Following the money, and examining policy
// Liam Loxton

Due to the fact that tax rates aren't high enough to subsidize all social services effectively, our way of life is directly impacted by charities and non-profit organizations. We are asked to donate every day, from the boxes at fast food establishments and smile cookies at Tim Hortons to canvassers on the street. It's evident that charities are an essential part of keeping society functional.

According to Imagine Canada in 2010, Canadian charities received $11.2 billion in donations from corporations and individuals. These monetary gifts significantly impacted communities by establishing which charities thrive or succumb to bankruptcy. It’s reasonable to assume that these donations can shape our social landscape by determining the availability of women’s shelters, grants for students, subsidized summer camps, sports programs, and more. Establishing the goal of maximizing donations and their distribution to all communities is desirable, and for this reason we should examine both who is donating all this money and where the money typically ends up.

The combined effort of all corporations contributed to an estimated $2.8 billion, or 25 per cent, of total donations. These funds are primarily filtered into social services (19 per cent) and health (17 per cent) orientated charities, like Big Brothers or the BC Cancer Foundation. Meanwhile, the $8.4 billion donated by individual Canadians primarily goes to religious organizations (46 per cent) such as the Salvation Army.

There exists a program in Canada called Imagine Canada’s Caring Company, where corporations can agree to donate at least 1 per cent of their pre-tax domestic profits to the cause of their choice. Billion dollar companies such as Rogers can contribute more than$ 10 million a year under this program. Most corporations do not donate according to this ideal and are currently shy by an estimated average of 0.3 per cent. This lack of participation in the program hurts the goal to maximize funding for charities. On top of that, 84 per cent of donations made by corporations are made to the 7 per cent of charitable organizations that reported annual revenues of more than $1 million. This means that any smaller charity would have to rely on individuals to get their cause off the ground. This is counteractive to the goal of widely distributing donations to all communities.

Understanding why a corporation donates to a particular charity seems reasonable when there are direct gains. More than half of the corporate donations come from two industries: finance and insurance, and manufacturing. Insurance companies would benefit the most from more social services and health organizations. Both the donor and the recipient benefit from this relationship. If there are more social programs, communities will be strengthened and the crime rate will drop. If there are more health organizations, communities will be healthier and citizens will live more productive lives. these factors combined typically lead to lower claim rates and can contribute to a strong economy.

From a distribution perspective, more awareness of these smaller charities is needed. For example, organizations like Imagine Canada are creating informational presentations for corporations to help them make more informed decisions about where their money could be most beneficial.

Another tactic to increase corporate donations is by government intervention. Higher tax rates could be implemented on the public and private sectors, ensuring that a particular amount reaches each charity based on a criteria that the public can establish. The alternate option to this would be to reduce corporate tax rates with the intent of stimulating job growth, thus resulting in more individual donations. In theory, corporations will have more profits leading to more donations in the absence of government funding.

An article presented by Canadian Auto Workers’ (CAW) union and confirmed by the federal government’s own data shows that a tax cut “does not guarantee that companies will spend the money on research and development or on hiring more employees.” Therefore, tax cuts result in a net loss for charities due to reduced budget and no increase in individual donations.

The same article goes on to demonstrate that if $3 billion was cut from the budget in order to support corporate tax breaks, it would create 46,000 fewer jobs compared to extending EI benefits. Even if jobs are created, there is the demonstrated problem that corporations are currently narrow-minded on what charities they will donate to.

If the BC Liberals are serious about improving family life, then perhaps they should re-evaluate corporate tax breaks. Allowing the government to step in can be more beneficial to charities than tax cuts and substantial social services can have a much larger impact on families than a cheque from the Liberals. These goals need to be realized because, ideally, individuals, government, and corporations all want the same thing: healthy communities, happy citizens, and a strong economy.

// Liam Loxton

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