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Competition Between Charities and For-Profit Businesses in Canada: Unfair or rather Unwanted?

Thursday, January 17, 2019
Chief Economist For Canada’s Charitable & Nonprofit Sector debunks myth that 'tax supported charities' have unfair advantage over for-profit businesses

Imagine Canada today released Unfair or Unwanted? Competition Between Charities and For-Profit Businesses in Canada, a discussion paper by Brian Emmett, Chief Economist for Canada’s Charitable and Nonprofit Sector. 

As Canadian charities face a long-term crisis of financial sustainability, they are looking at ways to increase earned income. At the same time, for-profit businesses have become more active in areas once thought to be the unique domain of charities. The prospect of more competition with the private sector brings increased attention from policy makers who have expressed concerns about “unfair competition between for-profit businesses and tax supported charities.”

Chief Economist Brian Emmett argues that for-profit businesses and charities both benefit from government support, and that tax policy has little, if any, effect on market shares and earnings of for-profit businesses.

The reality is that charities struggle to cope with a growing social deficit, straining their resources as their structures inhibit them from competing effectively with for-profit businesses. Policy thinking about “unfair” competition is wrong, unconstructive and deadens debate, providing an erroneous case for opposing the reforms charities need to remain sustainable.

Discussed in Unfair or Unwanted? Competition Between Charities and For-Profit Businesses in Canada:

  • The cost of tax expenditures supporting the charitable and nonprofit sector amounts to about a third of the amount directed to for-profit businesses.
  • What would the impact be, on the market share of charities, of eliminating tax concessions for the charitable sector?
  • Government is fundamentally changing the rules of the marketplace for charities and for-profit firms, often inadvertently tending to emphasize many of the qualities for-profit business bring to the table.
  • Charities receive tax concessions, but the ability to access capital gives for-profit businesses a built-in advantage charities lack.
  • Both charities and businesses are growing in important markets but businesses have an advantage that allows them to adapt to change more quickly.

To read more, download the discussion paper at imaginecanada.ca/chief-economist

About the Chief Economist

In 2013, Brian Emmett joined Imagine Canada in the unique role of the Chief Economist for Canada’s Charitable and Nonprofit Sector. As Chief Economist, Brian is tasked with measuring the impact of the sector and bringing economic issues facing charities and nonprofits to the forefront of public policy decision makers.

The position of the Chief Economist for Canada’s Charitable and Nonprofit Sector is made possible through funding received by The Counselling Foundation of Canada, The Muttart Foundation, and an anonymous donor.

For further reading, see Brian Emmett’s previous discussion paper, Beyond Synergy: Charities Building the Future Canadians Want.

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