Transparency in the charitable sector final

TRANSPARENCY IN

THE CANADIAN

CHARITABLE

SECTOR

TRANS·PAR·ENT

Adj.

Allowing light to pass through

so that objects behind can be distinctly seen.

THE MEDIA’S

TAKE ON

TRANSPARENCY

WHAT I’M GOING TO

COVER

• An overview of free third-party transparency tools for

charitable organizations

• An overview of Imagine Canada’s new CharityFocus tool

and what unique transparency resources it offers

• An overview of the challenges (and solutions!) of using

financial data in transparency-related tools

• The future of transparency

• Feel free to ask questions at any point!

ABOUT ME

• President, Common Good Strategies

• Previously, Senior Research Associate at Imagine Canada

• Designed CharityFocus.ca

• Designed T3010QuickPrep.ca

• Many reports on the T3010

• 1000s of hours working on T3010 and financial

statements!

Any opinions expressed are solely my own.

DOES TRANSPARENCY HURT

CHARITABLE DONATIONS?

“Satisfied customers tell three

friends, angry customers tell 3000”

Pete Blackshaw

% OF TAX FILERS CLAIMING

DONATIONS ON TAX RETURNS

29.4%

23.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf

DONATION RATE TO

CHARITIES, BY HOUSEHOLDS

38%

29%

62%

55%

0%

10%

20%

30%

40%

50%

60%

70%

Rate of giving to religious charities

Rate of giving to non-religious charities

Source: Analysis from Survey of Household Spending

LEVEL OF TRUST IN

CHARITIES, 2000 TO 2008

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2000 2004 2006 2008

A lot of trust Some trust

TOTAL DONATIONS TO CHARITIES

FROM INDIVIDUAL TAX RETURNS

(IN $1000S)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Source: http://www.imaginecanada.ca/files/www/en/researchbulletins/rb1501en.pdf

• Lack of transparency can definitely hurt an individual charity

• One of the strongest predictors of donations to a particular

charity is trust in that charity

• Most people do not use financial information, even if its

available

• Of those that do, most use it as a “heuristic”

• Is it there or not?

• The challenge is that people also use heuristics to judge the

charity

• The media definitely will use this information

• It’s always better to have bad news come from your own

organization

According to the Muttart Foundation’s Talking About

Charities Survey:

• 49% of donors want more information about the work

charities do

• 62% strongly agree that more attention should be paid to

the work that charities do

Source: Muttart Foundation’s Talking About Charities Report: 2008

TRANSPARENCY

INTERMEDIARIES

IN CANADA

CHARITY RATINGS

MONEYSENSE

CHARITY 100

CHARITY INTELLIGENCE

TOP PICKS http://www.charityintelligence.ca/images/to

ppicks/ci_top_picks_2011.pdf

CHARITY MATCHING

A NEW TRANSPARENCY

TOOL FOR CHARITIES

Provided by

“CharityFocus is a powerful and user-friendly, fully bilingual resource for the Canadian public, which provides comprehensive financial information about all Canadian charities. The site draws from organizations' T3010 filings to the CRA but also provides charities with an opportunity to upload their own material to provide context and meaning to the numbers.”

- Stephen Faul, Vice President Strategic Communications and Business Development

WHAT NEXT?

• More structured details on volunteers?

• More structured details on impact?

• More APIs for social media as new sites become popular

HOW TO USE

CHARITYFOCUS

• Step 1. Make absolutely sure your current T3010 is accurate and fully complete

• Make sure you have charitable programs, fundraising expenditures, etc. on the form

• Check your math

• Check for keying (that’s not a typo) areas that may have been introduced by CRA

• Step 2. Ensure that key information is accurate going back for all years available (Revenue, Expenditures, Charitable Expenditures, Qualified Donees)

• Step 3. Check all years available and ensure the information is accurate

• Step 4. Make sure all future submissions are accurate.

HOW TO GET MORE

FROM CHARITYFOCUS

• Upload your annual report

• Upload your financial statements

• Upload your social media channels

• Upload your brochures

• Upload impact statements and evaluations you’d like to

share with the public!

• Upload your own RSS news stream

• TELL YOUR STORY.

THE PROBLEMS WITH

T3010 INFORMATION

ERRORS ON THE

T3010 (2007)

http://www.muttart.org/sites/default/files/report/PerspectivesOnFundraising-FINAL.pdf

Annual revenue With 1 error on

the T3010

With 3 or more

errors

Less than $30,000 42% 16%

$30,000 to $99,999 35% 9%

$100,000 to $249,999 29% 6%

$250,000 to $499,999 25% 5%

$500,000 to $999,999 22% 4%

$1,000,000 to $9,999,999 22% 4%

$10,000,000 or more 23% 5%

My favourite error:

$5.7 billion dollars in tax-

receipted donations from one

organization

$205 million dollars

Source:

http://fotos.eluniversal.com.mx/coleccion/muestra_fotogaleria.html?idgal=3405

Approximately $5.7 billion dollars

UNDERESTIMATING REVENUE BY

$1.5 BILLION

OTHER ERRORS

• In 2007...

• 84% of organizations report dollars received from tax-receipted gifts or fundraising revenues.

• 58% completed the checklist on the T3010 which identifies which type of fundraising methods they use.

• 27% of charities reported any amount greater than $0 for fundraising expenditures.

OUR SOLUTION FOR

THE PROBLEM

T3010 QUICKPREP

• www.quickprep.ca

• This tool was created with the support of Canada Revenue

Agency!

LIMITATIONS OF THE TOOL

• Only errors that can be found by a computer

• Though over 150 business rules built into the system

• It’s an online only application

• It does require basic technological skills

THE FUTURE OF THE

QUICKPREP

• We hope to continue to improve it based on feedback from

users, charities, and the general public!

• From reactive to proactive

ANOTHER COOL SITE

SEARCH FOR

DIRECTORS

the future of

transparency

MOBILE ACCESS

MOBILE

• 7% of our traffic is from a mobile

device

• Almost ½ of mobile traffic is now

from an Ipad

• Almost 1/3 of mobile traffic is from

an Iphone

• Average time on site: 46 seconds

WEB SEARCHES

3

4

Average time on site: 58 seconds

MORE INFORMATION

ON NONPROFITS

• Almost no information on these organizations!

OTHER KEY TRENDS

• More expectations

• More charities, larger charities

• (Mo’ money, mo’ problems)

• More ratings

• More automatic processing of your data

• Spiders, automatic processing of your website

• Social media

• Blogs

ADDITIONS I’D LIKE

TO SEE TO THE T3010

• More awareness of public usage of Charity data

• Notes to the financial statements

• More information on volunteers

• More sections for charities to provide context and impact

to their filings

• More details on technology expenditures

• Online filing

• Tiered forms

Transparent concrete

BECOMING MORE TRANSPARENT

QUICK CHANGES FOR

YOUR WEBSITE

• Upload your annual reports on your website

• Upload your audited financial statements

• Decide whether you might want to link to your T3010

• Upload impact statements, key metrics, and evaluations

that can show how well you’ve done!

• Make it easy to find!

BIGGER

CONSIDERATIONS IN

TRANSPARENCY

• According to your annual reports and financial statements,

did nothing bad happen last year?

• Is this decision the sort of things my staff are going to

complain about when they’re drunk after work?

• Do reporting frameworks make sense for our organization?

• Do we want to highlight our transparency by joining

Standards of Accreditation organizations?

• How can we explain to our stakeholders how our decisions

are made?

• How can people contribute to the decision making?

• Should we upload all of our policies relating to conflict of

interest, ethics, whistleblowing, ethics, etc.?

THANK YOU!

[email protected]