The Planned Giving Pulse interviewed Senator Terry Mercer, CFRE, about the Senate Banking Committee’s proposed changes to planned giving in Canada.  Although an interim report was released in late 2004, the Committee is scheduled to release its final report later this month.

Planned Giving Pulse:  The Senate Banking Committee is releasing its final report on Ways to Increase Charitable Giving in Canada next month.  What was your role in the proceedings?

Terry Mercer:  When I heard that the Banking Committee was going to be hearing from charities I became curious as to the motivation.  I met with the Chair Jerry Grafstein and Vice-Chair David Angus and was very pleased to learn what the motivation was.  They wanted to help charities find ways to get more for their good works.  From a regulatory point of view, they wanted to make sure charities were operating within the bounds of the law, and in the best interest of Canadians. 

As a resource, I was around to help.  As the Chair of the AFP Foundation and someone  active in the industry, I didn’t feel I should sit on the committee, but I would attend as an observer and refer them to people in the industry to talk to.  For example, Ken Ramsay, is well-respected and a leader in Planned Giving and I wanted to make sure they talked to people who are actually involved in true philanthropy.  Not people selling chocolate bars to the grade seven class.  People who are ethical and who are adhering to the Donor's Bill of Rights.  The government doesn’t need to reinvent the wheel when there are credible organizations in the field such as AFP, CAGP and CASE who can offer insight.

Pulse:  How critical was the testimony of charities from various sectors and professional fundraisers such as AFP in influencing the Committee’s recommendations?

Terry Mercer:  I think it was fundamental to understanding the situation.  Besides AFP, one of the individuals who added so much was Donald Johnson of BMO Nesbitt-Burns.  Don’s testimony as a volunteer was extremely helpful.  CAGP’s testimony was extremely important.  I was pleased as I watched the testimony.  We were almost entirely united. 

As they presented, even though people were from different organizations, they had the unity of coming from the AFP professional side.   Testimony reflected all the significant community groups (hospitals, educational institutions, social services, etc.)

Pulse:  The interim report focused solely on tax measures.  What are some of the broader issues affecting charities that will be covered in the final report?

Terry Mercer:  We don’t know yet.  We will have to wait for its release.

The reason that the interim report focused on tax issues was that they were anxious to get this done in the pre-budget consultation process.  They wanted the government to review and understand what needed to be done to make the industry better.  Mr. Martin and Mr. Chrétien both understood that we needed to make tax changes to make charitable giving better.

Senator Grafstein didn’t just present the report and let it set.  He personally visited the regional caucuses of the Liberal Party and made an appeal to support the recommendations. They were very receptive and endorsed the recommendations of the report.  That gave more weight to the argument.

Pulse:  The federal government’s 50% reduction of capital gains tax on gifts of securities in 1997 resulted in a substantial increase in gifts of securities.  What would your estimate be for the impact of the current proposed changes?

Terry Mercer:  I think it will not cause as dramatic a change because the initial shock was to get it done at all (back in 1997).  I think we would probably see a 25% growth.  Tax breaks for gifts don’t really affect small gifts.  That’s why the capital gains tax incentive is so important.  I wouldn’t suspect that we’d have the same growth as last time.  If we grow by 25% (that would be the initial bump), that would still be quite significant.

In the next phase, while the Senators are looking at operation and governance of the charitable sector, I think they will increase the tax credit for small donations.  I’d like to see it increased up to 75% on smaller donations.

Pulse:  In your opinion, how critical are tax incentives in an individual’s decision to give stocks or land?

Terry Mercer:  At the high level, I think it is very significant.  However, it is not the driving force behind people giving.  When I give money to my church or my university, I give because I think they do good work and I want them to continue to do good work.

If I were to give them land or stocks, a planned gift, I would want to ensure that the estate or myself benefit from that gift.  When you look at the tens of thousands of Canadians who gave money to the Tsunami.   The government’s commitment to match funds donated before January 11, I thought, was remarkable.  By being strategic you can actually triple the effect of the money – through corporate matching and government matching. 

In terms of the recommendations, the Senators are aware that there are a large number of Canadians of wealth who probably would be more apt to give gifts if there were tax benefits for those donations.

Pulse:  AFP (Association of Fundraising Professionals) recommended the government create a nationally sponsored Philanthropy Day to recognize philanthropy and encourage people to give and volunteer.  What is your opinion on that?

Terry Mercer:  We do celebrate National Philanthropy on our own in November but we don’t do it with the national support of the government.  The declaration of it would be a tremendous boost, both to charitable donations and in terms of recognizing volunteers and the work of the organizations in the sector.  It’s a huge sector. 

Pulse:  What do you feel are some of the advances in the industry?

Terry Mercer:  There have been some terrific advances.  I’ve been in this business for over 25 years.  This is the first time I have seen the Revenue Agency reaching out to the community.  They are asking the right questions in advance, involving people, trying to understand the technical aspects of how charities and fundraisers are doing their jobs.  They are anxious to protect the public, but not make it impossible for charities and professional fundraisers to get their job done. 

One of the underlying principles that are so important is the ethics.  The only stories to hit the front pages of the Star are the bad ones.  I have been fortunate to raise hundreds of thousands of dollars for charities and that has never been on the front page.  If I had screwed up it would have been all over the front page.  When the government starts to talk to people they are surprised that we are ahead of the curve:  we understand that there needs to be a Donor Bill of Rights and a Code of Ethics and we developed them and operate under them. 

They are also learning that, not only should we as professional fundraisers subscribe to them, but also the organizations we work for should adopt the same principles.  We should leave the standard behind at each charity as a legacy so that the ethical practices remain ongoing, things like no compensation on percentage of dollars raised. 

Government regulators are sometimes surprised that we are already there.  They hear the bad stories (like someone taking 95% of money when raising funds).  Those people are not fundraisers. 

Pulse:  Any final thoughts?

 

Terry Mercer:  I think this is an interesting study.  We are moving in the right direction.  The industry was somewhat nervous when it started.  We were very pleased with the first phase.  We now understand that we are all on the same team here:  providing good service to the public and that the non-profit sector has the tools it needs to do good works.  I think the government scrutiny is good news because we can stand up to it.

We should be open and transparent.  The list of witnesses that appeared before the Committee was impressive.  With the time frame that they had, they reached out to a broad range of people. 

When the final report comes out, I hope there will be pages and pages of witnesses, which will help them write a positive report.

About Senator Terry Mercer:  Mr. Mercer was appointed to the Senate on November 7, 2003.  He served as National Director of the Liberal Party of Canada from 1995-2003.  Prior to working with Liberal Party, Mr. Mercer held a wide variety of positions with various charitable institutions including the Canadian Diabetes Association, the YMCA of Greater Toronto, the Nova Scotia Lung Association and St. John Ambulance Nova Scotia Council.

Mr. Mercer is also very active in the Association of Fundraising Professionals (AFP) and is Chair of the AFP Foundation for Philanthropy in Canada. 

Mr. Mercer is a Certified Fundraising Executive (CFRE) and has lectured extensively on modern ethical fundraising techniques.