Unfair or Unwanted? Competition Between Charities and For-Profit Businesses in Canada
Released: January 2019
As Canadian charities face a long-term crisis of financial sustainability, they are looking at ways to increase earned income. At the same time, for-profit businesses have become more active in areas once thought to be the unique domain of charities. The prospect of more competition with the private sector brings increased attention from policy makers who have expressed concerns about “unfair competition between for-profit businesses and tax supported charities.”
This discussion paper, by Chief Economist Brian Emmett, argues that for-profit businesses and charities co-exist in many markets, both benefiting from government support, and that tax policy has little, if any, effect on market shares and earnings of for-profit businesses.
- The cost of tax expenditures supporting the charitable and nonprofit sector amounts to about a third of the amount directed to for-profit businesses.
- What would the impact be, on the market share of charities, of eliminating tax concessions for the charitable sector?
- Government is fundamentally changing the rules of the marketplace for charities and for-profit firms, often inadvertently tending to emphasize many of the qualities for-profit business bring to the table.
- Charities receive tax concessions, but the ability to access capital gives for-profit businesses a built-in advantage charities lack.
- Both charities and businesses are growing in important markets but businesses have an advantage that allows them to adapt to change more quickly.
Beyond Synergy: Charities Building the Future Canadians Want
Released: February 2018
As a follow up to his Charities, Sustainable Funding and Smart Growth discussion paper, Chief Economist Brian Emmett presents a strategic architecture for government and the charitable and nonprofit sector to address the looming social deficit in Canada. The missions of charities align with building the future Canadians want – one that is equitable, inclusive, and environmentally responsible – but without attention to the economic contributions of charities and regulatory reform of out-dated rules and regulations, the innovation necessary to fulfill this promise will be greatly impeded.
- The “need driven” growth of charities by demographic, social, cultural, environmental and economic factors
- Economic growth that has not been equitable, inclusive, or environmentally responsible
- The measurement of GDP and the broader Index of Economic Well-being in relation to quality of life
- Policy implications and the relationship between the economy and charities
- Moving from a synergistic to intentional relationship
- A balanced approach to economic progress
- A strategic architecture outlining goals, activities, and the resolution of specific issues
- A new operating environment for charities and government
- Enabling policies
- Financial sustainability
Charities, Sustainable Funding and Smart Growth
Released: October 2016
Through a series of scenarios that project the state of the charitable and nonprofit sector in 2026, chief economist Brian Emmett identifies a looming social deficit.
- The nature and evolution of the charitable and nonprofit sector
- Why the charitable and nonprofit sector has grown so rapidly
- Performance of the economy and how it has supported revenue growth of benefit to the sector
- State of the sector in 2026 based on eight scenarios considering:
- the status quo
- demographic and social changes increase demand on sector services
- slower economic growth
- potential government policies to stimulate growth
- negative consequences of economic growth
- decline in individual household donations
- effects of increased regulations on charity revenue sources
- increasing demands on the sector and lower economic growth
- How smart growth initiatives can mitigate a social deficit
Charities in Canada as an Economic Sector
Released: June 2015
The discussion paper, by Chief Economist Brian Emmett and co-author Geoffrey Emmett, invites Canadians, governments, businesses and communities to not only think of charities as purpose driven but also as an essential component driving Canada’s economy.
- Role and scope of the charitable sector in the Canadian economy
- The charitable sector as a small business sector
- Productivity and innovation in the charitable sector
- The charitable sector as a place to work
- Revenue and funding sources for charitable organizations
- Policy implications
Tax Incentives for Charitable Donations in Canada with a Focus on the Stretch Tax Credit for Charitable Giving
Released: March 2015
Brian Emmett, our Chief Economist, and Harvey Sims, the former Chief Economist, Privy Council Office for the Government of Canada and Ottawa-based consultant, co-authored a discussion paper about the tax incentives for charitable giving in Canada paying particular attention to the proposed Stretch Tax Credit.
This paper gathers and interprets existing evidence about the impact of tax changes on donations and taxes using a simple economic approach. It also summarizes some of the other economic and policy-related implications of changes in tax-treatment of donations that are important for charities to consider.