The sector of non-profit organizations is faced with the controversy surrounding the organization STATES.
August 3, 2020 21h22
The case STATES does not help the charities
The canadian Press
OTTAWA — these are hard times for charitable organizations.
The activities of these charities were often interrupted during the pandemic, reducing their income potential, while traditional donation drop as a result of the economic crisis. To make matters worse, the sector of non-profit organizations is faced with the controversy surrounding the organization STATES.
Imagine Canada, which advocates for the funding of the charities, estimates that their revenues have dropped by nearly a third during the pandemic, because the economic uncertainty and high unemployment have forced households to reduce their discretionary spending.
The pandemic has only accelerated a trend noted since several years for many organizations that have sought new sources of revenue, through the sale of goods and services. Bruce MacDonald, chief executive officer of Imagine Canada, believes that nearly half of the revenue of charities in Canada come from these activities.
The revenue from everything that is not directly related to the work of the charity should go through a separate subsidiary company, as an enterprise of social economy. These separate entities are not generally subject to the same rules of transparency that the charities themselves, explained Mr MacDonald.
In 2016, the liberals have allowed the charities and the associations of amateur sports to get involved in a limited way in a for-profit business without losing their charitable status, as has been done by STATES. Two years later, an advisory committee set up by the government recommended to go still further, for example, by altering the tax system.
The brothers Kielburger
During four hours of testimony before the Committee on finance, House of commons, last week, the co-founders of the united STATES, Craig and Marc Kielburger, have indicated that they had launched an enterprise, “ME to WE”, in order not to violate the rules of the Canada revenue Agency. They claimed under oath that 100% of the profits of the company were returned to the charitable activities.
The most recent figures from Habitat for humanity have thus shown that in 2019, the “Centres for the renovation ReStores” have paid almost $ 6.8 million to the charity. “It is terrible if people think that there is a problem with the company of social economy, because it is the only way to obtain a greater impact and a certain stability of funding”, said in the interview, Julia Deans, executive director of Habitat for humanity Canada.
There were 110 stores “ReStores” before the pandemic: two did not survive the confinement – one in Dartmouth, Nova Scotia, and the other near Victoria, British Columbia.
Mr. MacDonald argues that the complex structure of the organization in the US, with its multiple foundations and ramifications, is not representative of the sector. He deplores that donors lose confidence as details emerge on UNITED. “And let’s face it, confidence, in our industry, it is of paramount importance.”
The agencies also fear that governments are reluctant to associate themselves with charities for political reasons. The ontario government announced last week that it will not renew a contract with UNITED.