How open data saved $3.2 billion
This is a story of fake charities and tax shelters. In an analysis of data from the Canada Revenue Agency (CRA), it was found that billions of dollars in donations were collected by fraudulent organizations, with only a tiny portion going to the actual causes. In one case, only $1 out of every $100 went to helping the homeless. The rest of the money went to a tax shelter. Shameful.
All told, my colleague estimated that these illegally operating charities alone sheltered roughly half a billion dollars in 2005. Indeed, newspapers later confirmed that in 2007, fraudulent donations were closer to a billion dollars a year, with some 3.2 billion dollars illegally sheltered, a sum that accounts for 12% of all charitable giving in Canada.
Not only did this lead to the exposure of fraud, but also negligence on the part of the CRA charity division (now under new leadership). How did this go on for so long? A simple sort on the data would have raised questions immediately. Instead, it took a freelance consultant, poking around out of curiosity, and journalists, who were aware of fishy behavior, to move things along.