National Post

A few red flags…

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Overhead and f undraising s pending

Navigating the universe of charities can i- nvolve questions of a somewhat philo sophical nature. For instance: What makes a charity a charity, as opposed to a not- forprofit organizati­on? What sorts of good w- orks should we be indirectly subsidizin­g with tax receipts for charitable gifts, and which activities are best left without that extra help? And when is a donation a donation and not a payment for a good or service — for example, an admission ticket to the Hockey Hall of Fame?

Yes, Toronto’s Hockey Hall of Fame and Museum i- s a registered charity — a siz able one. In 2013, the most recent year with complete Canada Revenue Agency informatio­n available, the Hockey Hall of F-ame reported spending a total of $ 13 mil lion. But it reported that only about oneq- uarter of that, just $ 3.4 million, went dir ectly to its charitable purpose, which is to “educate guests about all facets of hockey” through exhibits, a historical archive and recognitio­n of people who have made an outstandin­g contributi­on to the sport.

Meanwhile, the organizati­on spent $ 2.5 million on fundraisin­g to attract $ 445,000 in donations. But it also reported $ 4.5 million in “fundraisin­g revenue,” which the organizati­on said includes admission ticket sales ( for which no tax receipt was issued). That means half of every dollar the hall of fame raised went to marketing and fundraisin­g, under the most generous interpreta­tion of the numbers. Leave out ticket sales, and the ratio would be even higher.

Jeff Denomme, president and chief executive of the Hockey Hall of Fame, said the eyebrow- raising numbers aren’t the result of inefficien­cy — they’re the result of running a unique, large, multi- faceted organizati­on, with operations that include a large retail store. Running a “related business,” such as a museum gift shop, is permitted under the Canada Revenue Agency’s rules for charities.

I- f preserving hockey history is your pas sion, this may well be the charity for you. J-ust be aware that the organizati­on is mak ing — and spending — most of its money on operating a business, not preserving and promoting hockey history.

Errors

We have sympathy for small charities with limited resources that are struggling to meet their reporting requiremen­ts. But for t-he 2,500 charities making more than $1 mil lion in donations that we analyzed, properly reporting financial informatio­n shouldn’t be so difficult.

Neverthele­ss, we found many errors in the public tax filings of Canada’s largest charities that made it impossible to accurately assess how they were spending money.

A full 40 per cent of large charities failed t-o report spending any money on fundrais ing, yet without the aid of a single brochure o-r paid-promotion, together they raised mil lions of dollars just the same. Either they’re a-ll geniuses at guerrilla marketing, or some thing doesn’t add up.

O-ther errors are less obvious, but still im portant. For example, several school boards (which do count as registered charities whose donors are entitled to tax receipts) reported spending almost exactly the same amount on fundraisin­g as they generated in revenue.

Do-nors might be curious to know, for ex ample, how the Ottawa Carleton District School Board had cause to report spending $ 17 million on fundraisin­g activities. Gold foil-wrapped brownies at school bake sales? Justin Bieber playing at the homecoming dance? We called it to find out.

And — oops! — the board explained that t-he numbers should have shown them spend ing $17 million of the money they raised, not that they spent $17 million to raise it. There w-ere other school boards that reported simi lar numbers who appear to have made the same mistake.

Transparen­cy

Something we think you should certainly be able to afford if you’re g- enerating more than $ 1 million in dona tions: A website. While trying to determine which charities met our criteria of being national in scope with a broad appeal to all Canadians, we were surprised by how m-any didn’t have one. Some of those char ities are surely doing great work, but it’s 2015. It’s reasonable for donors to expect to find at least basic informatio­n about that important work online. Or at least set up a telephone hotline.

In tax filings for Toronto-based Humane Medicine Inc., it lists its charitable purpose a- s “promotion of art and science of medi cine,” which is not exactly crystal clear. Still, that doesn’t mean it isn’t a worthy cause. The numbers suggest that donors h- ave been showering it with money late ly: Normally, Humane Medicine reports $ 20,000 to $ 70,000 in charitable revenue, but 2013 saw that multiply fifteenfol­d to $1.1 million.

What amazing things has Humane Medic- ine been doing in promoting art and sci ence medicine? Good question. The charity h-as no website, and we could not reach any one at its office by telephone. It would not be u-nheard of that someone filling out the re turns just put a decimal in the wrong place.

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