What Has The CRA’s Pilot Grant Project Accomplished Between 2021 And 2023?
Did you know that the grant funding the Canada Revenue Agency offered to host organizations is a pilot project, not a permanent feature of the CVITP? This project was planned for three years, running from 2021 to 2023 but has been extended for a fourth year to the end of 2024. In this article, we review how this pilot project was implemented in the three-year period and what it was supposed to as well as what it really did accomplish. We also speculate on what the fourth year is likely to yield in the way of results. We conclude with what we think should happen once the fourth year is completed.
Insights From Visiting 14 Urban Organizations in 5 provinces
Over the last three years, we’ve visited CVITP host organizations in six cities spanning five provinces. At the risk of overgeneralizing, we see broadly two types of host organizations. They have different objectives which lead to very different practices and sustainability in providing CVITP services. One of the two organizations is more common and serves most of the CVITP’s clients across Canada. Yet it is the weaker of the two types of host organizations. If the Canada Revenue Agency (CRA) wants to expand the CVITP, the current situation presents it with some big operational challenges.
In this article, we outline the main features distinguishing the two types of organizations, show why these differences severely limit the CVITP’s potential for expansion, and suggest some ways in which the CRA could constructively meet this challenge. Find out which of the two types of organizations yours is most alike, see if there are any defining characteristics we’ve missed, and let us know if you agree with our reasoning that this presents a problem for the CRA as well as with our proposed solution for building on these differences to the CVITP’s advantage.
One Way to Get Useful Data on Your CVITP Clinic: Ask the CRA for it
We have previously made the case for host organizations to collect and analyse data from their CVITP clinics to demonstrate the impact of their work to stakeholders and to improve their clinics in future years. There are two ways to get this data: the Canada Revenue Agency (CRA) could provide it or host organizations could collect it themselves. In this article, we look at the first of these methods, showing how the CRA could and why it should provide the data.
But even if the CRA could and should provide the data to participating organizations, the CRA may not do this on its own initiative. Host organizations are going to have to ask the CRA for the data. To make it easier for them to do this, we provide a template of a letter which can be used or modified and sent to the CRA. To get commitment from senior managers within the host organization who may be less familiar with the subject, we also provide a background note that a CVITP clinic coordinator can use internally to brief them.
If a host organization thinks it is a good idea, now is the time to send in this letter. It will give the CRA ample time to plan for any changes in practice before the 2024 tax season.
However, we are not naïve in believing that the CRA would do this just because a handful of host organizations ask for it. As it represents an important change in institutional practice, it will likely require a sustained letter writing campaign over the longer term by many host organizations to convince the CRA to make the technical, demographic, economic and benefit-related data available to each of its participating organizations for the CVITP service they are providing and the populations they are serving.
In the short term, what does a host organization do to get the data it needs to improve its CVITP service and to demonstrate the impact of this service? This will be the subject of a forthcoming article.
Assessing Year #2 of the CRA’s Three Year Pilot Project
This article looks at the implementation in the second year (2022) of the Canada Revenue Agency’s (CRA) three-year pilot grant project in support of CVITP host organizations. (We reviewed the first year of implementation in 2021 here.)
The first part of this article looks at the second year of funding. Increases to the grant amounts on offer were announced late in the calendar year, after all the second-year implementation of this pilot project was finished. These increases were probably a response to the very low grant payments for the first year of operation. But while the CRA’s stated objectives for the program suggest the funding is intended to serve as incentive for host organizations to ramp up their services, the timing of the announcement was strange as it would have no effect on the results obtained in the second year. According to the CRA, 1,067 host organizations had applied for grant funding in the second year and the CRA anticipated disbursing $2.4 million (up from just over $900,000 in the first year).
The second part of the article looks at the results obtained in the second year and compares these with results from the first year. In doing this, use is made of the objectives and performance targets the CRA identified for this pilot grant program:
- While the first objective is to cover some of the participating (host) organizations’ administrative costs, no performance measure is given. That said, it is strange for an element of the project design to be a stated objective of the pilot project.
- Whereas the number of participating organizations was expected to grow by 5% per year, between 2021 and 2022 the number grew by 692%. However, as we observed when the grant program was launched over two years ago, the CRA will have difficulty disaggregating the rebound in the numbers due to the pilot project from a return to normal after the deleterious effects of COVID in 2020 and, to a lesser extent, in 2021 as well as the natural growth in the numbers that the program has previously known.
- Although increased retention of participating organizations is a stated objective and a performance measure is given, the CRA publishes no data which allow this to be assessed.
- Expansion in the reach of participating organizations is listed as another objective. But no performance measure is given so this cannot be assessed.
- Expansion to vulnerable population segments is also listed as another objective. But, again, no performance measure is given so this cannot be assessed.
- Even though it is not a stated objective, the CRA identifies an increase in the number of volunteers associated with grant recipient organizations as a performance measure. As the CRA does not distinguish in its published data between host organizations which are grant recipients and those which are not, this cannot be assessed.
- The CRA also identifies an increase in the number of returns filed by grant recipient organizations as a performance measure. However, this too cannot be assessed because the CRA does not distinguish in its published data between host organizations which are grant recipients and those which are not. Surprisingly, the growth in returns filed is not a stated objective. Yet a simple measure of success could be whether more individuals get served and, by extension, more returns get filed.
When the project was first launched, we wrote that the pilot grants needed to be targeted differently for the CVITP to better contribute to the poverty reduction objectives set out in the federal government’s 2018 Poverty Reduction Strategy.
In the intervening years, the federal government has further increased its use of the income tax and benefit return (for example, with the one-time top up to the Canada Housing Benefit, the Canada Dental Benefit and the grocery rebate) to achieve its income security and poverty reduction goals. This has only reinforced our conviction that, upon completion of the pilot, the CRA needs to rethink the design of this program (and not just make the funding permanent and more generous) if it wants the CVITP to improve its contribution to reducing poverty in Canada.
How To Coordinate CVITP Clinics, Why It Isn’t Happening And Why It Should
We work as CVITP volunteers in a large urban area. At the height of the tax season, in March and April, there are over 40 host organizations offering CVITP clinics in our area. Yet they do not coordinate their CVITP efforts between themselves. We suspect this is true in many urban centres. Why?
In this article, we give nine examples to illustrate some of the ways in which CVITP host organizations can coordinate by pooling clients, volunteers and information.
We then explore the question of why this doesn’t happen more often. In a nutshell, many host organizations feel they cannot afford the costs, in the short term, to closer collaboration. Ideally, the CRA’s regional coordinators could take on the role of leading coordination efforts amongst host organizations within their regions, helping to overcome some of these costs. However, given the CRA’s generally cautious approach to the CVITP, we do not see this happening anytime soon.
Yet we know that there are cases of closer collaboration between host organizations, even if infrequent. We offer up the intriguing example of Aspire Calgary to show how 18 host organizations have managed to closely collaborate on a range of activities related to the CVITP, from training to fundraising. Working together, they have managed to produce impressive results in support of Calgary’s poverty reduction strategy: in 2019, their 572 volunteers filed 8,797 returns in 325 clinics which generated $43 million in government benefits for people on low incomes. We briefly outline three notable features of Aspire Calgary’s model which support this collaboration.
Such cases demonstrate that some organizations are willing to incur the short-term costs associated with better collaboration. Why? We believe it is because they have realized that the short-term costs are outweighed by the benefits over the medium term. Chief amongst these benefits is better client service: more clients can be assisted; they can be assisted by volunteers who better understand their particular circumstances and the service can be offered on a more flexible basis.
Finally in our article, we set out a challenge in 2023 for host organizations who are willing to take the first step toward closer collaboration with others in their region. We propose volunteer training, an area we find to be neglected at many host organizations we know and an important element for improving service to clients.
Collecting & Analyzing Data to Improve Service & Demonstrate Impact
When personal information is stripped from client returns and the remaining information is aggregated, a host organization can make at least two uses of the ensuing data. It can use the demographic and economic data to learn more about the population currently served and to improve targeting efforts in the design of future tax clinics. The host organization can also use data on the benefits and credits generated for clients to demonstrate to its various stakeholders the impact of the current CVITP service on their clients’ financial situations.
Annually, the Canada Revenue Agency (CRA) strips the personal information from returns and provides the demographic and economic data to Statistics Canada for publication. Infrequently, the CRA has also aggregated the data from returns on benefits and credits at the national and provincial levels and shared the figures publicly. Given the advent of the CVITP Organization Identification Number or COIN in 2021, it is now technically feasible for the CRA to do all this for each individual host organization as well.
There are two reasons why we believe it is in the CRA’s own interest to do this. First, by providing data to individual host organizations on the benefits and credits generated by their CVITP clinics for their clients, the CRA would be helping them to make the case to donors. Increased donor funding would alleviate a serious resource constraint for many host organizations. In turn, this could reduce some of the pressure on the CRA to provide funding while, at the same time, increase client access to CVITP services.
Second, by obtaining demographic and economic data on the clients served by its CVITP service, the host organization can learn more about the population currently benefiting from its CVITP service. Where there is a mismatch between this data and the population the host organization wishes to serve, this information can be used to help better target CVITP services in the next tax season. In turn, this could increase access to CVITP services by clients who need these the most.
In both instances, the provision of data to host organizations could help the CRA to better contribute to meeting the objectives of the federal government’s Poverty Reduction Strategy (PRS).
Quite apart from doing this to fulfill its obligation to support the government’s PRS, we believe the CRA has an obligation, as a good partner, to provide its host organizations with their data. Currently, most host organizations offer CVITP clinics with little or no support from the CRA. Providing this data would be one of the most important contributions the CRA could make to help its host organizations.
Although the CRA does not presently do this, some host organizations are collecting and analyzing client data from their CVITP clinics. However, most are not. This article explores five challenges host organizations face in doing this:
- A lack of interest or understanding within the host organization about the importance of this data
- Addressing client consent considerations
- Handling client privacy issues
- Finding staff or volunteer time to collect the data
- Finding the expertise to analyze the data
Our experience is that host organizations mandated to promote their clients’ financial empowerment are the most successful at present in addressing these challenges. As they already receive donor funding in support of this mandate, they are well positioned to tackle these challenges.
On the other hand, most host organizations providing CVITP services do not have clients’ financial empowerment as part of their core mandate. Thus, they probably do not receive donor funding specifically to support their CVITP services.
One final reflection: our article addresses the use of anonymized data found in client returns. To improve on the delivery of their CVITP services, host organizations also need to find ways to get data on non-filers within their potential client base.
Implementation of CRA’s Pilot Grant Program in Year 1 of 3 – A Slow Start to Missing the Mark
In 2021, the Canada Revenue Agency (CRA) introduced a new pilot grant program that provides financial support to some CVITP host organizations. When it was introduced, we had a lot to say about it here.
The pilot program has completed the first of its three years. As is unfortunately typical of the CRA in its reporting on the CVITP, there is a dearth of information on the first year of this pilot. However, there is one important piece of information cited in the CRA’s Departmental Plan for the 2022-23 fiscal year: “In the first year alone, the CRA sent just under one million dollars to qualifying organizations across Canada to support their efforts to ensure that vulnerable people have the ability to file tax returns and access the benefits and credits designed to support them.”
Remember: the budget for this three-year pilot grant program is $10 million; this amounts to an average of $3.3 million being available each year to support host organizations. Disbursing less than $1 million in the first of the three years raises serious question about the ability of the pilot grant program to meet its stated objectives: defraying organizations’ costs of hosting CVITP clinics and encouraging more organizations to host CVITP clinics.
In the following article, we show that it has budgeted too much for this pilot or, on the basis of the current budget, it is simply too stingy with the current payments to meet its goals. We predict that the pilot program will complete its three years well under budget. There are two design elements we stated when the pilot program was first launched which are likely to contribute to this outcome: administrative arrangements that are burdensome, deterring some host organizations from applying for the grant, combined with grant amount limits that are too low to serve as an incentive for host organizations.
We note that the indicators the CRA has said it will use to determine the success of the pilot are likely to yield misleading conclusions. This is because the implementation of the pilot program coincides with the period immediately following COVID, when the numbers for the CVITP had plummeted and thus could be expected to rebound anyways.
We also believe that the indicators the CRA is using are the wrong ones as none of them gets at the real purpose of the CVITP. As noted in one of our articles assessing the pilot program when it was first launched, at its core the CVITP is about the income levels of the clients it serves. Therefore, the pilot program should aim to increase the number of returns filed by a host organization for clients whose incomes fall at or below the poverty line, not simply the number of returns filed nor, for that matter, host organizations and volunteers enlisted in the CVITP. Until the CRA draws a closer link between its CVITP and the objectives contained in the federal government’s Poverty Reduction Strategy, it will continue to miss the mark with opportunities like its pilot grant program.
CRA’s Newly Minted COIN: A Welcome Innovation
This year, the Canada Revenue Agency (CRA) introduced an innovation into the CVITP. Every host organization will be issued with a unique CVITP Organization Identification Number or COIN for the duration of its participation in the CVITP (i.e. it will remain the same from year to year). In this article, we explain briefly why the CRA introduced the COIN and how it works. We also identify a function for the COIN which the CRA has not yet stated but which we believe will be really important for helping to make strategic decisions about the future shape of the CVITP.
Sixteen Lessons From Dealing With COVID
As we reported here, in the 2020 tax season the CVITP served only 55% of the clients it had served in the previous year. The Canada Revenue Agency (CRA) attributes the dramatic decline to the public health restrictions introduced in 2020 to deal with COVID.
In preparing for the forthcoming tax season, the CVITP tax clinics will be subject to similar COVID related public health restrictions. Furthermore, as of now, the CRA has given no indication that it will change the traditional filing deadline of April 30th to ensure the continuity beyond June 2021 of the many benefits which are conditional upon filing an up-to-date return. Significant changes in practices and procedures are needed to avoid an outcome similar to last year’s.
What can be learned from the experience last year which can be applied to this year’s tax season and to future years when the public health restrictions are no longer an issue?
This article identifies 16 lessons. We also invite our readers to share additional lessons drawing on their own experiences.
Notice of Assessment: Canada Revenue Agency’s New Grant Program
The Canada Revenue Agency (CRA) recently announced that it will, for the first time, be providing financial support to host organizations that run CVITP clinics. As the CRA has previously denied that it could provide such support, this is an important change. And in principle, it is one that we support.
However, the current pilot project, which offers $3.3 million a year over the next three years, is poorly designed, with no targeting (not in line with the purpose of the program), insufficient financing (unlikely to provide the intended incentive effects), and an administrative process that is burdensome (not exploiting the flexibilities available with the use of grant funding).
Recognizing that this three-year pilot project has yet to begin its first year of implementation, we make some suggested changes that we believe will significantly improve its impact. We propose that the CRA:
- Target its grant funding to ensure host organizations are providing support to those who need it the most;
- Make the client income level a criterion, using the poverty line as the threshold;
- Set a minimum percentage for a host organization’s client returns that must meet or fall below the poverty line to qualify for any grant funding;
- Offer a larger financial incentive for returns filed by clients who had previously not filed for a number of years;
- Establish and publicize the minimum percentage and the size of the financial incentive at the outset of the grant funding period;
- Significantly increase the funding level per eligible return to provide for something approaching a real incentive;
- Use the annual registration process for the approval of host organizations to collect all of the information required to assess the host organization’s eligibility for grant funding; and
- Use the annual registration process for the approval of host organizations to notify eligible host organizations of the funding formula it will use to determine the amount of grant funding they could receive at the end of the eligible activity period.
We conclude this four-part series of short articles offering some thoughts on the challenges the CRA will face in assessing the impact of this pilot project. Given the difficulty in surmounting these challenges, there is a risk that any growth in the numbers will be claimed as demonstrating the success of the pilot and used to justify maintaining this project with poor targeting, insufficient financial resources and cumbersome administrative arrangements.
Supporting Host Organizations Better
The federal government’s Poverty Reduction Strategy identifies the CVITP as one of its programs that contributes to achieving its goal of reducing poverty in Canada. This is because the annual income tax and benefit return processed by the CVITP serves as the basis for establishing eligibility for and maintaining access to many federal and provincial/territorial benefits and credits, some of which are income-tested.
Set up by the Canada Revenue Agency (CRA), the CVITP is a free return preparation and filing service offered, in 2019, by over 3,500 host organizations to some 741,000 low and modest-income individuals filing 835,216 returns with the assistance of over 19,000 volunteers. Yet the CRA provides no financial support to assist host organizations with any of the costs they incur to make this possible. Instead, it encourages host organizations to do their own independent fundraising. This has not proven to be a successful nor sustainable solution.
To maintain and improve CVITP services, the CRA should be providing direct financial support to host organizations. It should also spin off some of the CVITP related services it currently provides to an independent not-for-profit unit, financed through a service contract with the CRA. This independent unit could provide these as well as other new CVITP related services not presently available to host organizations.
This proposed arrangement is in keeping with current federal government practice wherein federal services to the public delivered by independent parties receive some financial support. In the absence of such a change, host organizations will continue to struggle to maintain the current level of service and will not be positioned to improve their CVITP services in line with CRA expectations. Furthermore, the entire CVITP operation will remain at risk, as was evidenced this year when COVID related public health restrictions temporarily shut them down and willing host organizations moved to more labour intense “virtual clinics”.
Read here to learn more about the difficult conditions in which host organizations currently operate and why this severely limits the potential of the CVITP, one form that CRA financial support to host organizations could take, and why there is also the need for an independent unit as well as what it could be do to help fulfill the potential of the CVITP.
How well are your CVITP clinics targeted to clients who need this service the most?
For many CVITP host organizations, the demand for free clinic services exceeds the supply of volunteer time available to prepare returns. The income ceilings suggested by the Canada Revenue Agency (CRA) are an established way of limiting access to this free service. This article compares the income ceilings suggested by CVITP with the incomes that make up poverty lines and finds that, with a few exceptions, the former are generally greater than the latter. Host organizations which want to target their services to those who need it the most may wish to use income ceilings that are more closely aligned with the poverty lines for their region.
To learn more, you can read the full article here.
The Evolution of the CVITP – Host Organizations
In a series of articles, we trace the evolution of the CVITP, using information from CRA reports and plans for Parliament. Read our article about the organizations which have hosted CVITP tax clinics. Our other articles tell you about the clients served by the CVITP tax clinics, the returns that have been filed at the these clinics and the CVITP volunteers who have helped clients to file their returns.
Interested in reading the whole series? Start with our introduction and learn why we reach the conclusion that “the CRA’s reporting on the CVITP has been weak to date and gives Parliament too little information.”