National Post

WHEN COMPASSION­ATE GIVING MEETS CRITICAL THINKING

- By Claire Browne ll

Don’t let anyone tell you Canadians aren’t the giving type. We donate our money to charities, and we donate big — more money was given i-n 2013 than the entire gross domestic prod uct of Iceland. The total for that year, which is the most recent data available: $12.7 billion.

That certainly explains why there are so many charities — 86,000 to be specific, which we trust are doing vitally important work. And surely, accounting for the odd exception, t-hey do. They research cures for diseases, pro vide shelter for the homeless and help people in developing countries access clean water, among many other things.

Some consider the importance of that work to be the only thing donors should concern themselves with. That’s one perspectiv­e.

Last year, the Financial Post published its first annual Charities of the Year report card. In it, we identified 25 large, national charities that, in addition to doing virtuous work, also met our highest standards for governance, financial transparen­cy and the efficient use of donations. ( The vast number of charities requires us to limit our ranking to those that exceed $ 1 million in annual donations, and which most donors are likely to encounter in their giving decisions. We also evaluate only t- hose that directly do charitable work, rath er than redistribu­te funds to other charities, such as the United Way.)

Readers responded by thanking us for helping them make more informed decisions about their donations. Most importantl­y, many charities that did not earn a top mark c-ontacted us to ask what they could do to im prove their chances of making the list.

But there were criticisms, too. Bruce MacDonald, chief executive of Imagine Canada, a national organizati­on that supports charities, told us that he disagrees with the focus that donors ( and the Financial Post) put on something like running a lean, low-overhead charity. And he took issue with any attempt to grade the performanc­e of charities.

“It is difficult to find a ranking system that m-eaningfull­y compares and contrasts organ izations,” MacDonald told the Financial Post in a statement. “Perhaps a more helpful article would focus on the tremendous impact c-harities, individual­ly or collective­ly, are hav ing on society.”

He’s not wrong: It is difficult to create such a system. But clearly many people see value in doing it (we do, after all, recognize the merits of models that rank similarly complex things such as business schools and workplace cultures). The reality is that a surprising­ly large proportion of Canada’s largest charities are s- till failing to post audited financial state m-ents and file tax returns that are full of er rors and omissions.

Out of a sample of 80 charities on a shortlist for Charity of the Year,- only half had post e-d three years of full, audited financial state ments on their websites. And about half of the 2,500 large charities we analyzed had obvious errors on their tax returns, such as spending and revenue figures that didn’t add up to the reported total. So, perhaps, as Imagine Canada suggests, there is reason to lament the emphasis donors put on charities’ finances. Bu-t others might argue, there is reason to la ment that some charities don’t take finances seriously enough.

Either way, the fact that transparen­cy and e-fficiency are qualities donors take so serious l-y is reason enough to give them the informa tion they’re looking for.

“Do-nors really like charity ratings. We be l-ieve that they’re helpful,” said Greg Thom son, director of research at Charity- Intel ligence Canada, which analyzes Canadian charities. “Ideally we’ll be moving toward the i-mpact a charity has being the most import ant part of the decision to donate, but right now, the accountabi­lity and the transparen­cy aren’t there.”

W- ith this in mind, we present the Finan cial Post’s Top 25 Charities of the Year: There are 14 new entries on this year’s list, across a variety of sectors. Mothers Against Drunk Driving wins The Most Improved award, after last year receiving a red flag for an error in its 2012 tax filings. In 2006, MADD was criticized for mis- categorizi­ng money spent on f-undraising, which inflated its charitable pro gram spending. But a review of its last three years of financial statements put the charity well within our efficiency benchmarks.

And if you’re wondering why your favourite charity isn’t on the list, we’ve created an interactiv­e database that lets you look up how it performed in our analysis.

Just visit: natpo.st/FP-giving.

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