1. Why Ethical Fundraising Matters Karen Alebon October 23, 2008

2. Overview Public Opinion on Charities & Fundraising Government Regulation Overview of the Ethical Code Question & Answer

3. Public Opinion on Charities & Fundraising

4. Public Trust in Charities Remains High Source: Talking About Charities 2008, The Muttart Foundation

5. Trust Varies by Type of Charity Source: Talking About Charities 2008, The Muttart Foundation

6. Donations & Donors: 1984 - 2005 Source: Research Bulletin: Trends in Individual Donations: 1984 – 2005

7. Opinions on Raising Money Source: Talking About Charities 2008, The Muttart Foundation

8. The Public Wants Information Source: Talking About Charities 2008, The Muttart Foundation

9. …And More Scrutiny Source: Talking About Charities 2008, The Muttart Foundation

10. High Expectations around Use of Donations Source: Talking About Charities 2008, The Muttart Foundation

11. High Expectations around Disclosure Source: Talking About Charities 2008, The Muttart Foundation

12. More People Believe There Should be a Legal Limit on the Amount of Money Spent on Fundraising Source: Talking About Charities 2008, The Muttart Foundation

13. Charities Sixth Most Trusted British Institution Source: Charity Awareness Monitor, 2007

14. Trust and Performance of Charities, UK Source: Charity Commission survey of public trust and confidence in charities, 2008

15. 16% of Americans have a Great Deal of Trust in Charities Source: How Americans View Charities, 2008

16. Only 30% of Americans Believe Nonprofit Sector on the Right Track Source: Harris Interactive Poll, April 2006

17. Over 25% of Americans do not Think Charities are Honest and Ethical in Use of Funds Source: Harris Interactive Poll, April 2006

18. Negative Media Attention More than 200 articles published in the last six years with negative coverage of the sector. Focus of media attention related to Code over the last six years has been: –high costs of fundraising, –transparency, –fraud, –misleading donors, –etc.

19. Some Headlines… “Murky books leave donors with questions” » The Globe and Mail, December 18, 2006 “Finding out where your charity dollar is going” » Vancouver Sun, December 22, 2006 “Charity scams bust public trust” » Toronto Star, June 7, 2007 “Charitable empire has high costs” » Toronto Star, November 4, 2007 “Charity’s licence revoked over inflated tax slips” » Toronto Star, August 12, 2008

20. CRA – Proposed Fundraising Guidelines In July 2008 the Canada Revenue Agency (CRA) released a “Proposed Policy on Fundraising by Registered Charities” for consultation. This 35-page document provides guidance on a number of issues including the evaluation of fundraising activities and the appropriate allocation of expenses.

21. CRA – Evaluation Grid Most controversial is an evaluation grid that provides a ratio of acceptable fundraising costs to fundraising revenue in a fiscal period. –Less than 20% costs: acceptable; –20 - 35%: generally acceptable; –35 – 50% potentially not acceptable; –50 - 70% generally not acceptable; –more than 70%: rarely acceptable.

22. Fundraising Guidelines – Sector Response Imagine Canada, the Association of Fundraising Professionals (AFP) and Health Charities Coalition of Canada (HCCC) convened charities to discuss the impact of these changes. Concerns: –Evaluation grid does not take into account the variation in the sector – assumes one size fits all. –Cost allocation methodology remains subjective and is very complex. –Positive role of fundraising not reflected. Coalition submitted joint response with over 80 signatories. Informal consultations now taking place between the CRA and charity representatives to discuss some of these issues.

23. Conclusions Public expectations around accountability and transparency are increasing – Donors are asking more questions. Charities need to play a leadership role in responding to these issues before they become a problem. It’s the right thing to do – Charities have a responsibility to manage fundraising and finances ethically. Trust in the sector remains but there are reasons to be concerned.

24. The Ethical Fundraising and Financial Accountability Code – An Overview

25. Ethical Code - Introduction The Ethical Fundraising and Financial Accountability Code was first developed by the Canadian Centre for Philanthropy (now Imagine Canada) approximately 10 years ago. The Ethical Code sets out standards or guidelines on donor relations, fundraising practices and financial reporting for charitable organizations. In 2006, a research and consultation process was undertaken to update and revise the Ethical Code. A revised Ethical Code was released in October 2007

26. Content of the Ethical Code Ethical Code includes information related to donor protection such as privacy, disclosure related to who is soliciting, and limiting solicitations. Guidelines related to fundraising practices include misleading marketing, online fundraising, and transparency about costs of fundraising. Financial accountability guidelines touch on the treatment of restricted gifts, content of financial reports and requirements for financial statements. Imagine Canada’s Ethical Code is complementary to the Code of Ethics created by the Association of Fundraising Professionals.

27. Ethical Code Program Ethical Code is a donor assurance program aimed at helping to maintain public trust in the sector. It is also a movement of charities committed to ethical fundraising and financial accountability. Revised Ethical Code Program launched in January 2008 with a greater focus on accountability. Program participants are eligible to use the Ethical Code ‘trustmark’ or logo that signals to donors that they comply with the Code.

28. Ethical Code Program – Current Status More than 150 applications received since January 2008 launch of program. Marketing & Outreach –Supplement in Maclean’s focused on Ethical Fundraising in June 2008 –News Release resulting in several newspaper articles including coverage in the Toronto Star. –Thanks & Giving supplement planned for late- September – focus on the importance of giving and what donors should look for when making a donation.

29. Promoting Compliance Compliance is monitored through a complaints-based process. There is no accreditation process but donors or the public can file complaints. Charities are encouraged to settle complaints directly with donors. If this is not possible the complaint will ultimately be sent to the Ethical Code Committee.

30. Question & Answer