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john ibbitson

This is part of The Globe and Mail's in-depth look at the evolution of philanthropy. Read more from the series here.

As Stephen Harper moves toward rewriting this country's social contract, he presents each of us with a moral question.

If we want lower taxes, are we prepared to give more of ourselves to others?

Human Resources Minister Diane Finley is looking to reform federal grants to charities and non-profits. Funding would increasingly be tied to performance. Organizations would be enabled and encouraged to seek investments from individuals and corporations.

For now, only a few pilot projects are planned. But we can expect the Conservatives to widen this wedge as steadily and as quickly as public opinion permits.

Canadians will still enjoy universal public health care and near-universal public education. There will still be subsidized housing, welfare and unemployment insurance. The foundations of the social state will remain intact.

But in an era where fiscally restrained governments confront rising need created by economic turmoil, the private sector must do more. And the private sector is each of us.

Canadians don't really give a lot to charity, compared to their U.S. counterparts.

In 2008, 27.3 per cent of Americans donated to good causes, compared to 23.6 per cent of Canadians, and they gave almost twice as much, according to an annual study on giving by the Fraser Institute.

Canadians don't give as much because we expect government to enact programs that bring help to those who need help, while Americans rely more heavily on private philanthropy. That's why we agree to pay higher taxes.

Except taxes have come down. The GST is two percentage points lower than it was five years ago. Federal corporate income taxes are declining to 15 per cent as of next year from 28 per cent in 2000. Ontario began cutting provincial income taxes in the 1990s; other provinces and the federal government followed.

Tax cuts have consequences. As economic growth flags, needs grow more acute, and demonstrably less government money is available to help.

This is why the Conservatives are attracted to the idea of mobilizing more private capital for public good. It can involve targeted community investments by corporations and foundations. It can involve enabling non-profits to generate income through investments, using the profits for their core mandate.

And it can involve each of us giving more generously in lieu of taxes.

It is generally accepted in these more-conservative times that the market allocates resources more efficiently than the state, which is why government should involve itself only in areas where public needs are beyond private capacity, such as the military or free public education.

If governments give less to charities and non-profits, and citizens give and – better yet – invest more, then this private social capital should do a better job of meeting needs than its public predecessor. Only the best charities should thrive; only those that demonstrably achieved their goals should expect our support.

The percentage of Canadians donating to charity actually declined between 1998 and 2008. Clearly, our sense of social obligation is not as fully developed as it should be, which is why, for example, the Ontario government requires high school students to provide 40 hours of community service before they can graduate.

Of course, we could always just raise taxes. Alex Himelfarb, former clerk of the Privy Council, argued in a speech earlier this month that governments are tax-cutting their way to perdition.

"Without an honest conversation about tax, we won't be able to face up to our challenges and we will sleepwalk our way toward a smaller, meaner Canada," he warned.