Bill S-279 An Act to amend the Income Tax Act (data on registered charities) has passed first reading in the Senate on October 4, 2023, and second reading on May 30, 2024.   It has not been to committee, or the House of Commons yet.

The act identifies its purpose as “The purpose of this Act is to ensure the collection and dissemination, in aggregate, of data on the directors, trustees, officers or like officials of registered charities within the meaning of subsection 248(1) of the Income Tax Act and whether they are members of each of the designated groups as defined in section 3 of the Employment Equity Act.”

In essence, the act will mandate that CRA must collect certain demographic information on what are called ‘directors, trustees, officers or like officials’ of registered charities.  The information will include how certain people fit into designated groups as defined in section 3 of the Employment Equity Act which say “designated groups means women, Aboriginal peoples, persons with disabilities and members of visible minorities; (groupes désignés)”.

The Act requires:

149.‍11 (1) No later than June 1 in each calendar year, the Minister must prepare and complete a report providing data on directors, trustees, officers or like officials of registered charities and whether they are members of each of the designated groups as defined in section 3 of the Employment Equity Act in respect of registered charities whose most recently completed taxation year began on or after March 31 of the preceding calendar year.

CRA does not ask for information on diversity as it is interesting and important but not really related to the mandate that it has at the moment under the ITA.  That might be why this legislation is being proposed in the first place.  If the ITA is adjusted to require CRA to collect that information, then CRA will need to collect that information.

A recent Stats Can report (March 20, 2024) notes;

Composition of boards of non-profit organizations

Diversity within non-profit boards broadens perspectives, experiences, and expertise, strengthening the ability of non-profit organizations to make impactful decisions, advance initiatives for civic improvement, social welfare and public benefit. Almost all (92.6%) organizations have boards of directors.

In 2023, less than half of board of director positions in non-profit organizations were filled by women (47.3%). Organizations related to social services (70.4%) and environment (56.0%) had the greatest proportion of positions filled by women. Conversely, organizations related to business and professional associations and unions (36.4%) had the lowest proportion of positions filled by women on their board of directors, followed by organizations related to religion (37.1%).

Around one-tenth (9.8%) of all board of director positions are filled by members of racialized groups. This varied by type of organization, as it was higher for religious organizations (15.7%), followed by business and professional associations and unions (13.1%). Organizations with the lowest proportion of members of racialized groups filling board of director positions were related to environment (2.9%), followed by organizations related to development and housing (4.7%).

Stats Can notes that the following is the distribution of board positions filled by members of designated groups:

	%
Women	47.9
Racialized people	9.4
Persons with a disability	3.2
First Nations, Métis or Inuit people	2.8
Non-binary people	0.8

I will discuss some preliminary thoughts on the pros and cons of this bill.

PROS

• There is no question that having diverse boards can result in better decision-making by nonprofits and charities.  More importantly, from a fairness point of view, the lack of representation of certain groups on certain very important charities is quite noticeable. Sometimes what is measured is paid attention to, and in this case, diversity would be measured and information provided to CRA
• The discussion, whether the bill succeeds or not, raises the profile of the issue of diversity on charity boards, and every time someone brings up the T3010, it raises awareness of this important form.
• It encourages groups to again consider the extent to which their boards have diversity.

CONS

• When politicians decide exactly what questions will be on the T3010, you are creating a potential problem. The T3010 should be devised by CRA without interference from individual politicians.   We don’t want the T3010 to become a political football for politicians.
• Unfortunately, diversity in this bill is quite narrowly defined as in the Employment Equity Act.  It does not include, for example, LGBTQI people.
• We have huge gaps in the information requested by CRA on the T3010.  For example, there are now zero questions about what political activities a Canadian charity is undertaking.  There are no specific questions about volunteers, and for many small charities, their volunteers are more important than their financial information.  Every charity is supposed to have a public benefit and there are no questions on public benefit in the T3010.  How much is fundraiser by bequests?  Absolutely no idea because there are no questions on bequests in the T3010.  How much does the charity spend on legal fees – some charities don’t want that information to be public because they have spent a lot of money on lawyers defending them on claims of abuse, etc.    Currently, the T3010 asks about employees earning over $350k.  There are people earning substantially more than that and new categories should be added.   In other words, there are lots of ways to improve the T3010, and to focus on just one question may not be the best way to improve the form.
• We know that many important institutions are not diverse. Statistics Canada has released information on this problem.  They provided very detailed information as of March 2024.    Should we not focus on matters that are both important and we don’t have almost any data on those issues?
• Apparently this information will not be available publicly, and just part of a confidential schedule. Therefore the public will not be able to see the results of this information. Instead, perhaps CRA will release some sort of anonymized information on the data.
• Making 86,000 charities scrutinize these issues is not necessarily helpful.  Many smaller groups have tremendous problems getting anyone on their board.  We know that many large foundations and even large institutions don’t have diverse boards.  Statistics Canada recently did a study on this topic.  We don’t need to add this question to know that charities have a long way to go to improve diversity.
• Groups that don’t provide that information may be revoked by the Charities Directorate.  It is not likely that they will do that, but technically, if you don’t complete the question, then your filing is incomplete. I have suggested with respect to different questions that some questions could even be optional. For example, I have suggested that volunteers are vital for some organizations and not as important for other organizations.   Having questions on the T3010, even if optional, at least will give charities that rely on volunteers the opportunity to answer the questions so that their data is recorded.  Most Canadian charities are relatively small, and volunteers are very important – you would not get that picture if you look at the T3010, which focuses significantly on financial metrics.  There are charities that have budgets under $100,000, but volunteers may be delivering the equivalent of millions of dollars worth of impact.
• The information on each charity will not be provided to the public, only may be used in aggregate form for a report or to deregister a charity if they don’t answer the question.  So it requires time to complete but does not add transparency for the public.  No one, except for an analyst or two at CRA, will know which charities have no diversity on their boards.
• The T3010 would then have a single question relating to diversity of directors, and it does not deal with members, who are often far more powerful than directors. It is the members who determine the long-term direction of the charity and can easily remove directors.
• If you care about diversity and making boards more diverse, this added question does not require more diversity. A more powerful tool would be to make certain grant funds available to groups that can demonstrate diversity in their governance structure.  Or to have a journalist like Robyn Doolittle, who has discovered the lack of diversity in corporate boards, cover this issue.  This will also not help donors and funders if they wish to provide more funding to groups that have diverse boards.
• There is confusion as to exactly which people are being counted. CRA typically uses the term director/trustee and like official, but this legislation refers to “directors, trustees, officers or like officials.” Is this different from what is collected in the T1235 form?

It will be interesting to see what happens with this legislation and if there are other improvements in transparency in the non-profit and charity sectors. Unfortunately, the lack of transparency on so many different issues is part of the reason that the public has a lot less trust in charities today than they had 20 years ago.

Here is the text of the legislation: