Update April 20, 2011
With the dissolution of Parliament on March 26, all bills that had not received Royal Assent, including Bill C-470 on compensation disclosure for registered charities, have been terminated. Bills cannot be reinstated; however, a new bill with the same or similar intent to that of Bill C-470 could be reintroduced in the next Parliament. MP Albina Guarnieri, who originally sponsored the Bill C-470, is not seeking re-election, so another member of parliament would have to introduce the bill.
Update March 10, 2011
On March 8, Bill C-470 passed third reading in the House of Commons without debate, and on March 9, it passed first reading in the Senate. In its current form, the bill still requires Canadian charities to disclose the names and titles of all employees with total annual compensation over $100,000, beginning in 2012.
While CCVO supports the principle of transparency in the nonprofit and voluntary sector, it has concerns that organizations did not have an opportunity to speak to the implications of the amendment made by the House Standing Committee on Finance requiring disclosure of all employees earning over $100,000. The amendment was introduced after the Committee hearings on December 6, 2010. Of further concern is the inclusion of non-taxable benefits, including health and pension benefits; calculating total compensation would mean that the bill could apply to people with salaries below $100,000.
Update December 22, 2010
CCVO has learned that the amended Bill C-470 requires the disclosure of the name, job title and annual compensation of any and all executives and employees of Canadian registered charities who receive total annual compensation of over $100,000 beginning in 2012. Earlier versions of the bill applied the disclosure requirement only to the top five earners in an organization. The $100,000 floor is indexed to inflation and the Minister of Revenue retains the right to exclude from disclosure executives or employees who may be deemed at-risk. CCVO and its partners will determine whether this was a deliberate amendment to the bill and keep you updated.
Update December 8, 2010
CCVO is delighted that substantial amendments were made to Bill C-470 on December 8, 2010, by the federal Standing Committee on Finance. The bill, which will now go to the full House of Commons for a final vote, has been amended to remove the compensation cap. It now only requires that charities disclose the compensation, position title and name of the top five employees earning annual compensation over $100,000, with the $100,000 figure adjusted annually so inflation does not reduce its true value. CCVO is pleased that the Committee also responded to the sector’s concerns regarding the need for anonymity for some employees working in high-risk fields such as domestic violence and international development. The amended bill allows the Minister discretion in exempting public disclosure of information for justified reasons.
CCVO, Imagine Canada and other colleague organizations have been diligent in raising concerns about the impact the original bill could have on Canada’s charitable sector. These concerns were expressed through written submissions, meetings and formal presentations to the Committee in Ottawa on December 6, 2010.
Existing disclosure requirements
Through existing transparency and accountability requirements, charities are already disclosing the compensation ranges for their 10 most highly paid employees (without listing employee names) as well as information on charitable programs, revenue and expenditures including fundraising, transfers to qualified organizations, and more. Click here for a summary of these requirements compiled by Imagine Canada. CCVO supports these requirements and the need for transparency and accountability in the charitable sector. If there are concerns, we recommend that the government and charitable sector work together to meaningfully address them through changes to existing regulatory frameworks.
CCVO takes action on Bill C-470:
December 2010 – CCVO presents in Ottawa to the Federal Standing Committee on Finance and sends a follow-up letter addressing questions about the safety concerns expressed.
November 2010 – CCVO provides a one-page submission to the Federal Standing Committee on Finance.
September 2010 – sends letters to the leaders of the federal parties in the House of Commons, selected Calgary MPs and Albina Guarnieri, the MP who sponsored the bill.
August 2010 – CCVO and nearly 70 other charities endorse a letter by Imagine Canada to the federal parties.
Concerns regarding the disclosure requirements of the original bill
As originally drafted, Bill C-470 specified that the five highest-paid employees in every Canadian charity must have their names and salaries publicly disclosed. However, only an estimated 23% of Canadian charities have more than five employees. This means that for the majority of charities, disclosing the names and compensation of the top five employees may actual entail disclosing the names and compensation of all employees, including junior and part-time staff. This level of disclosure for non-executive positions goes well beyond anything required in the public or private sectors, and CCVO believes it is an unnecessary intrusion of employee privacy. The disclosure requirement is an additional concern for employees in higher-risk fields such as domestic violence or international development, who often prefer to remain anonymous to increase their personal safety.
Concerns regarding the compensation cap in the original bill
Bill C-470 originally proposed a $250,000 compensation cap for charity staff. In 2009, slightly more than 300 charities (mostly hospitals, health organizations and universities) paid $250,000 or more to at least one employee. These organizations represent less than half of one percent of the 81,000 organizations in Canada’s charitable sector. CCVO was concerned that the one-size-fits-all cap did not reflect the varying market conditions across Canada or the diverse types, sizes and complexity levels of charities. The compensation cap would undermine the autonomy of charities and their volunteer Boards of Directors to define appropriate and realistic compensation, and would set a precedent where government dictates compensation in a particular sector. In addition, the cap would decrease in real value over time as there is no adjustment for inflation. The consequences for organizations paying an employee over $250,000 could be severe, including loss of charitable status. However, implementing the cap could violate existing legally-binding agreements and cause significant operational, reputational and legal costs.
Alberta Prime Time feature on Bill C-470, Charity Clarity.
Imagine Canada website on Bill C-470 and summary of existing transparency and accountability provisions for charities.
Bill C-470 – the original draft legislation.
“Bill C-470 and the Backlash Against Fundraising”, an article by Malcolm Burrows.
Questions, Comments or Examples?
As CCVO continues its work on this issue, we would like to hear from you. If you have comments or questions, please email email@example.com or call (403) 261-6655.