18 July 2006

The Premier and the charitable impulse

A check of the Canada Revenue Agency (CRA) website reveals there are currently 389 family foundations in Canada with charitable status. That means they can grant tax receipts for donations received.

There are two family foundations in Newfoundland and Labrador. The Johnson Family Foundation supports the Grand Concourse Authority and the Geo Centre, among other things. The Williams Family Foundation Inc, (WFF) featured this past weekend in The Independent, provides assistance to groups and individuals focusing on poverty reduction and education.

Family foundations, like many charitable groups are organized to conduct philanthropic workin a variety of areas of social concern, while providinga fromal grant-making structure, legal and financial safeguards and financial benefits. They are designed to support and encourage philanthropy in Canada.

Some of the family foundations are endowed; that is, they have assets and use the revenue from those assets and from donations - usually from family members - to give financial support to groups and individuals that meet the foundation's criteria.

Other foundations are smaller or merely operate on the basis of annual donations. Both the Johnson and Williams foundations appear to operate in this way, although the Johnson foundation has annual revenues more than 10 times that of the Williams foundation in the most recent year for which reports are available from Canada Revenue Agency.

Of the 389 registered family foundations in Canada, though the Williams family Foundation is different in one significant respect. It is the only family foundation, and apparently the only grant-making foundation at all in the country, that is associated with a serving politician let alone a sitting premier.

For that reason alone, the operation of the Williams family Foundation would merit public scrutiny for reasons discussed below.

But the Premier himself put his family's foundation in the public spotlight when he committed three years ago to donate his entire salary as first minister to charity through the Williams Family Foundation. The public has a right to know how much has been donated to charity, even if the individuals receiving the money are known only to the foundation and to federal taxation authorities.

The first problem, unfortunately, is that we don't know where the premier's salary has gone. CRA filings by WFF indicate that the WFF received only $20, 000 in donations in 2003 and $110, 000 in 2004. Both amounts do not match the approximately $150, 000 pre-tax salary provided to the premier.

The second problem that arises from the Williams Family Foundation is that it apparently is not run at arms length from the Premier's Office. In the first year following the October 2003 election, a member of the Premier's Office political staff appared in the Western Star presenting a WFF cheque in the city represented by the Premier in the legislature. This past weekend members of the Premier's Office provided official comment on behalf of the foundation even though the Premier himself is not a registered director of the charity.

This second problem is the crucial one. It is rare, indeed likely unprecedented, for a politician in Canada to be so closely associated with an organization donating over $100, 000 per year to groups and unnamed individuals in the province. Some of it is apparently directed to registered charities but at least half the funds distributed by WFF in 2004 went to unnamed individuals.

It is rare since the act of charitable gift-making on such a scale raises concerns about a conflict of interest between the politician and the recipients. Were the foundation run at arms length from the Premier himself, one would have almost no argument. But given that the Premier is apparently intimately associated with the operation of the family foundation, there is the very real potential that the Premier's charitable work - as sincere as it is - also carries with it a conflict in the recipient between his or her direct, personal need, his or her political choices and a natural desire to display gratitude for assistance received.

In short, every private gift from the Williams Family Foundation - no matter how worthy - places the recipient in an unacceptable position given that it comes openly, and without doubt from the Premier.

Some of the donations to registered charities create similar potential problems. In two years, the WFF gave money to foundations associated with health care boards in the province. The directors of these boards ought to be able to speak openly and to take issue with government policy from time to time. That is what they get paid to do. However, these directors and senior officials are placed in an unacceptably difficult position when their foundations receive grants from the WFF.

In the same way, advocates for health causes such as the cancer society, the school lunch program or the arthritis society may be compromised in their ability to advocate openly on behalf of their clients when cash donations are being received from the Premier's family foundation.

No one should question the Premier's motives in establishing the Williams Family Foundation or doubt the work the Foundation does.

However it is entirely inappropriate for a serving politician, let alone the province's first minister to be directly associated with providing money to anyone in the province, except through the provincial government's budget.

Anything else represents a compromise of the politicial system that is every bit as serious as allowing cabinet ministers to actively conduct any other type of business from their ministerial offices.

After all, how can a voter hold the Premier and his administration properly accountable for their decisions when he or she is simply so thankful that the "Danny Williams foundation" ensured her aging mother did not lose her eyesight? It obviously never occured to a recent caller to Night Line that the Premier and his administration ought to cover such medical treatment for everyone under the province's medical care plan.

The premier must move quickly to place the family foundation at arms length from his office.

Otherwise he may well be damaging our political system, taking it back to a point where it has not been in the better part of a century or more.