A better way to fund services

A letter in Wednesday’s Advocate has an answer to secure funding for service agencies in these cash-strapped times.

A letter in Wednesday’s Advocate has an answer to secure funding for service agencies in these cash-strapped times.

The letter came from media relations director Linda Sims, of the Canada Pension Plan investment board, and it was intended to clear what they see are misapprehensions about the solvency of the CPP.

Far from collapsing due to retirement of baby boomers, changes in the way CPP is funded (made by the Liberals in the 1990s) will see the pension plan self-funding for the next 11 years, Sims writes. Meanwhile, growth of their $138-billion investment fund means that interest from the fund will top up the CPP obligations for generations to come.

For today, we’ll take her at her word. Instead, let’s examine another message from this that has application here and now.

Had the Alberta government treated our provincial Heritage Fund with the same diligence as the CPP did with theirs (as other countries have done as well), we wouldn’t be having any difficulties funding health care or social services in this province.

Had our Heritage Fund not been pillaged in the years of Ralph Klein, and had our royalty windfall been properly saved in the years of huge surpluses, Alberta’s position would be the same as CPP’s today.

Today, our “rainy day” fund is no umbrella at all. Its November report pegs its fair value at $14.8 billion. If the Heritage Fund had been allowed to grow naturally, and been given some investment during our wealthiest decade, it could conservatively be more than triple that today.

Second-quarter income from the fund came to $391 million, much of that a recovery of value lost in the last recession. Triple that, and you’re starting to talk about real money.

Let’s look at that lost opportunity in the light of a news story in Tuesday’s paper, about Alberta’s non-profits facing hard times.

A lot of charities deliver services that are mandated by government. That’s because non-profit staff are paid far less than provincial staff, and are backed by volunteers and charitable fundraising.

The value non-profits add to government programs is well in the hundreds of millions of dollars a year.

Yet because the government frittered away our wealth in the good years, they have to cut back on programs for the province’s most vulnerable people today. They’re essentially downloading provincial obligations onto volunteers.

In the Advocate’s interview with Heather Gardiner of the United Way, published on Tuesday, we discover that our non-profits are facing a loss of staff and ability to deliver core programs because they have no secure long-term funding. The money the United Way raises every year is totally spent in the year following. This is the definition of poverty for organizations.

Alberta already has community foundations in every city. But we need them large and strong enough to fund core social programs — out of fund dividends, not fundraising.

To provide the $2 million the United Way needs this year, we’d need the Red Deer and District Community Foundation holding about $50 million more than it has now.

But if you have trouble raising $2 million, how do you raise $50 million?

It could be done if the province would wean itself from gambling profits, and take the portion it places in general revenue every year and invest that instead into building foundations.

And we don’t even want to talk about the millions and billions lost in royalty holidays for energy companies reaping huge profits once again.

In short, Alberta needs to be more responsible regarding the way our royalty trust fund is managed. And charities need to begin planning to fund their activities out of foundation income, rather than annual fundraising.

Greg Neiman is an Advocate editor.