Town of Gibsons supports Public Market with flow-through funds

(by Laura Houle)

The Town of Gibsons collected more than $700,000 in donations from the community in 2016 and transferred the funds to the Gibsons Community Building Society, according to Ian Poole, the Town of Gibsons’ director of finance. The Building Society operates the Public Market.

The Town of Gibsons, which owns a 39 per cent share of the market property, stepped up to help the Building Society by issuing tax receipts to donors for a total of $210,273.

One reason the Town helped out: only registered charities have the ability to issue tax receipts for gifts and donations. Canadian municipalities are considered registered charities according to the Canada Revenue Agency (CRA) guidelines.

According to the CRA’s list of charities, the Building Society is not a registered charity.

A Gibsons resident submitted a Freedom of Information request to the Town of Gibsons in February 2017 to discover the amount of donations to the Building Society for which the Town had issued tax receipts in 2016.

The town supplied a list of 51 tax receipts for a total of $210,273 in 2016. The names of 46 individual donors were blacked out. Section 22(1) of the Freedom of Information and Protection of Privacy Act requires a public body to refuse to disclose personal information if the disclosure would be an unreasonable invasion of a third party’s personal privacy.

Corporate donors were Bull Housser and Tupper LLP in Vancouver ($15,000), Ivan G. Thompson Ltd. ($1,000), Taryn Holdings Ltd. ($25,000),  Sea to Sky Meeting Management Inc. ($1,000), and Spiegelman and Company ($500).

Town staff calls the donations “flow-through” funds because they were received as revenue and then transferred to the Building Society.

Photo Laura Houle

The Town of Gibsons was not the only entity issuing tax receipts for donations to the market in 2016. The Sunshine Coast Community Foundation did so as well. The foundation did not contribute the funds directly to the Building Society; it donated them to the Town of Gibsons in the form of a grant. The town then transferred the money to the Building Society.

Wendy Francis, executive director for the foundation, said that in 2016, the grant to the town was just over $345,000.

Why did the foundation not give the money directly to the Building Society? Francis explained that the Canada Revenue Agency has determined that foundations are only able to give grants to qualified donees. These qualified donees are either charities or other entities that the CRA has classified as qualified donees.

Municipalities are qualified donees, Francis said. “We couldn’t grant to the market or the Building Society which runs the market because they’re not qualified. We gave a grant to the town and it could use that money how it wished to.”

“This is how the foundation manages grants to non-profits that are not qualified donees. The organizations must have a sponsor which is a qualified donee and the funds flow through that entity, with or without a fee levied on the recipient,” added Sandra Cunningham, former executive director for the foundation.

According to Francis, some people also donated money to CanadaHelps.org, which gave those people tax receipts as well. CanadaHelps.org then gave the money to the foundation, and the foundation donated another $58,000 to the town in 2016. 

In total, the foundation granted $403,000 to the town in 2016, Francis said. The town received the money, she said, and passed it to the Building Society, which operates the market.

In 2016, the town gave $706,779.30 in flow-through funds to the Building Society (the Public Market). According to Wendy Francis, $403,000 came from the foundation. However, Ian Poole gave a number of $510,406.30 from the foundation.

When The Coast Clarion inquired, both the town and the foundation stuck to their numbers.

“All I can speak to is the numbers that I have, which shows that we got $510,406.30 from the SCCF in 2016,” Poole said.

“I can’t explain why the figures you received from the town are different from those of the foundation,” Francis said. “We each keep our own sets of books and have our own accounting practices: there may be differences in timing between when cheques were written, cashed and recorded.”

The tax receipts to the 46 individual donors and five corporate donors mentioned above are in the amount of $210,273. The town gave $706,779.30 to the market. If $403,000 came from the foundation, the difference is $90,506.30.

If the foundation gave $510,406.30, as Ian Poole said, the total of donations would be $720.679.30. In that case, the difference is $13,900.

2016 was not the first year the town issued tax receipts for the Public Market.

In 2013, the town collected $275,000 in donations from the community and issued tax receipts to donors. However, those funds were not flow-through funds. The town used them to purchase a 37.93 per cent equity interest in the market property at 473 Gower Point Road.

If the town was able to use donations from the community to purchase an equity interest in the market property in 2013, why couldn’t the town do the same in 2016?

“The first time we contributed $275,000, that gave us a 38 per cent interest in the equity,” Poole explained. “But in [February] 2016 when we made the second equity contribution, the market board had reevaluated the appraised value of the building because it was undergoing major renovations. At the same time our equity increased in terms of investment dollars, the value of the property increased. The result was that our equity interest remained about the same; it increased by about 1 per cent.”

The second equity contribution that Poole referred to occurred in February 2016, when the town invested $275,000 from the Parks Acquisition Reserve Fund in the market and forgave $110,000 in required frontage work at the market site.

Colliers International Realty Advisors Inc. found that the market building, when completed, would be worth $2,750,000. This amount formed the basis for the calculation of the Town’s portion of the equity in the property, and it is the reason that the donations in 2016 did not appreciably increase its equity interest.

The Coast Clarion asked Nancy Grenier, communications and marketing director for the Gibsons Community Building Society, about the fundraising procedure and the society’s application for charitable status.  The Society declined to comment at this time.

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12 comments

  1. This doesn’t seem right. If the Public Market isn’t eligible for charitable status having the money go through the Town doesn’t make it okay. I had no idea municipalities could do this–are there limits to the types of enterprises they can do this with? If not, I could see this getting out of hand.

    Thanks for enlightening us Laura.

  2. On second thought, this could be a good thing. We are about to lose our recycling depot–how about the Town sets up a flow-through arrangement so people can donate to help them out and get a tax receipt for it? I’m going to write to the Town and suggest it.

  3. Have I got this right? In 2016, the Town funnels about $1,000,000. to the Market ($275,000. from the parks fund plus $706,779.30 made up of either $4 or $500K from Canada Helps and the Sunshine Coast Community Foundation which seems to have belatedly realized they were doing something illegal, plus $210, 273. of Town-receipted donations from corporate bodies and individual community members–not to mention the $110,000 in forgiveness re frontage fees). In 2013, when the property was worth $1,110,000., the Town funnelled $275,000 to the Market and got 38% equity. In 2016, when the property is valued at $2,275,000., the Town funnels about a million and gets 1% more equity. What am I missing here? Who was the genius who brokered this deal for the Town?

  4. There are a lot of figures to digest in this article . Thank you Laura for bringing this to our attention.
    At first blush it seems shady to me and begs further investigation. Gonvernment should not be involved in private enterprise.
    Judith Bonkoff

    1. Hey Jean the link in the article says that the Canada Revenue Agency does not have the Building Society listed as a charity. In general, people can say anything they want on their website. I’d be inclined to go with the CRA’s information.

    2. I think that was a it of lazy writing using the word charitable in the general sense. As in “my friend Larry is a very charitable fellow”.

  5. It is standard practice for not-for-profits who are not charities to partner with not-for-profits who are charities in order to access grants and funds. This is not shady at all. This is standard operating procedure for dozens of not-for-profits on the coast every year.

    I applaud the efforts at holding governments accountable, but I am not sure why there is an assumption of something nefarious here. I mean there are differences of opinion about the business case of the market and its long term viability, but I think everybody involved is acting in good faith to improve the town. Is there a reason to assume otherwise?

  6. I think the coast clarion would be doing their readers a service if they published these dollar amounts in a table. The table could indicate where the money came from and whether it was used for equity purchase or not. All the numbers scattered throughout the article are just confusing people and are obviously causing some people to assume wrong doing. As a responsible news source coast clarion should work to clarify the situation.

  7. Thanks, Laura, for such an enlightening article. Is this confirmation that municipalities are merely microcosms of the macrocosm of global corruption unfolding day after day after day?
    Certainly an indigestible eye-opener for many, perhaps.

  8. “Is this confirmation that municipalities are merely microcosms of the macrocosm of global corruption unfolding day after day after day?”

    No it is not. What was it that was written that gave you that idea? That is an honest question. I am wondering what facts in the article gave you the idea that there was “corruption”.

    As already pointed out it is common practice for not-for-profits that are not charities to partner with not-for-profits who are charities in order to access funds that are only available to Charities. I would bet that a dozen not-for-profits on the coast that you would support do this each year.

    If the article gave you the idea that this practice was somehow underhanded or corrupt then I suppose it failed to inform.

  9. From what I read in this story: the Town of Gibsons isn’t following CRA rules. The funding is described as “flow through” funds by Town staff. The Town simply collects it and then hands it over to the Building Society. So it sounds like the Town has no oversight or control of the money once it’s handed off to the Society. They are simply a conduit for the funds.

    If this is true, it’s a violation of CRA rules which are very clear that the charitable organization must retain direction and control over the project and any donor funds.

    What Larry says above is only partly true: Yes, it is common for not-for-profits that are not charities to partner with not-for-profits who are charities. But, he doesn’t mention a significant factor in how the partnership is structured: the non profit with charitable status must be the principal in the partnership.

    The Town of Gibsons appears to be going out on a limb here and the end result could be that they lose their charitable status.
    Read about it here: http://www.ecccalgary.com/wp-content/Better_Together_2015.pdf

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