It does sound like there are certain ways in which the transparently which exists currently exceeds that which we have here. In particular, the electronic access to information from the T3010 forms sounds quite progressive. As you suggested, our primary option is to search through individual PDFs of annual tax returns, and to do so primarily using Guidestar, a private organization. (Guidestar has constructed and does provide access to a database reflecting some of the information, but it is limited and access is on a paid basis. The Chronicle of Philanthropy also provides an online database, but it contains a very limited number of prominent organizations and foundations).

The timeliness of the filings in your country is also clearly superior to our practices. In most cases, the most recent information we have available to us now is from FY 2008.

I do understand your argument that other areas of charity operations may merit greater transparency but I view the line you’ve drawn with regard to compensation information — the present use of increments up to %350,000 — as somewhat arbitrary. You imply that reporting individual compensation information would take more time, but it seems to me that the individual employee information is actually the raw data, and that the act of categorizing into increments is actually more work on the part of filing organizations.

I also feel that there can be considerable value in reporting the various elements of compensation separately, rather than lumping them together in a single number. It seems this practice is at the heart of the controversy around the $2.7 million case that you and Claire have both pointed out. As illustrated in my recent posts about the Boys & Girls Clubs of America hubbub here in the states, understanding the makeup of compensation can go a long way towards more reasoned discussions of compensation.

I completely agree with you that compensation should not be used as proxy for the effectiveness and usefulness of a charity. Is it your feeling that greater availability of data would tend to make this happen? Is there any danger that lack of availability creates a sense of secrecy and perhaps suspicion? I am also a strong believer that an organization’s overhead and expenses should not serve as proxy for effectiveness or impact, and that we need far better approaches in this area, but I would not suggest this as a rationale for decreasing existing requirements for the detailed reporting of organization expenses. In short, I don’t see it as an either/or proposition.

I am glad that we are in agreement that disclosure and caps are two completely separate issues. It will be interesting to see if they become more distinct as the bill enters its second hour of debate and any subsequent legislative steps.

I am very interested in your statement regarding the responsibility of boards/governors to ensure that compensation is appropriate. Can you tell me more about this or point me to any resource? Is this spelled out somewhere in existing legislation or regulations?

Thanks again, Mark, for your comment and contribution to my learning. As an inquisitive bystander, I look forward to continuing to learn about and discuss these issues, and to seeing how the debate around Ms. Guarnieri’s bill plays out.

When I said that we have “excellent transparency on the issue of compensation” I am not comparing Canada to the US but to the needs we have here in Canada. For the importance of this issue compared to other issues I think we have more than enough disclosure. From what I have seen so far excessive compensation is not a problem in Canada – abusive Canadian charity tax evasion schemes ($5 billion over 6 years), fraudulent issuing of receipts, poor controls over expenditures both in Canada and abroad etc – those are far greater problems in Canada.

Furthermore 1) Canada requires disclosure of compensation in increments till $350,000 whereas before it was 120,000 which is a very substantial improvement in our context. 2) Compensation according to the bill is not just salary but “compensation” “includes salaries, wages, commissions, bonuses, fees and honoraria, plus the value of taxable and non-taxable benefits;” Hope that answers your question. 3) In Canada I can search in an Access database through all of the T3010 information for free and see which charities are paying what increments – I don’t have to go from one 990 to another as I understand one needs to in the US. I think in fact that Canada is one of the few countries that has made the information electronically accessible as opposed to a PDF on a site which makes it cumbersome to compare thousands of charities at once. 4) I do not think in the big picture compensation should be used as a proxy to determine the effectiveness and usefulness of a charity. There is so much more important information for which there is little transparency required (although some charities voluntarily report on it).

My understanding of the US includes that it takes 3 years of failure to file your 990 to be deregistered as a 501(c)(3) – in Canada if you don’t file your T3010B form within 6-10 months after the deadline a Canadian charity will lose its status. So with a particular charity in the US they may not file for a few years and the information you are receiving can be 3-4 years out of date – even though it is correct to the penny! I am sure that you have seen examples of that.

In terms of salary caps which I agree should not be lumped in with the issue of disclosure and transparency.

Compensation in Canadian charities must be appropriate otherwise it is a breach of the duties of the board/governors and there are significant stakeholders concerns.

In the Canadian context I think it is important to decide what type of transparency would be helpful to various stakeholders of charities, to prioritize that information because charities have to do their mission (obviously they are not there just to fill in forms), and to require that the most useful information is requested from charities on the T3010 and then available to the public. I think that it is important to recognize when certain information on a particular point is enough especially when there are other important areas that are getting little to no attention. There can be different levels of transparency for small versus large charities etc.

Mark Blumberg
http://www.globalphilanthropy.ca

Along these lines, I have to take issue with Mark Blumberg’s assertion that Canada has “excellent transparency on the issue of compensation” and that the bill ignores “the extensive transparency requirements that already exist”. I’ve taken a look at the relevant tax form, schedule 3 of T3010B, as well as the accompanying instructions, and note that all forms of compensation are lumped together. I also note the manner in which compensation is reported — by the number of people falling within each dollar range — and have a hard time considering this to be “excellent transparency”.

I’m still not taking sides. Honestly, I don’t care how this turns out. I don’t have a dog in the fight, as the saying goes. But I’m also not understanding Blumberg’s statement that “If providing exact salary information is a poor idea…”. I can’t find, or perhaps I can’t follow, his argument. Why is it a poor idea?

Identifying actual compensation on a per individual basis, with a breakout as to the various types of compensation, would be consistent with the US treatment effective with the 2008 tax year. At least in our circumstances, it seems to represent a reasonable degree of transparency. Certainly, as a consultant to nonprofit organizations in this area, it will allow me to do a better and more informed job.

By the way, I think Blumberg’s point that more transparency about evaluations of the charities’ work is needed is a good one…and one that is applicable to the US nonprofit sector as well.

What I find most striking is that the bill contains two very different provisions: 1) transparency/reporting and 2) capping compensation. I am surprised that these issues are being conflated, and would imagine that different constituencies would have different stands on these two issues (I would).

As I mentioned to you, I received a call from Ms. Guarnieri’s office, filling me on some of the next steps for the bill. I understand that the second hour of debate in the house will happen on 4/19, and if passed, the bill will then go to the Finance Committee. I will be interested in keeping an eye on how it and the accompanying discussion proceed, and look forward to continuing to hear your views on it as well.

Thanks again!

As a semi-frequent (?) visitor to Canada, and in the interest of expanding my professional horizons, I’ll definitely be keeping an eye on how the proposed legislation unfolds, and look forward to hearing more of your views. I will also be continuing to write, both here and on the Mission Connected blog, about my views on executive (and non-executive) pay in the nonprofit sector.

Finally, I have to tell you that I love love love your blog (and have added it to my blogroll). If mine grows up to have even a quarter of the personality that yours does, I’ll be a very happy blogger.

Thanks again, Claire. Be well, and stay in touch!

I’m from the great white North so I thought I could help put this bill in context. In my opinion, it didn’t happen in a vacuum.

MP Albina Guarnieri represents Mississauga-East-Cooksville, a Toronto-area riding where many newspapers have made a point of writing critically and specficially about executive compensation & fundraising costs per dollar.

The Toronto Star in particular has been highlighting the charitable sector (beginning with an investigation series in 2002) and has since published many pieces that have generated a lot of commentary from the public.

Here are some of the articles that have inspired debate in the community, and could have contributed to the attitudes shown by those supporting/creating the bill.

Charities admit fundraising mess – July 15, 2007
Columnist discusses commission-based fundraising tactics for major charities:
http://www.thestar.com/news/canada/article/236046

Feds aim to revoke Children’s AIDS – March 16, 2010
Investigation of the costs-per-dollar at a pediatric AIDS foundation:
http://www.healthzone.ca/health/news/investigations/article/780906–feds-aim-to-revoke-children-s-aids-charity-after-audit

Fox’s Celebrity Worries Charity – Sept 24, 2009
Discussion of Michael J. Fox’s American charity vs. an established Canadian charity:
http://www.healthzone.ca/health/newsfeatures/research/article/700200–fox-s-celebrity-worries-charity

Charity boss gets 2.7 million send-off – October 1, 2009
Critical commentary on the published salaries for staff at a hospital foundation:
http://www.healthzone.ca/health/news/gta/article/703659–sick-kids-charity-boss-gets-2-7m-send-off

Shady Kids Charity Has License Yanked – May 12, 2009
Expose on findings of a Canada Revenue Agency audit:
http://www.healthzone.ca/health/news/gta/article/632819–shady-kids-charity-has-licence-yanked

This all comes after a 2006 series of articles run by the paper that calculated only 19 cents of every dollar donated to MADD Canada was spent on programs. This investigative piece and follow-ups created a ripple effect in the community and has stuck in the public perception.

One of the pieces is here:
MADD’s exorbitant costs anger charity’s volunteers:
http://www.thestar.com/news/article/134309

Not every critical article on the charitable sector is written by the Toronto Star, not every article written about charities is critical – I don’t mean to pick on them, but they’re the paper that makes many of their historical articles available on the web and easy to share!

I wanted to highlight some of what’s been written about charities up here because I think it sets the stage for why a bill like this could be tabled and attract public attention.

This post was mentioned on Twitter by joe_brown: New Done By People blog post: Canada vs. USA…the #nonprofit executive compensation version http://bit.ly/cjYkCS #hr…