The past couple weeks has seen Conservative governments in both Canada and the UK release their 2012 budgets. Traditionally, conservatives have been pro-charities because they want to reduce the size of government and the services it provides to citizens. The more the non-profit sector can step in to fill the gap of government services the better. It means taxes can be lowered and social services can be funded by private philanthropists. It’s no wonder charitable giving and the non-profit sector in the US is so huge. But social inequities continue to grow and many people find themselves marginalized and without basic services, like healthcare, adequate education and employment opportunities.
So it’s worrying that these newly announced budgets will hurt the non-proft sector’s ability to both fundraise and stand up for the people they are working to support. The UK budget primarily does the former (i.e. diminishing capacity to fund operations), while the Canadian budget does the latter (i.e. silencing advocacy and critics…plus some intended limiting of funding).
UK budget – hurting charity funding
The hipocracy of the “Big Society” is clearly demonstrated in the UK government’s budget move to limit charitable tax relief to £50,000 a year or 25% of the donor’s income (whichever is higher). Charitable tax relief means that individuals do not pay taxes on the money they donate to charity – which is meant to encourage philanthropy. So it is baffling that the conservatives want to put a limit on this relief (which was previously unlimited) and thereby give donors a disincentive to give large sums to charities at the same time that the government is cutting social programs! This could – and probably will - severely hurt non-profit funding, which is already forcing charities to downsize and close at unprecedented rates. For more on the budget implications for charity funding, check out this article from The Independent, Philanthropists: Giving up Giving?
Canadian budget – silencing critics
If the UK budget will hurt charities’ ability to raise funds, then the Canadian budget will hurt charities’ ability to perform their services. Essentially, the conservatives are seeking to clamp down on political activity and foreign funding of charities. Is it because of ongoing systematic problems and abuse of charitable status? No, it’s because, as some critics argue, the government is trying to muzzle its politically active opponents through fear mongering. Here is the Budget 2012 excerpt that causes concern for Canadian charities:
[U]nder the Income Tax Act charities may devote a limited amount of their resources [10%] to non-partisan political activities that are related to their charitable purposes. Recently, concerns have been raised that some charities may not be respecting the rules regarding political activities. There have also been calls for greater public transparency related to the political activities of charities, including the extent to which they may be funded by foreign sources.
What evidence do they have of “concerns being raised” about charities’ political activity? Presumably they mean their own concerns, because almost all charities are well below their allowable 10% of political activities, and there are by no means widespread abuses of this limit. And what “calls for greater public transparency” of “foreign funding” has there been? Perhaps they mean a few minority conservative Senators who are protecting industry interests and have no real case against international funders seeking to achieve the same charitable aims as their Canadian counterparts. What about foreign funding of Canadian industry? No mention of that of course.
Essentially this budget is the Canadian government’s public declaration that they won’t stand for charities that seek to criticize their policies and activities. It and the UK budget are very worrying for the short-term future of non-profits.