2024’s fall economic statement improves data collection on nonprofits; incentivizes donations of unused, imported goods to charities

There’s work ahead to ensure digital supports & procurement targets extend to nonprofits and charities

Tabled on December 16, the federal government’s 2024 fall economic statement (FES 2024), contains several proposed measures relevant to areas of the country’s charitable and nonprofit sector.

Sector-wide policy and funding announcements

Starting in 2026, nonprofit organizations earning more than $50,000 annually will be required to file a tax return with the Canada Revenue Agency. This requirement to file will contribute to the establishment of an annual dataset with key information on organizations, including, potentially: what they do, where they operate, who they employ, and other information yet to be determined. This data will support improved social and sector-wide policymaking, leading to a greater potential for capacity support, including labourforce planning. This measure is in part the result of advocacy by our sector on the need for better government-collected data on both charities and nonprofits. There will be opportunity to influence the roll-out of this measure, including which questions the form should contain, and whether the annual filing datasets should be made available to the sector and broader public. FES 2024 also provides CRA with an increased budget to implement this collection.

FES 2024 proposes duty relief for imported goods that are donated to a registered charity, provided the goods are used toward charitable programming. Currently, duties are applied to imported goods but if they are unsold, a refund of duties paid is permitted as long as the goods are destroyed. Consequently, unsold, imported goods are directed to landfills in order to secure the refund on the import duties that were paid. The idea behind this proposed measure is to incentivize the merchant to instead donate the unused goods to a charity, now that the duty refund is made available through this option as well. To qualify for this incentive, the donation of goods is contingent on their use in the charity’s programming, and cannot be resold (for instance, the goods donated to the charity would need to be used to forward a charitable activity, such as given to a person in need, and not resold through a consignment store).

The government reinforces its prior commitment, announced on October 29, 2024, to legislate that charities pursuing activities specified as women’s reproductive health demonstrate transparency in delivery of services related to abortion or contraception. Imagine Canada has reported to the sector on this issue as it has evolved (link 2022 statement). We are currently reviewing this proposed change to the sector’s legal regime with a view to broader implications for organizations both now and under future governments.

Our sector’s combined labourforce of over 2.5 million Canadians is weathering storms faced by other industries, and can benefit greatly from government policymaking. FES 2024 seeks to invest $9.5 million in the Youth Employment and Skills Strategy Program to remove barriers faced by Black youth in the employment market. Policies announced - including development of a national credential recognition performance framework - to accelerate recognition across provinces of credentials earned abroad can empower newcomers.

As part of the government’s mandate to combat terrorist financing and other financial crimes, FES 2024 seeks the launch of “interdepartmental dialogues with non-profit organizations to deepen awareness, enhance communication, and better combat money laundering, and sanction evasions risks.” (p. 172)

Opportunities for sector advocacy

The government proposes a successor to the Digital Adoption Program (DAP), with a proposed commitment of $500 million, starting next year. This iteration of government investment in the private sector’s digital adaptation is focused solely on financing options (whereas the DAP also offered grants). There is no mention of nonprofits or charities as program beneficiaries, signaling the need for sector influence in upcoming program design. The financing will be delivered through the Business Development Bank of Canada.

A proposed Small Business Innovation and Procurement Act would establish a 20% target across federal departments for procurement of goods from small businesses, but bears no mention of social enterprise, community benefit, or nonprofit and charitable producers of goods and services. As such, this FES signals a lost opportunity to advance elements of this government’s own social finance and social innovation strategy, including support for the demand side of social procurement markets. The burden may be on the sector to seize this window to influence the implementation of this target so that nonprofits can benefit from the massive purchasing power of the federal government.

Mission-area highlights

Charities and nonprofits work together to deliver on a host of current and key national priorities. Organizations operating in dozens of subsectors together deliver outcomes related to housing and homelessness; affordability through financial literacy and advocacy for low-income communities; and community programming for equity-seeking communities. Below are a few notable highlights from the FES that relate to some of those subsectors:

For areas of the sector advancing missions related to housing, there may be interest in the proposed building of more women’s shelter spaces, and a five-year extension of the Federal Community Housing Initiative after it was set to expire in 2028, with funds delivered to cooperative and nonprofit housing providers offering rent geared to income for residents.
In the realm of affordability, the creation of an Artist’s Resale Right in Canada is meant to ensure artists - who tend to be low income earners - are entitled to an additional income stream via royalties when their work is resold. The government also proposes community infrastructure investments in the areas of child care, with an eventual increase in transfer payments to provinces to support provider capacity.
FES 2024 commits to implement aspects of Canada’s Black Justice Strategy, and $15 million in funds for the Women's Program to support capacity of women’s organizations and advance projects seeking to end gender-based violence and helping women and girls becoming financially secure. A proposed $36 million toward the Supporting Black Canadian Communities Initiative meant to “empower Black-led, Black-serving, and Black-focused community organizations to promote inclusiveness” (p. 168). Government is also announcing intent to introduce legislation that would prevent the Canada Disability Benefit from being treated as income.

What was missing?

Emerging from a postal strike that halted mail-based donations and cut deeply into organizational budgets during the most critical fundraising period of the year, many charities are asking that the Minister of Finance extend the ability of donors to claim the Charitable Donations Tax Credit toward their 2024 income taxes. A deadline extension of the period to issue donations to March 1, 2025 would provide Canadians with an additional 8 weeks to ensure they can still support their charity of choice for the 2024 tax year. While passing bills in the House of Commons is difficult for now, a simple announcement by cabinet of intent to pass legislation is required at this stage to enable CRA to execute the extension.

Charities are invited to participate in a nation-wide letter campaign to urge the federal government to enable this extension.