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    The Social Economy Across the Rural to Urban Gradient: Evidence from Registered Charities

    Data source and methods

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    The data used in this analysis comes from an administrative database generated from information returns (Form T3010A) submitted by registered charities to the CRA. The fiscal year of reference used in this analysis is 2004. The CRA dataset was processed with the PCCF+ application of Statistics Canada for the corresponding year (Version 4H, June 2006), which is updated periodically to account for changes in the postal codes (Statistics Canada 2008b). This yielded a dataset of geo-referenced observations at the census subdivision (CSD) level.1 In 2004, the CRA database had 78,008 registered charities on record. In total, 77,833 records of these charities, for which a current postal code was available, could be matched to a total of 5,600 CSDs across Canada, using the 2001 census geography. Hence, the database used in this analysis represents 99.8% of the registered charities existing in 2004.

    It is important to emphasize that the database represents the entire population of registered charities and not a sample. Registered charities, regardless of their designation, must submit annually to the CRA an information return outlining the activities of the charity for the year. Information return data provided by these charities are available to the public and are provided by the CRA as submitted by each organization. Hence, this database provides a unique opportunity to work with micro-data for an entire population of registered charities.2

    Box 2 reports the details on the designation of registered charities and on the difference between these and other non-profit organizations. In brief, registered charities are designated either as a charitable organization, a public foundation, or a private foundation. A charitable organization (e.g., hospital) primarily carries on its own charitable activities. A public foundation (e.g., hospital foundation) gives more than 50% of its income annually to other qualified donees, usually other registered charities. A private foundation may either carry on its own charitable activities, or it may give funds to other qualified donees, usually other registered charities.  The designation is given by the CRA's Charities Directorate and is based on the charity's structure, its source of funding,3 and its mode of operation.

    Box 1  Definition of rural used in this analysis

    As discussed in Puderer (2008) and du Plessis et al. (2001), there are numerous possible operational definitions of urban and rural areas; the choice of the definition to be used in an analysis is largely driven by the research questions at hand. In this study, we use the rural and small town definition of rural, which represents the areas that are outside of the commuting zones of larger urban centres with a core population of 10,000 or more. Technically, this definition is based on the Statistical Area Classification (SAC) of Statistics Canada (Statistics Canada, 2007), which distinguishes between larger urban centres and rural and small town areas.

    Larger urban centres (LUCs)

    Two types of larger urban centres are incorporated in the definition of urban: (1) Census Metropolitan Areas (CMAs) have an urban core population of 100,000 or more; and (2) Census Agglomerations (CAs) have an urban core population of 10,000 to 99,999. Note: This is the definition from 2001, which we are using in this paper. In 2006, a Census Metropolitan Area (CMA) has an urban core population of 50,000 or more with a total population of 100,000 or more, and a Census Agglomeration (CA) has an urban core population of 10,000 or more with a total population of less than 100,000.

    Both CMAs and CAs include the total population of neighbouring census subdivisions (CSDs), i.e., incorporated towns and municipalities, where more than 50% of the labour force commutes (i.e. a measure of social-economic integration) to the urban core of a specific CMA or CA. More details of the delineation are available from Statistics Canada (2007). The term 'Larger Urban Centres' (LUCs) refers to the combined CMAs and CAs.

    Rural and small town ( RST ) areas refer to non-CMA/CA areas. RST areas are divided into five types of zones based on the degree of influence of LUCs (as indicated by the degree of commuting to any CMA or CA). These zones are Census Metropolitan and Census Agglomerated Influenced Zones (MIZs) (Statistics Canada, 2007). These are defined as follows:

    1. Strong MIZ includes CSDs with a commuting flow of 30% or more of the total employed labour force living in the CSD and working in anyCMA/CAs' urban core;
    2. Moderate MIZ includes CSDs with a commuting flow of between 5% and 29% of the total employed labour force living in the municipality and working in anyCMA/CAs' urban core;
    3. Weak MIZ includes CSDs with a commuting flow of more than 0%, but less than 5% of the total employed labour force living in the municipality and working in anyCMA/CAs' urban core;
    4. No MIZ includes CSDs with either fewer than 40 people in the resident labour force (where data suppression rules apply) or where no people commute to the urban core of anyCMA or CA; and
    5. RST Territories refers to the non-CMA/CA parts of the Yukon, the Northwest Territories and Nunavut.

    The data included in the CRA's administrative database cover a variety of financial information on assets, liabilities and revenue; it categorizes the organizations according to type of activity and provides employment and membership data. In addition, the database includes the mailing address and postal code for each charity.4 The postal codes in and of themselves are a valuable component of this administrative database that, to date, have not been fully exploited.

    The Statistics Canada PCCF+ application allows users to convert postal code information attached to micro data to a variety of standard census geographies. In our case, it allowed us to geographically assign the registered charities in Canada to the census geography associated with that postal code.  In rural terms, this area may be an area the size of a municipality and in urban terms it may be one side of a street within a city block.  Statistics Canada's PCCF+ consists of a SAS control program and a series of reference files derived from the most recent Statistics Canada Postal Code Conversion File (PCCF) and a 2001 postal code population weight file (WCF). The program automatically assigns a full range of geographic identifiers (Census Subdivision, Statistical Area Classification Type, etc) based on postal codes.

    In this specific case, the use of the PCCF+ allowed us to assign 77,833 of the existing 78,008 records to a census subdivision, which in simple terms is an incorporated city, town or municipality. In turn, census subdivisions (CSDs) are classified by Statistics Canada into Statistical Area Classification (SAC) types based on the CSDs' degree of urban influence. The SAC types correspond with the two main areas of interest – rural, composed of all rural CSDs, also defined as rural and small town (RST); and larger urban centres, composed of both the census metropolitan areas (CMAs) and Census Agglomerations (CAs). Detail on this definition can be found in Box 1.

    Box 2  Definition and type of registered charities

    The definition and measurement of the social economy remains challenging; various agencies have adopted different operational definitions and measurements of this universe. Statistics Canada (2008a) uses a definition of non-profit and voluntary sector which partially relies on the classification adopted by the Canada Revenue Agency (CRA 2008) and includes the registered charities of Canada. Based on the CRA definition, the voluntary sector is made up of approximately 83,000 registered charities and 81,000 non-profit organizations. In addition CRA estimates that there are some 750,000 unincorporated community organizations that are not included in the voluntary sector count provided by the CRA (CRA 2008). Detailed definitions of non-profit organizations and charities according to (CRA 2008) are provided below.

    Registered charity. A registered charity means a charitable organization, public foundation, or private foundation that was established in Canada and is resident in Canada. It is operated for charitable purposes and must devote its resources to charitable activities. A registered charity has received a Registration Number from the Canada Revenue Agency and is exempt from paying income tax and can issue official donation receipts for gifts that it receives.

    • Charitable organization. A charitable organization (such as a hospital) primarily carries on its own charitable activities. It can be a corporation, or it can be established by a constitution or a trust document. A charitable organization must have an arm's length board of directors and generally receives its funding from a variety of arm's length sources.
    • Private foundation. A private foundation may either carry out its own charitable activities or it may give funds to other qualified donees, usually other registered charities. It must be established either as a corporation or a trust. A registered charity will be designated a private foundation if 50% or more of its directors or trustees do not deal with each other at arm's length, and/or more than 50% of the capital is contributed by a person or group of persons not dealing with each other at arm's length, if that person or group of persons also controls the charity.
    • Public foundation. A public foundation (such as a hospital foundation) generally gives more than 50% of its income annually to other qualified donees, usually other registered charities. It must be established either as a corporation or a trust, and more than 50% of directors/trustees deal with each other at arm's length. A public foundation generally receives its funding from a variety of arm's length sources. It may carry out some of its own charitable activities.

    Non-profit organization (NPO).  Under the Income Tax Act, a non-profit organization is an association, club, or society operating exclusively for social welfare, civic improvement, pleasure, recreation, or any other purpose except profit. It can not be a non-profit organization if it is also able to qualify as a charity. One of the main differences is that it cannot issue official tax donation receipts for income tax purposes. A NPO must be both organized and operated exclusively for social welfare, civic improvement, pleasure or recreation, or for any other purpose except profit; and comply with regulations regarding the filing of form T1044 to qualify, or to continue to qualify as a not-for-profit organization under the Income Tax Act.

    Source: Canada Revenue Agency. Charities and Giving: Dictionary.

      

    Notes

    1. A census subdivision (CSD) is an area that is an incorporated city, town or municipality or an area that is deemed to be equivalent to a municipality for statistical reporting purposes (e.g., as an Indian reserve or an unorganized territory). Municipal status is defined by laws in effect in each province and territory in Canada (Statistics Canada 2007).
    2. Registered charities are distinguished from non-profit organizations in the Income Tax Act.
    3. Previously, if more than 50% was contributed by a single source the designation would have been a private foundation. Now, under proposed legislation which is being applied by CRA the source must also control the charity for a designation of private foundation.
    4. For the purpose of this analysis, we used the address corresponding to the physical location of the charity (Section I1, T3010A Registered Charity Information Return).
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