Some nuances to keep in mind when measuring giving.

• Author: Broder, Peter

We are all familiar with those who find themselves subject to public or media criticism responding with the old saw that what they did, or what they said, was "taken out of context." Sometimes there is merit to that complaint, sometimes not. Usually, we associate being taken out of context with an individual or situation. But it can apply in other circumstances--and the use of statistics is a prime example.

This brings me to a recent Edmonton Journal report on a Fraser Institute study on charitable giving in Canada. The report repeats the now familiar assertion that Canadians are less generous in their charitable giving than Americans, suggests they may be becoming more so, and laments a recent decline in the number of tax filers claiming donations on their returns. On their face these suppositions seem reasonable. However, explored further, they are less credible.

There is, and has been for some years, a legitimate basis for concern about the tax filer data on which the Fraser Institute study is based. During the last decade, the percentage of Canadians claiming tax credits on their returns has been stagnating. Overall donations have tended to grow, however, owing to changes in demographics and in the size of the average donation. The latest data indicate that may no longer be the case.

... the suggestion that the gap in generosity between Canadians and Americans may be widening is open to question.

But before concluding that, one must look at the context. In the early 2000s, a number of donation tax schemes emerged that purported to offer donors a substantially greater tax credit for their gift than actual out-of-pocket costs. This was accomplished by a number of different structures, but the effect of the schemes was typically that tax receipts were issued for amounts substantially more than the value of the gifts that went to charities or their beneficiaries. Hundreds of millions of dollars and perhaps more were claimed illicitly.

The Canada Revenue Agency (CRA) responded with an aggressive auditing program of the charities associated with the schemes. Promoters of the arrangements were targeted for audits and legal actions as well. As part of the initiative, the CRA also announced that taxpayers participating in the schemes could expect to have their tax returns audited. The CRA efforts resulted in the revocation of the registration of scores of charities and the re-assessment of countless taxpayers. The courts have generally upheld...