Want to make a donation and get a tax credit for 2012? Under current rules, you need to get your money to your favourite charity by 11:59 pm on December 31 to qualify for a tax deduction for this year.

But if Bill C-458 passes, the charitable giving deadline will move to the final day of February of the following calendar year, aligning it with the RRSP contribution deadline. The bill also proposes to create a “National Charities Week” which would run the final week of February and ostensibly raise awareness and promotion about the work charities do across the land.

The bill, also known by its catchier title, the National Charities Week Act, was introduced on October 31 by Peter Braid, Member of Parliament for Kitchener-Waterloo and is currently awaiting second reading in the House. In the meantime, its merits are being debated by supporters and detractors alike within the country’s charitable sector.

Giving hither and yon

Asked where the impetus for his bill came from, Braid told CharityVillage that his work with nonprofits as well as a prior private member’s motion, M-559, he introduced in 2010, were the catalysts. That motion, which asked the Standing Committee on Finance to review the charitable tax credit and a proposal to remove capital gains tax from donations of private company shares and real estate, he said, triggered a study by the committee to look at ways to encourage Canadians to increase their charitable giving. Motion 559 received unanimous support in the House.

“I participated in one of the early hearings [of the finance committee] on this subject,” he said. At that hearing noted Ottawa-based charity and tax lawyer Adam Aptowitzer appeared and made the suggestion that would lead to the drafting of C-458, Braid said. “It resonated with me and as a sitting member of the committee, I had the opportunity to ask Mr. Aptowitzer some questions about his proposal.”

After some more research on Aptowitzer’s suggestion, Braid said he started consulting with both Minister of Finance Jim Flaherty and various players in the nonprofit sector in his own riding as well as nationally. Among those consulted “to gauge interest and support” for the bill were Imagine Canada, United Way Centraide Canada and World Vision Canada.

Defending the logic of his bill, Braid argues that one of the primary reasons people give more in December is because of the traditional and often religiously motivated “spirit of giving.”

He said many charitable organizations see his bill as providing a “second opportunity” for giving at the end of February.

Asked if any study has been done to determine what potential added donation levels could result from the bill, Braid said no modeling had yet been done on this topic.

“But as a result of the bill proceeding through debate and the legislative process, and further study at committee, I think there may be opportunities to pursue that sort of research,” he said.

For now, Braid said the feedback he’s received from the charitable sector about his bill has been “overwhelmingly positive.”

Adam in the garden of charity

Aptowitzer confirmed that he was asked by the Finance Committee to submit a suggestion about tax-related incentives for more charitable giving. What’s contained in Bill C-458 is “one of the suggestions I put forth,” he told CharityVillage.

He said he and Braid had informal conversations about the idea to move the charitable giving deadline to the end of February and create the National Charities Week, but the MP never officially consulted him during the bill’s drafting process.

Aptowitzer echoed Braid’s reasoning for the bill, noting that the proposed model for giving is based on the model for RRSP contributions. “It’s not about extending a deadline so that people give more. It’s to create a second season of charitable giving. The first would be the Christmas season… then the tax [season] and a new charitable giving season.”

“The idea really is that it gives charities another kick at the can to speak with their donors and a chance to educate their donors about how the incentive system works,” he said.

Aptowitzer said he believes the bill is inherently nonpartisan and would likely receive support from the majority of parliamentarians. “It’s the kind of thing all parties can agree on. Whatever objections [to the bill] exist out there, I don’t think there are compelling reasons to oppose it.” He said the majority of the people and clients he’s spoken with have had “nothing but ecstatic comments” about the bill.

But there are serious concerns (if not outright objections) about C-458’s potential impact, notably from the folks at Imagine Canada and particularly from another respected charity lawyer, Mark Blumberg.

Imagining the possibilities

Marcel Lauzière, president and CEO of Imagine Canada, laid out his reservations about the bill while still supporting its intent. He is quick to praise Braid for his genuine intentions and belief in helping charities, but noted there are mixed feelings about the proposed legislation.

Imagine Canada pointed out to Braid that there could be unintended consequences to moving the charitable giving deadline. Lauzière said he would like to allow more time for more in-depth study of the bill to “identify dangers and suggest ways in which they could be mitigated.”

As an example, Lauzière noted that many organizations have entrenched communications and fundraising efforts tied to the end of the calendar year and the holiday season. Additionally, Imagine Canada points out that the Canada Revenue Agency (CRA) currently requires all charitable receipts for a calendar year to be issued by the end of February. If the date were moved, when would the charities have to issue receipts by? Would the CRA make changes to accommodate the new deadline? What would the administrative burden be on charities? These are but some of the questions and bureaucratic problems that could arise.

“One thing we have said is that if this bill were to pass, there would have to be a substantial transition period allotted for charities to make the necessary adjustments and for donors to catch on to it,” Lauzière said.

“The other thing to ask is what donors actually think about this. At the end of the day, it’s really about donor behavior. If there is something positive to come out of here, we would hope it means Canadians giving more than they’d given in the past,” he said. “How will they react to this? Will it make a difference? I’m not sure that’s been looked at.”

Imagine Canada’s priority for change in the tax incentive realm remains its Stretch Tax Credit proposal and Lauzière says that his organization would be “disappointed if C-458 became the government’s only response to the challenges facing the sector. If this bill goes forward, and if government sees this as ‘the thing’ they’ve done for charities, then we will be very unhappy. We’ve made that clear to [the finance committee], Braid and Flaherty’s office.”

With regards to the stretch tax credit, Aptowitzer said the proposals in Bill C-458 “would seem to complement the stretch tax credit quite well.”

“I see this [bill] as good for all donors and charities and probably good for the implementation of the stretch tax credit” should Braid’s bill become law, he said.

Lauzière said he’s heard from many social service organizations that tell him come January, it is always very hard to connect with Canadians to donate. “It’s as if [the public] believes all the issues have been solved over the holiday period.”

Linking the charitable giving deadline to the RRSP season could be a good marketing opportunity for charities to get Canadians thinking about their giving patterns in a more planned way, he said.

“But it’s impossible to predict people’s giving behaviours or patterns.”

Ball of charitable confusion

Blumberg is of a similar mind on the subject.

The Toronto-based lawyer agrees with Lauzière that certain unintended consequences could arise and that there should have been more thought put into the drafting of the bill.

“The sector has invested an enormous amount of energy in the Braid hearings at the Finance Committee. I was surprised that Mr. Braid did not wait to consider the Finance Committee report that he requested before proposing a private members bill to implement certain changes on charitable giving,” he told CharityVillage via email.

He wrote that the date change might cause more confusion than anything else.

“December 31 is a firm date that people know and act upon – now donors will not need to worry about December 31, and they may be preoccupied with other issues in late February and simply forget to donate,” Blumberg said. “Also the juxtaposition of RRSPs for your old age and charitable giving may result in charitable giving losing out.”

Blumberg also repeats Lauzière’s contention that tax receipt issuance could cause major headaches for charities. Pushing the charitable giving deadline to February, he said, will put undue pressure on charities, as they will now “have to rush them through in early March as taxpayers will complain if they don’t have their receipts for filing their tax returns in March.”

“We have too much tweaking with tax benefits and dates and not enough dealing with real issues…such as more transparency about charities and nonprofits and preventing a small number of people from abusing the benefits of registered charities,” Blumberg wrote. “Canadians have been generous with charities but if the public trust in the charity sector is reduced then the deadline for donations will make little difference.”

As far as the idea of a symbolic National Charities Week goes, Blumberg said he has no issues with it. “Although I would have preferred a warmer time of year. I can think of many more concrete suggestions to give greater profile and voice to the charity sector including having a cabinet minister whose sole responsibility is the voluntary sector.”

Still, at least one major charity likes C-458 and all it has to offer.

United we give

Dr. Jacline Abray-Nyman, president & CEO of United Way Centraide Canada, said her organization believes a National Charities Week would help promote and profile the work charities do “beyond a traditional campaign season, and encourage Canadians to give beyond the holiday season as well.”

She noted that according to Statistics Canada, 10% of donors provide 63% of total charitable donations in Canada. “To ensure the long-term sustainability of the charitable sector, we must find new and innovative ways to both increase the donor base, and motivate larger donations.”

Some other positive outcomes from Braid’s bill include allowing Canadians to focus more on giving after the busy holiday season. A time, she said, when people are “not necessarily focused on strategic financial planning and may not maximize their donation to receive a greater charitable tax credit.”

“For some nonprofit organizations, extending the deadline may help to reduce the administrative crunch they face between Christmas and New Year’s, when an extraordinary number of donations are received,” Abray-Nyman said.

She added: “The designated National Charities Week would be an excellent avenue to raise the profile of our sector and the work we do, as well as provide an extra promotional boost in conjunction with the revised donation deadline.”

Abray-Nyman also mirrored what both Lauzière and Aptowitzer had to say about how C-458 could be a good complement to the Stretch Tax Credit proposal.

“The bill could work in conjunction with…the Stretch Tax Credit, both of which carry the rationale to encourage Canadians to think more strategically about and better plan their giving,” she said.

It’s not in the budget…yet

According to Braid, it should be noted that the finance committee’s report on C-458 would include recommendations to the finance minister to consider its proposals for possible inclusion in a future federal budget. So even if the bill doesn’t pass through the legislature, it’s possible that the Finance Minister could simply insert the legislation into a budget.

At the moment, the bill awaits second reading and debate in the House. As of November 14, it’s currently sitting at No. 22 on the private member’s business list, meaning it would likely only come up for debate at the end of January 2013.

However, Braid could always try and switch debate timeslots with another MP whose bill is scheduled for earlier debate. No word on whether that’s being considered.

What do you think? Would this bill have a positive or negative impact on giving and and the charitable sector in general?

Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.

Photos (from top) via iStockphoto. All photos used with permission.

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