Canada’s Charitable Sector post the Covid-19 Crisis

July 15, 2022

Today in Canada, there are approximately 86,000 organizations with charitable status and another 84,000 not-for-profit entities. They are an important part of our social fabric, but there are some imperative decisions to be faced.

In the waning days of the second world war, Winston Churchill was working to establish the United Nations and is credited as saying: “Never let a good crisis go to waste.” 

Churchill was attempting to draw attention to the opportunities that often surface in times of massive upheaval and change. Certainly, the global pandemic has similarly generated chaos and the kind of transformation that will likely take decades to fully process and comprehend. No one has escaped unscathed, and this is particularly true for society’s most vulnerable and those organizations which support them.

Barely two weeks into the pandemic, Canadian charities were reporting a dramatic spike in demand for services and supports.

More than 200 of them convened around a call to the federal government to establish a $10-billion “stabilization fund”. Led by Dr. Samantha Nutt, of War Child Canada, this hastily convened coalition foretold of, “an impending and irreparable collapse of Canada’s non-profit sector.” Overnight, charities were being called upon to pivot quickly into emergency help mode. People were out of work, isolated seniors were struggling with everyday life, homeless shelters needed to acquire PPE and other supplies to keep clients and staff safe; and vulnerable children were being cut off from critical school and afterschool programming, to name just a few of the cascading issues to surface. At the same time, donations dried up, volunteers stayed home, and fundraising events were out of bounds.  “My honest prediction,” said Dr. Nutt, “is that at least half of Canadian charities will not withstand the COVID-19 crisis unless there is significant government action on this.”

The government did indeed step forward. But perhaps not in the way charities wanted. 

In the first instance, key programs like the Canadian Emergency Wage Subsidy (CEWS), the Canadian Emergency Rent Subsidy (CERS) and the Canadian Emergency Business Account (CEBA) were available to businesses and charitable organizations alike, although as with the business sector, particular eligibility criteria screen some out. In early 2021, Imagine Canada reported that the “uptake for these programs seems generally to be high”, with the greatest uptake being highest with CEWS. In the aggregate, 42% of all charities sought relief through at least one of the short-term programs. Even while these funding programs were largely geared toward just keeping the lights on, so to speak, some charities were required to shutter operations temporarily or in some cases permanently.

In late Spring 2020, the federal government announced it was establishing the Emergency Community Support Fund (ECSF) starting with a $350 million investment. Through two rounds of funding, the Community Foundations of Canada, United Way Centraide Canada and the Canadian Red Cross were selected to oversee the distribution of these government funds to community-based charities and non-profit organizations serving vulnerable populations throughout the country. Above this, there were additional funds set up to respond to the needs of specific vulnerable groups. For example, $75.5 million was made available to address the needs of Canadians experiencing homelessness. Up to $50 million was provided to women’s shelters and sexual assault centres, including facilities in Indigenous communities, to help with their capacity to manage or prevent an outbreak. United Way Centraide Canada was entrusted with another $9 million to distribute to local organizations providing services and supports to Canadian seniors.

The parameters of this funding were clear and direct: This funding was intended to address a pressing social inclusion or well-being need caused by COVID-19; it was not intended to replace lost fundraising, nor any projects designed to provide financial stabilization, recovery and/or resilience of an organization’s general operations due to the global pandemic.

All these measures helped, but they did not address the biggest problem facing charities: declining resources. 

In two recent reports, one published by Imagine Canada, and another produced by CanadaHelps and Environics Analytics, there is a sincere effort to put a positive spin on things, but the downward spiral of charitable funding models had been further hastened by the pandemic. In February 2021, Imagine Canada was reporting that, “…overall the financial situation…. remains grave. Revenues are down for over half of charities (55%) … [and] Most revenue sources are in decline.”  Relative newcomer to the sector, CanadaHelps, suggested in their report that the sector was experiencing “unprecedented strain” due to what they have termed “the giving gap”, a term they use to describe the steady decline in the percentage of Canadians that donate to charities. Is it really “unprecedented”? Or could we see it coming?

We saw it coming. 

Donations to Canadian charities and participation in traditional forms of volunteering have been in decline for the better part of two decades. Remember that before the global pandemic, we faced a global financial crisis. In a seminal piece, published in 2010, entitled On Not Letting a Crisis Go to Waste: An Innovation Agenda for Canada’s Community Sector, then President & CEO of Canada’s J.W. McConnell Family Foundation, Tim Brodhead argued convincingly that the Great Recession of 2008 was not a blip, but rather a “harbinger of a more significant and permanent change in our economy”. Moreover, he wrote, we were facing a choice: “If we believe we face short-term strains, we will respond in traditional ways, tightening belts, and getting on with it,” wrote Brodhead.

But if we believe we are now in a world of constant, accelerating change, it was “time for the community sector to re-think its operating models, its function, and its contribution to Canadian society, embracing innovation and re-asserting its role as a catalyst, community-builder, and creative problem-solver.”

Most Canadian charities failed to recover fully to pre-recession status. Many have made relatively recent investments in technology and digital marketing, which will take time to improve the situation. For most of our charitable sector, however, it could be argued that very little changed between the 2008 crisis and this latest incarnation. Meanwhile, the needs our charitable sector typically serves have only seen growth.

I find it noteworthy that when the federal government finally announced it was offering pandemic recovery funding to the ailing charitable sector, it did so with some very specific strings attached. Its  Community Services Recovery Fund was announced as a one-time investment of $400 million, intended to support charities and not-for-profits “acquire the tools they need to modernize and adapt to the challenges the sector faces”.

Speaking at the Collision Tech Conference in Toronto earlier this month, Yung Wu, CEO of MaRS Discovery District, was asked if he was optimistic about our future. He replied: “I think we have a renewal and breakthrough moment right now. The choice is what we wish to do with this moment.” While he was speaking to Canada’s tech industry, his words could have just as easily been applied to Canada’s charitable sector.

How many more crises will be required to convince us that the time for tweaking around the edges has passed?