Let’s say your organization is experiencing a decline in volunteerism and no matter what you try, you can’t seem to stem the tide. Meanwhile, thanks to the economic downturn, your expenses are escalating, making the lack of volunteers an even more frustrating problem. So, what now? Maybe, you wonder, the government can help. Perhaps if the Canada Revenue Agency (CRA) allowed volunteers to receive tax credits for donated time, they’d be more willing to give it.

Perhaps. But, as a recent report commissioned by Volunteer Alberta indicates, the solution is not as clear as it sounds. In fact, according to its writers, Clifford L. Spyker of Mount Royal College and John Peloza of Simon Fraser University, a lot more research is necessary before such an idea should take root. The reaction may come as a surprise to charities and government representatives alike, a number of whom have proposed such a plan in recent years. With so many organizations struggling for voluntary assistance, the idea seemed a viable response. And policymakers could never imagine the sector turning down prospective fund allocation.

Toward informed action

But Karen Lynch, ED of Volunteer Alberta, had her doubts. And, though the proposals were advanced by those whose hearts were primarily in the right place, Lynch was frustrated that they lacked research-driven data to back them up. It wasn’t just any data she was looking for. Staying away from any emotional components, avoiding the question of whether social factors would play a role, the report Volunteer Alberta eventually commissioned had a very specific mandate: determining whether a fiscal instrument like a tax credit can actually be used to stimulate volunteering. Plain and simple. “I wanted to provide research one way or another so that at least if we’re going to have public policy, it was informed,” she explains. In the end, while far from definitive, the report has effectively raised a number of significant questions, enough to give one pause.

Incentive or reward?

Take, for example, the basic, fundamental query that lies at the heart of the proposed credit: What is it meant to achieve? Is it an incentive to stimulate volunteerism or a reward after-the-fact? As ED of Volunteer Canada, Ruth MacKenzie explains, the distinction is highly relevant. Technically, the proposals were meant to encourage volunteerism. Yet, they appear to be positioned as a reward mechanism, similar to tax receipts for monetary donations. “And the question is, will giving tax credits to reward behaviour that already exists actually change behaviour and encourage those not already volunteering to do so?” she asks, adding Volunteer Canada, still in their own consultation phase, hasn’t yet taken a firm position on the volunteer tax credit proposals.

Rosemary Byrne would agree. Volunteer director at St. Mary’s Hospital in Montreal and President of the Réseau de l’Action Bénévole du Quebec (RABQ), Byrne had recently taken part in a RABQ research project on proposed volunteer tax incentives in Quebec. Looking at the impact of similar legislation on volunteers in France, Belgium, and other countries around the world, the researchers were surprised by their findings. Tax credits, it was determined, played little role in changing behaviour. “It didn’t seem to have made a difference in terms of the numbers of people volunteering,” she says. A final report was never even published because, as Byrne explains, the original proposal “seems to have died,” (though on a federal level, she adds, the recent Special Senate Committee on Aging has revived the discussion somewhat). In any case, the original idea was touted by Quebec Ministers and people in upper middle class tax brackets, says Byrne. “No one in a lower tax bracket would have benefited at all; that was another disincentive.”

Of course, some would argue that the proposed tax incentives could work like the private members Bill C-219, allowing firefighters and other volunteer emergency workers tax deductions on their volunteer hours. Similar provisions are already in force in provinces like Halifax. But MacKenzie and others are quick to distinguish the two. The emergency workers is a very unique category of volunteer engagement, she says. Besides, she adds, it’s very clearly a reward scenario, not a form of volunteer encouragement. Which also brings Lynch to one of her main arguments. People are confusing tax credits with expenses, she offers. “That’s one of the fundamental misunderstandings of the sector.” After all, you can always reimburse volunteers for their expenses but that should remain a different matter altogether.

What is your time worth?

Then there’s the question of placing an economic value on time donated. How exactly would the dollar amount be calculated? Say, for example, a lawyer volunteers on the board of an organization, should her time be valued at the regular rate she charges for legal services? If the same lawyer volunteers at a charity later in the day making sandwiches alongside a short-order cook, is the lawyer’s value now considered less than that of the cook since this her expertise? “These situations all cause trouble in valuing a person’s time especially when no money is exchanged,” Spyker explains. And the group left with the decision will likely be the organization now under pressure from volunteers looking to maximize the value of their tax write-offs.

A + B = 100%

Which brings us to the theory of gross complements. Volunteers, this idea posits, have a finite amount of time and money they’re willing to donate. The more they give of one, the theory continues, the less they’ll give of the other. So, even if tax credits achieve its intended purpose and volunteerism increases, cash donations will likewise fall. That’s an especially problematic scenario with today’s nonprofits already so cash poor, says Spyker.

And another thing…

The report raised a few other red flags. For instance, since the proposal is CRA-driven, it would seem to impact only charities. But what about all the 80,000 or so nonprofit organizations; where will their incentives lie? Finally, there are those who wonder if the tax incentives will entail an administrative nightmare for organizations struggling enough as it is just to keep up. Byrne uses Sport Quebec as a good example. Having introduced tax credits two years ago, she said the agency is facing a lot of challenges with the added paperwork and without any new money to help them manage.

But what about the advocates?

Of course, some argue the level of satisfaction derived – or even expected to derive – from tax credits will have an enduring and positive incentivizing effect. Money is a strong motivator after all, is it not? A number of organizations and politicians proposing the idea though so. Some seniors groups were deemed proponents, for example. Tory MP, James Rajotte of Edmonton-Leduc was so impressed with the initial concept, he passed it onto Finance Minister Jim Flaherty for consideration in the budget. That move came at the request of a local food bank executive who urged Rajotte forward, claiming volunteers needed additional forms of persuasion and recognition.

Unfortunately, none of those organizations or politicians accepted interview requests for this story. Certainly not the first time someone in the sector or government shirks from the spotlight at the first hint of differing opinions. And, if past behaviour is any indication, it certainly won’t be the last. Nevertheless, many experts seem to agree that the proposal and the Volunteer Alberta report leaves us with more questions than answers. More research, it seems, is necessary. “The paper is a really good start,” says MacKenzie, “and where we’re at is, we just don’t know” What she does know, however, is that all that chatter is a positive sign. “I’m really exited that so many people are talking about volunteering,” she says. “Whether I agree with something or not, at the end of the day, I’m glad people are recognizing volunteers as something worth having a conversation about and worth looking at in a political and analytical perspective.”

Elisa Birnbaum is a freelance journalist, producer and communications consultant living in Toronto. She is also president of Elle Communications and can be reached at: info@ellecommunications.ca.

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