“Government should change their definition of charity.”

Written by Banu Raghuraman

The opinions are those of the author and do not necessarily represent the official views of Endeavour.

Our theme for February was the role of government within non-profits. We met up with Alex Gill, one of our board members, to delve deeper into the subject.

volunteer_boardalexAlex Gill is a social entrepreneur and university instructor who enjoys working with community activists, non-profit executives, corporations and others who want to make a difference. He currently heads Mendicant Group, a consultancy that helps charities, non-profit organizations and companies improve their social impact. Mendicant’s current clients include a diverse range of non-profit organizations, including those from areas such as health care, child and youth development and the environment. Prior to founding Mendicant, Alex spent more than a dozen years as an executive at a number of large non-profits and associations.

Alex holds appointments in Ryerson University’s Department of Politics and Public Administration and the Institute for the Study of Corporate Social Responsibility, where he regularly lectures about non-profit management, advocacy and corporate citizenship. In 2010, Alex co-authored AIM: Achieve, Inspire, Make a Difference, a book which helps people use proven executive coaching methods to develop their own ability to give back to others.

1. How has the role of government evolved in its involvement in the non-profit area, at the Municipal, Provincial and Federal levels?

One thing to clarify is that non-profits existed prior to the existence of any government intervention. A lot of social programs or organizations that carry out social services were around before the government began to fund them. Usually, the government identifies a missing aspect in society and then find out is already being serviced by an existing non-profit. Then they decide to provide funding..

While this relationship started out with good intentions, beginning in the 1990s it has become increasingly dysfunctional – the government requirements for accountability have become stricter, and the concept of multi-year funding has largely disappeared. Therefore, they are providing less money and expect the non-profits to look for alternate sources of funding.

To top it off, government is generally risk-averse and they are reluctant to fund programs that are innovative and outside the bounds of how we normally provide services. This reluctance to take a chance on innovation makes it difficult to lower social service costs in the long run.

2. What policies are affecting non-profits’ processes or functioning or governance?

One key concept that impacts the non-profits would be the government’s definition of charity. That needs to be changed so that it is placed at a higher priority than where it is today. Although half of the country’s non-profit sector is made up of charities, we do not have an act of Parliament that clearly spells out what is and is not charitable – we leave it up to the Canada Revenue Agency.

3. How has the government’s spending pattern changed in terms of its interest in the non-profit area?

Governments are always asking non-profits to do more with less, and they are largely avoiding the multi-year funding and core funding that we know makes organizations better at what they do. And to top it off, when funding is frozen non-profits are expected to keep up with inflation – which means that they have to do more with less each year.

4. And in line with that, how are the grant mechanisms shifting?

Grants obtained from foundations are often expected to pick up the slack where the government is lacking. They do generally fund more innovative options and are flexible in terms of what they fund within the social sector.

But we are talking about two to three billion dollars that is granted from foundations, in comparison to the government, which provides funding that amounts to the tens of billions of dollars.

5. Where and how is our money channelled internationally when we refer to social causes through CIDA (Canadian International Development Agency)?

The government used to give money exclusively to large international non-profits.. However, now the focus is shifting to providing funds where we can profit economically. For example, donations may not go to eradicate poverty in Africa, but may go towards companies that are building structures in a poverty-stricken region or those who are doing economic development, with conditions that all the source material, labour, etc. is coming only from Canada. This gets into the concept of “Tied Aid” and is a big shift on how we used to do things internationally.

6. Do you have any closing remarks on the subject?

We often wait for things to happen and similarly, we wait for the government to provide funding. But the single biggest source of funding in the non-profit sector – 49% of total revenues – is from entrepreneurial options, such as social enterprise initiatives and nonprofits selling their services. We should encourage the mindset that we can always do things without waiting for the government to fund us.

The opinions expressed in the article are that solely of the interviewee, and do not reflect the views held by Endeavour Volunteer Consulting for Non-Profits.

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