Assessment of Donor Information Needs

Prepared for the:
Canada Revenue Agency
relations.media@cra-arc.gc.ca
FINAL REPORT
March 2010
Contract # 46558-103004/001/CY
POR 068-09

Executive Summary

In 2004, the federal government announced the Charities Regulatory Reform Initiative, which was created to help improve the legislative and regulatory environment in which the voluntary sector operates, and to improve the way in which charities are regulated. One of the goals of the initiative involves increasing public and voluntary sector confidence in the regulation of charities.

In 2005, and again in 2008, the CRA conducted a survey called Thinking about Charities to provide input into the development of a public education initiative that would increase the confidence of the Canadian public in the federal government’s regulation of charities. Results of the 2008 survey showed modest gains in awareness, but significant knowledge gaps regarding the regulation of charities. Though six in ten surveyed in 2008 noted an interest in learning more about how charities are monitored, only a small percentage could name the CRA as the organization responsible. Therefore, it is important that the CRA continue its efforts to raise its profile as a regulator of charities.

The purpose of the research reported here was to support this effort by gathering information on the information needs of donors. The research objectives included exploration of the following topics among people who had demonstrated an interest in making charitable donations:

• What financial and non-financial information is most important for the CRA to provide to the public on each registered charity to assist donors in their decisions to give to a charity.
• The perceived usefulness, clarity and completeness of select CRA communications products, including the pamphlet Giving to charity: Information for Donors, the main menu page of the CRA Web site for donors, and the types of information currently provided on each registered charity.

Eight focus groups were conducted January 14-21, 2010 in Halifax, Jonquière, Toronto and Vancouver. All participants had made donations to multiple charitable organizations that they claimed on a 2008 tax return, and intended to claim donations to multiple charitable organizations on a 2009 tax return.

This research was contracted at $51,035 (GST/HST excluded).

Current Sources of Information about Specific Charities

Participants were asked the following two types of questions in order to explore both the extent to which they have looked for information about charities as part of making donation decisions, and the sources of information they may have used:

• Have you ever had to look for names of charities associated with a cause which you are interested in supporting?
• Have you looked for information on a specific charity as part of deciding whether to donate to that charity?

Overall, going through an information-gathering process as part of deciding to donate to a charity is more the exception than the rule. It appeared that the majority of donation decisions were made without doing any deliberate research to identify or evaluate the charity.

It should be noted that although doing research on charities is the exception, it was quite common to hear participants express concerns about how the money they donate is spent. They also raised concerns about scams, particularly in the case of charities they had never heard of. Examples mentioned of the latter included "cold call" telephone and door-to-door solicitations, and previously unknown charities soliciting via the Internet or raising money via texting. However, in the majority of donation situations, the process by which participants selected a charity was such that they had a sufficient level of trust or personal connection that they did not feel a need to "check out" the charity before making a donation.

Awareness and use of the CRA Web site for information on charities were low: across all groups, three participants had used the site to get information on specific charities, and a couple more claimed to be aware of it but had not visited it. None of the remaining participants were aware that information on specific charities could be obtained from a CRA – or more generally, a Government of Canada – Web site.

factors Important in Evaluating a Charity

The discussion of what factors would be considered in deciding to donate to a particular charity was conducted in two stages:

• Stage 1 – Self-generated factors: In this stage of the discussion, participants were asked on an open-ended basis to describe the factors that would be important to them.
• Stage 2 – Reaction to a list of the types of information available in the CRA Charities Listings: Participants were given a two-page list of the types of information available on the CRA Charities Web site. One page listed financial information, using the headings Revenue, Expenditures, Assets, and Liabilities. The other page listed types of non-financial information. A copy of this handout can be found in the Appendix.

Stage 1 – Self-Generated Factors

By a wide margin, the single most important factor for participants in evaluating a charity was the overall percentage allocation of expenditures to "administration" on the one hand, and to the "cause" or "charity" on the other hand. Most participants mentioned this factor, and most named it as the single most important factor.

In this open-ended phase of the discussion, it is notable that other financial factors – beyond overall allocation to administration versus the cause – were not mentioned very often.

After this key financial factor, the most commonly mentioned factors tended to be non-financial. The most notable were:

• Types of programs operated by the charity: In the context of a general cause supported by the charity, quite a few participants wanted to know more specifically what types of things the charity is doing to support that cause, as they may prefer some types of assistance over others.
• Indicators of the success or effectiveness of the charity: Some participants said they would like information on the degree of success the charity has had in supporting the cause, as they would prefer a charity with a good track record of success. The nature of these indicators of success would depend on the nature of the cause and the charity’s programs – for example, it might be number of people helped, or a description of research breakthroughs.
• Does the charity deliver benefits "locally": Quite a few participants said they would like to know whether the charity delivers benefits "locally." The importance of this will vary with the cause, but the reason for wanting this information was a general preference for helping the cause "locally." The meaning of "local" varied, and could mean the local community, one’s home province versus other provinces, or Canada versus other countries.
• How long the charity has been operating: Quite a few participants said that if they were comparing two charities, they would want to know how long each had been operating. Among those mentioning this, most said they would favour the charity that had been operating longer on the grounds that it likely has more of a track record of success.
• People or businesses associated with the charity: This category emerged in several different ways. Several participants wanted to know who the head of the charity is. Several wanted to know who is on the Board of Directors. A few wanted to know what businesses, if any, support the charity. Several participants wanted to know what, if any, celebrities endorse the charity. What was common to all of these is that the credibility of the charity will be assessed by considering the reputation of the people and businesses associated with it.

Stage 2 – Reaction to a list of the types of information available in the CRA Charities Listings

There was widespread positive reaction to the existence and public availability of this collection of information on individual charities. This was particularly the case for the financial information, as this contained many types of information that participants had not previously thought of or considered in the context of supporting a charity. Reaction was also positive to the non-financial information, and participants recognized some of the types of information mentioned in the Stage 1 discussion. Most notably this included Its charitable programs and percentage of resources allocated to each, Year of registration, and Names of Directors and Trustees. Overall, the Charities Listings were perceived as providing a wealth of interesting information in a single place. Further, the fact the information is coming from the CRA was seen by some as giving an objectivity to the data that might not be present on a charity’s own Web site.

With regard to expected usage of the Charities Listings, it is first necessary to note a result on the presentation of the financial information. Some participants found the quantity of financial data to be a bit overwhelming – which led some to say they probably would not use this information in the Charities Listings. Quite a few participants suggested the CRA Web site should essentially provide a two-level presentation of the financial data: a top-level summary, and then all the detail for those who want to see detail. Consistent with the Stage 1 results, it was suggested the top-level summary should provide the overall percentage of expenditures going to administration versus the cause.

The majority of participants said they would probably use the CRA Charities Listings sometime in the future. Some of these participants appeared to be very interested in delving into all of the financial detail, while some said they would probably look mainly at the top-level financial summary and perhaps some of the non-financial information.

With regard to frequency of usage, the impression is that most would use it only under certain circumstances where they have some uncertainty about whether to donate to a charity, or to review charities to which they regularly give. Another circumstance mentioned in which the Charities Listings might be used is when a person is making a large donation and wants to be particularly careful in researching whether the charity would use the money effectively. However, most would not use the Charities Listings routinely on all donation decisions.

While the majority of participants anticipated using the Charities Listings sometime in the future, some doubted they would. These participants were not negative towards the Charities Listings, and they typically recognized that the information could be very helpful to some people. However, they did not see it as particularly useful for themselves, given how they choose charities, and the amount they typically donate.

Financial Information

Beyond the overall percentage spent on administration versus the cause, participants had difficulty picking out particular items as being more important than others. Participants tended to react in one of two ways – either they found all of the financial detail interesting, or they said all they wanted was the top-level summary and doubted they would go through the various detailed financial figures.

A general implication from participants’ comments on various specific financial items is that it may be useful in some cases to provide additional explanation. This might be additional explanation on the CRA Web site as to what an item means and perhaps how to use it. An example where this might be appropriate is "Amounts transferred to other charities or groups." Most participants were not aware of the distinction between foundations and charities, and some were suspicious that an organization would transfer money to other charities or groups. Another sort of additional explanation could come from the charity itself. There are some financial items that tend to be viewed with particular suspicion in terms of raising questions as to whether the charity is managing money appropriately (e.g., Investment or rental income, Amount spent on professional or consulting fees, etc.). Participants were asked whether it would be helpful if for these types of items the charity have the option of giving an explanation of the amount, and most said it would be helpful.

Non-financial Information

Of the various items listed under Non-financial Information, the one most widely mentioned as being particularly important was, Its charitable programs and the percentage of resources allocated to each (e.g., flood relief, food bank, meals for homeless, etc.). This is consistent with the relatively high level of mention of this type of information in the Stage 1 "self-generated" discussion of factors important in making donation decisions. Other particularly important non-financial factors included Year of registration and Names of Directors and Trustees.

The most significant self-generated factor missing from the Charities Listings non-financial information is information on whether the charity delivers benefits "locally" (note, though, that such information could be given either in non-financial or financial form).

Donor Web Site

Most participants reacted positively to the categories of information presented on the donor home page: the categories were perceived to be logical and complete.

The one notable issue with the labeling of information on the donor home page was the link, Donor alert. Particularly in the English-language focus groups, many participants partially misunderstood the types of content that would be available on the Donor alert Web page. These participants expected to find two types of content: a listing of recent donation scams, and general information about how to detect and avoid scams. In fact, the Donor alert page contains the latter (general information), but not the former (list of scams).

The misunderstanding in the English-language groups was driven by the word alert. The connotations of this word are that one would see information on recent problems. Several participants mentioned the Amber Alert program as an example of this usage of alert. Some participants suggested changing the title to avoid the word alert. Common to the main suggestions was use of the word "fraud," as this word was seen as both attention-getting and as describing the type of information associated with the link. Participant suggestions included "Protect yourself against fraud," and "Avoiding fraud."

Giving to Charity: Information for Donors

Overall reaction to the pamphlet, Giving to charity: Information for Donors, was widely positive. Participants did make suggestions on some specific elements of the pamphlet. One example involved the tax information about the five year window for claiming a donation, and the ability for a spouse or common-law partner to claim a donation. Many participants had not known this information and were very interested in it, but some suggested the pamphlet should go further and explain why a person might want to consider claiming a donation in a later tax year, or have a spouse or common-law partner make the claim.

Date modified:

2010-07-26