I recently had the pleasure of co-facilitating a consultation with the nonprofit sector in Thunder Bay on behalf of the Ontario Nonprofit Network (ONN). The consultations are in part to inform the ongoing work of ONN and to inform the upcoming Canadian Conference on Social Enterprise (this consultation is happening through the Ontario Social Economy Roundtable). The results were fascinating and the following provides a high level overview of what I heard and learned. I have prioritized the feedback according to what I heard and what is actionable by ONN and CCSE. This is my own take on the feedback.
- CRA – the Canada Revenue Agency – is putting the chill on social enterprise. There is a lack of confidence or understanding about what charities can and cannot do vis a vis social enterprise. There is fear in the sector with rumours abounding that charities are being shut down. Those groups that are running social enterprises are facing administration burdens and high expectations. We are encouraged to collaborate, innovate and act more like business and now, new more creative nonprofits are solving multiple problems applying this thinking, but there is a sense that this may be in contradiction to charitable law.
- CRA Fundraising Guidelines are causing effecting educational efforts in small communities. So, you are a small charity in a community of under 100,000 and you are pulling together an event to educate the community. Yes, this is a fundraising event! But it is also an opportunity to build relationships, educate an audience, recruit prospective board members and create an event that the community can galvanize around. The event costs you $5000 to put on. These are mostly static costs – the hall, the food, the band, etc… You have a successful event for your community – 60 people come out and with ticket sales, you are able to raise $6000. You have just broken the CRA fundraising rules that tell you that you can’t spend more than 30 cents to raise a dollar. Hhhmmm…. What does this mean for charities? Was this the intention of CRA? How could a charity possibly know how much it would be able to raise? How does one decipher fundraising and education? How do these guidelines affect small charities and small communities?
- HST is a serious issue – The Harmonized Sales Tax will mean an increased administrative burden on the sector. We barely understand how to manage the GST, never mind having to file two different claims. And there is still confusion of whether projects are eligible or ineligible for GST tax credits. Does this mean that project funding will need to add a 13% line item to all funding proposals in order to cover these additional costs? How do foundations and funders feel about this? Another area of confusion was related to whether HST will be charged on membership fees?
- GST is being charged used goods. These products have already been taxed and given that the sales or used goods is actually helping the planet, it seems like the government is double-dipping in the taxation of used goods.
- Prefer being called the “Public Benefit Sector” – it was quite unanimous that the sector doesn’t want be to be called the volunteer sector as we are increasingly professionalized. We don’t want to be called that which we are not, ie. The Nonprofit Sector, but rather, there was agreement that we should be called the ‘public benefit sector’ as it captures our shared mission – which is to enhance the world for public benefit.
- Funders tell us to collaborate but they can’t seem to figure it out themselves? Why can’t we have standardized application and reporting processes that will help us to reduce our overall administrative burden? Every application form is different, every reporting criteria is different. Not only is this inefficient, but it lends itself to mission drift as NPO’s start delivering what they think that the funder wants instead of delivering what they feel that their community needs.
- Insurance is a major expense. In some cases, nonprofits are paying 7 different types of insurance (Directors and Operators, Cdn Pension Plan, Liability Insurance, General Operating, EI, building insurance, WSIB and vehicle insurance). There was real interest in either working with an insurance company or creating our own organization to self-insure in the sector.
- There is a need for a Minister for the Nonprofit sector (actually we decided to call her the Minister for the Public Benefit Sector) that can ensure that the nonprofit sector is considered in all government decision-making. We have a ministry of agriculture, a ministry of culture, a ministry of citizenship – it certainly would make sense for the sector to have a voice in government given that we represent $1million employees and even more volunteers and provide valuable social services and civil society engagement that enhances the lives of nearly every Ontarian. Our Minister should have powers, money and authority too
- We need to re-think the relationship between social services groups and government. The ‘us and them’ mentality doesn’t serve either party effectively. The social service sector is frustrated with begging to have money to provide services that the government should be providing. They are filling a key gap where the government is either unable or unwilling to provide this support.
- Social enterprises need more sources of patient capital – foundations and the sector need to better understand the potential of ‘program related investments’
- The whole idea of a ‘sustainability plan’ in the sector is really an issue – some things will never be revenue-generating, nor will they be, this doesn’t make them less valuable or needed. What goes into a good sustainability plan?
- Employees in the sector want better protection for their future. Nonprofit sector jobs are particularly insecure as they often rely on the whims of funders. There was an overall feeling of feeling under-appreciated, facing inconsistency of compensation across the sector and the idea of a nonprofit union even came up. Certainly there was a sense that a professional association would benefit the sector.
- The sector needs more stats and a better sense of what the impact of the sector is on society. We all see our role in measuring impact. And these stats and impact assessments need to be local, provincial and national.
- Best practices seem to have gone out of fashion and yet the sector doesn’t have the overview that the funders do. There is no where that the sector can turn to for best practices.
- With the development of social enterprise, nonprofits are seeking leadership to indicate where the market transformation opportunities might be. What kind of social enterprises should NPO’s be starting? What types of enterprises are proving themselves most successful?
- There is a feeling of futility and contradictions in the sector. Many of us feel doomed if we do and doomed if we don’t. You look at how the CRA is providing these barriers,, you see the challenge of raising a dollar and you see the world needing our services and thought-leadership more than ever. The Thunder Bay crowd agreed that we need a series called “The Five Stories of Futility: the challenges of our sector” which would capture the inherent contradictions that we face.
Over and over again, it became clear that we needed to raise the profile of the sector so that we could be taken seriously in the work that we do. Participants were delighted that there was an ONN that could be willing to shepherd some of these issues forward. But they also realized that much of what they faced were their own capacity issues. There was a sense of needing fresh new leadership… but then the futility and risk-aversion set in.
The consultation was an opportunity to raise two other major issues which were most relevant to Thunder Bay. These were the need for a local organizing group and the need to face the challenge of operating two parallel social service systems: one for aboriginals and one for everyone else. There was a true desire to look at how to collaborate more effectively to address aboriginal issues in their community.
Despite efforts, the consultation didn’t net much by way of input to things like tax incentives or new legal forms for social enterprise, but it sure was clear that there is a general lack of understanding about what could and couldn’t be done within a charity. No matter what there is a long road to educate and engage the sector in the uptake of new strategies to meet social needs through social enterprise.
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