Scams giving charities a bad rap

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This article was published 19/12/2010 (5667 days ago), so information in it may no longer be current.

TORONTO — Fraudsters may have raked in thousands of dollars by preying on the generosity of Canadians in 2010, but that doesn’t mean the country’s philanthropic spirit has been crushed by a rash of high-profile charity scams, experts say.

Giving got a bit of a bad rap this year, say the heads of several Canadian charitable organizations, thanks in large measure to a pair of widely publicized but unrelated cases in which two Ontario residents pleaded guilty to fraud charges after falsely claiming to have cancer.

It likely didn’t help that at least six Canadian organizations had their charitable status stripped this year amid allegations of illegal tax scams.

But Canada’s giving spirit is a resilient thing, said Cathy Barr, vice-president of operations at national charity watchdog Imagine Canada.

“It’s hard to suggest (this year’s scams) would have any kind of positive impact on giving to charity,” Barr said.

“But my assumption, based on what I know about attitudes towards charitable giving in general in Canada, is that the impact would be relatively minor.”

In a Milton, Ont., courtroom last month, 23-year-old Ashley Kirilow of Burlington, Ont., pleaded guilty to fraud over $5,000 after she shaved her hair and eyebrows as part of an elaborate cancer scam. Kirilow still faces six counts of fraud under $5,000.

A week later, a similar scenario played out in Timmins, Ont., when Jessica Leeder entered her own guilty plea on charges she defrauded her workplace of thousands of dollars for bogus cancer treatments.

A third case is also before the courts. Christopher Gordon, 39, faces criminal charges in Toronto after he allegedly claimed to have terminal brain cancer, pocketing $3,000 in donations from concerned friends.

In a statement, the Canadian Cancer Society acknowledged the dampening effects a cancer-related fraud can have on giving.

“The Canadian Cancer Society is saddened that this type of fraud is continuing to take place, as it takes advantage of people’s generosity, trust and goodwill and could make people less likely to donate to legitimate charities,” the statement said.

On the other hand, said Barr, established charitable institutions might end up reaping unexpected benefits.

“These sorts of problems actually highlight the value and the security that you get when you donate to a registered charity,” she said.

“(They’re) regulated, they have to report on their revenue, their expenses, their salaries, their activities. All that information is publicly available. They have audits — all these good practices around philanthropy that you get with a registered charity that when you just donate to an individual, you don’t get.”

Figures from the Canada Revenue Agency suggest not all registered charities are created equal, however. The agency revoked charitable status for at least four charities and two amateur athletic associations in 2010, alleging violations of the federal Income Tax Act. The agency also revoked charitable status for the Tamil (Sri Lanka) Refugee-Aid Society of Ottawa, alleging the group had channelled more than $700,000 to the Tamil Tigers — a group Canada has labelled a terrorist organization.

The agency, itself, has identified charity tax fraud as a significant problem, according to documents obtained by The Canadian Press under access to information laws.

In response to a rash of abuse in recent years, the agency is considering tighter rules governing the way charities issue tax receipts, including the possibility of electronic filing and tracking systems, the documents suggest. The frauds, coupled with tough economic times, made 2010 a particularly difficult year for legitimate charities, said Barr.

“It’s unfortunate in an already difficult climate,” she said.

“Governments provide a lot of funding for charities, but governments have been cutting back. Individual Canadians are obviously hurting economically, and they’re cutting back, and then this sort of thing hits. It makes it even more challenging.”

Dean Tripp, associate professor of psychology at Queen’s University, said Canadians are generally more generous and giving than they are cynical.

“One of the things that I’ve realized is that Canadians are givers,” Tripp said.

“People, sure, in the short term, will more than likely be sensitized to this, but I think in the long term, if this wasn’t to be something that was repeated, I think people will go back to their patterns of giving.”

— The Canadian Press