to justify it, said Guarnieri.

“My bill would make charities as transparent as public companies,” Guarnieri told The Catholic Register.

A motivating factor behind the bill was the large salaries being paid to people in the charitable sector, said Guarnieri. She pointed to media reports in 2009 that Toronto’s Hospital for Sick Children paid its former president a $2.7-million severance package in 2008.

Charities have expressed their concern about Bill C-470 in a letter written by Imagine Canada, a lobby group for Canadian charities and non-profit groups, that was sent to all four federal party leaders in August. Some of the 67 co-signatories included St. Michael’s Hospital Foundation, World Vision Canada and UNICEF Canada.

Tony Arrell, St. Michael’s Hospital Foundation chair of the board of directors, said a salary cap could drive away talented fundraisers at top charities.

“Fundraising is a hugely competitive business and just as you compete for donations, you compete to have the best people at the organization,” Arrell said.

“I’m not in favour of putting handcuffs on things that are actually going to diminish the skilled people who work in this area... They could go somewhere else, make more money and not have to put up with it all,” he said, referring to the fact that many people who work in fundraising excel in sales, generally a more lucrative industry.

While he is in favour of disclosure, Arrell believes disclosing stats of employees’ who make more than a certain amount is more appropriate than the proposed top five salaries, much like when the number of government employees making more than $100,000 is released.

“If you rhymed off the top five people, the fifth person might not actually be that high and I think that’s an unnecessary invasion of privacy.”

Not all in the charitable sector are upset about Guarnieri’s bill. Fr. Philip Kennedy, president of Catholic Missions In Canada, said he supports it.

“The people who are in charge of charities don’t need to be paid seven-figure salaries,” he said.

Arthur Peters, executive director of ShareLife, the charitable fundraising arm of the archdiocese of Toronto, says he doesn’t take issue with the salary cap. But he is concerned with the fact the bill includes no floor levels when listing the top paid employees.

“Hard working people who aren’t making very much money could have their salaries published,” said Peters.

Dan Fortin, vice chair of the board of directors at World Vision Canada, takes issue with the compensation cap.

“We question the need for the compensation cap because an arbitrary compensation figure may not reflect future requisite skills and is not updated over time,” Fortin wrote in an e-mail to The Catholic Register. “But more importantly, it undermines volunteer boards’ independence and autonomy to hire competent management to run complex, large charities.”

Don McCreesh, chair of the board at Imagine Canada, said the kind of transparency where individuals are named is not productive.

“I think what people are more concerned with is not who is getting what amount but what the charity is spending on salaries and if they’re paying high salaries,” said McCreesh. “We should disclose that, no question.”

McCreesh also sees a problem with the administrative process that will need to be developed if a charity wants to pay an employee a salary above the cap.

“The straight administration would be costly and I’m just not sure how you would do it,” said McCreesh, referring to the compensation experts and consultants that would have to be hired and the surveys and reports that would have to be compiled in order to decide whether or not the pay is justified.

Instead of what Guarnieri’s bill is proposing, McCreesh said to make charities more transparent, money should be put into improving the accessibility of the Canada Revenue Agency web site. Under the current rules, charities must report how many employees (out of their 10 highest paid) make salaries within specific ranges. For example, $350,000 or more or between $300,000 and $349,999. These are available for public viewing on the Canada Revenue Agency site.

“We think there’s quite a large amount of disclosure. The difficulty is the support isn’t being given to the Canada Revenue Agency to make that web site quick and easy to access... It’s one thing to disclose, it’s another thing for Canadians to be able to access it.”

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