“Big Society” will change rules for Canadian nonprofits

publication date: Dec 29, 2011
 | 
author/source: Sumac Research
On October 28, the front page of the Globe and Mail read "Ottawa looks to rewrite rules on giving." In it, human resources and skills development minister Diane Finley unveiled the government's plan to put in place a sweeping set of tax reforms that will shift responsibility for the nation's social services away from government and into the hands of individuals and business.

The changes are said to be "inspired by British Prime Minister David Cameron's Big Society experiment, in which social responsibilities that traditionally fell to the state are put in the hands of the citizenry and private sector."

There has been a lot of controversy about the "experiment." While Cameron says it will empower communities, critics call it a "public relations effort to put a positive spin on deep cuts." Whether it's good or bad, right or wrong, nonprofits need to be prepared for the changes ahead.

Vague descriptions give little guidance

What kinds of changes can you expect to see? Finley was vague, but she did say that that "the government plans to start off small with a few pilot projects. The most likely would be to replace some traditional grants with a hybrid version - a defined amount that recipients could increase by meeting agreed-upon targets."

So there will still be financing, but it will "come with more strings attached in an effort to ensure that organizations deliver promised social gains."

In the end, it looks as though nonprofits will have to look to the public to shoulder more of the responsibility. Luckily it also sounds like the government plans to give donors bigger tax cuts for charitable donations, which is critical if this is where the majority of funding for nonprofits is going to come from.

Get ready by checking your own reporting

So, what do you do with this information; this vague description of changes that may happen? Well, the best thing you can do right now is take a good look at your organization. How does it spend money? To what extent does it achieve the objectives set out? Do you gather the information needed to show that you are achieving your objectives? How does your efficiency compare with similar organizations?

Government cuts are going to mean greater competition for funds, so it's time to do a little self-evaluation to see how you measure up, and take any actions you think are necessary to increase efficiency and effectiveness.

How is efficiency measured? Often efficiency is measured by ratios such as administrative cost per dollar raised. For information on how US charities are rated, visit The American Institute of Philanthropy, and to learn how to calculate ratios, visit Guidestar

Efficiency is important for the public as well. They have become increasingly critical of nonprofit spending over the years and are more careful than ever before about whom they support. They want to see that a nonprofit uses funds wisely, that it delivers services as promised and that it is accountable.

If this group is going to become the primary source of funding, then nonprofits need to start winning back their trust. The best way to do that is to be accountable and transparent about how funds are spent.

Sumac is a complete, integrated software solution for nonprofits that tracks lapsed donors and distributes personalized electronic and paper communication easily and cost-effectively. For more information, visit www.sumac.com.

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