Unintended Consequences: Charity Salary Caps

Globe & Mail: Salary caps would cripple Canada’s charities

“Bill C-470, a private member’s bill introduced by Albina Guarnieri, would impose a suffocating $250,000 cap on executive salaries at charities. The bill, which has gone through second reading, is nothing short of ridiculous. If it ever passed, the leadership exodus that would eventually ensue would cripple Canada’s charitable sector. So much for being charitable. Our whole outlook on compensation in charity is in need of a serious re-imagination.”

If a private charity was to pay its management more than $250,000, or any arbitrary limit for the matter, it is up to them.  The author is correct, the law of unintended consequences would kick in.  There are some smart people out there, and like any other company that is trying to create a product to sell or in this case attract donations for a worthy cause, to do that you need these smart people in charge.  The charities are competing with the private sector which offers stock option etc. which simply can’t be matched by charities.  If you are concerned about these salaries pass a law requiring full disclosure of the salaries and total compensation but setting an arbitrary limit will have a negative net impact in the long run.

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