Charities facing tough times
Donations fall as recession hits hard
Canada's charities are finding it's a lot more difficult attracting donors these days, as the economic downturn takes its toll on the non-profit sector.
Charity after charity reports that the donations just aren't flowing in like they used to. With the 2009 holiday donation blitz about to cycle into high gear, that's especially worrisome given that many charities count on raising a substantial portion of their annual fundraising targets in the last few weeks of the year.
Statistics Canada reported that Canadians claimed $8.18 billion in donations on their tax returns in 2008. That was a drop of $400 million from the previous year. Total donations fell 5.3 per cent from 2007 levels.
"That's the first decrease we've seen since the last recession in 1993 — a clear indication that the economy in 2008 was on donors' minds," says Michael Hall, vice-president of research at Imagine Canada, a non-profit organization that works to encourage philanthropy of all kinds.
Hall says he's "encouraged" that the drop was only five per cent, given the much bigger drop in the stock market and the big increase in unemployment. "Even in a period of uncertainty, the number of donors held constant," he said.
| Charitable donations (2008) |
|---|
| % of those with incomes above $80,000 who donate: 23% |
| % of those with incomes from $20,000 to $40,000 who donate: 29% |
| Median donation: $250 |
| No. of Canadians who reported charitable donations on their tax returns: 5.8 million |
| % of donations that come from those with incomes above $80,000: 51% |
| Source: Statistics Canada |
Demand grows as donations shrink
Hall points out that many charities face a double-edged sword — much higher demand for their services precisely when the downturn began squeezing donors' pocketbooks.
Harvest Montreal, for instance, reported that demand for the city's food banks in 2009 was up a third from a year earlier. The Salvation Army sees a similar situation in many Canadian cities, with food bank use nationwide up almost 75 per cent in the last year while donations dropped more than 40 per cent.
"We need government to step up," Hall says. "There was a lot of money that went into stimulating the economy but precious little of that went to charities."
Hall says he's worried that with government deficits growing, governments might look to cuts in social service spending — something that would hit charities hard.
"Charities can't run deficits," he notes.
Anecdotal evidence of fundraising difficulty isn't hard to find. Toronto's United Way campaign fell $2.5 million short of its 2008 goal — the first such shortfall in 18 years. A fall in corporate support led AIDS Calgary to cancel its February 2009 Calgary Cares gala because of a shortage of sponsors.
Foundations that manage endowments have had to drastically cut back on their distributions to charities as stock markets melted down at the end of 2008 and into 2009. The Vancouver Foundation, which cuts cheques to about 700 B.C. charities in an average year, expects that by the time 2009 draws to a close, it will have distributed $45 million — 25 per cent less than in 2008.
'A number of smaller charities won't survive into next year.' —Catherine Clement, the Vancouver Foundation
"All of that was driven by what happened to our endowment fund," said Vancouver Foundation spokesperson Catherine Clement. That fund, which stood at $800 million at the start of 2008, was down to $600 million by the end of the year. And while stock markets have helped it to recover some of that loss, Clement remains concerned about 2010, saying it won't be business as usual.
"A number of smaller charities won't survive into next year," she says, citing the arts, culture and environmental sectors as the most vulnerable.
The Vancouver Foundation polled almost 500 B.C. charities in September 2009 and asked them how they've coped through the downturn. More than half said they'd experienced a drop in revenue in the current fiscal year, with declines averaging 19 per cent.
Charities have reacted to the problems in a variety of ways — by seeking new sources of revenue, laying off staff and boosting their fundraising efforts.
Imagine Canada says its research shows people would donate more if they got more of a tax break. So, in its 2010 pre-budget submission, Imagine Canada proposed a "stretch tax credit" that would sweeten the tax credit on new donations above $200 that exceed a donor's previous level. So, if a donor gave $250 in 2008 and $350 in 2009, that extra $100 would attract a 39 per cent federal tax credit — 10 percentage points higher that the current level for donations above $200.
That could be one way of persuading people to give more. But there are many other ways to help charities. Corporations could pledge to maintain donation levels at pre-recession levels. They could allow charities to use available company office space. They could also allow employees to volunteer as a group to support a charity whose goals are in synch with the company's line of business.
Canadians volunteered 2.1 billion hours
Indeed, volunteerism is a huge source of help for many charities. A 2007 survey by Statistics Canada showed that Canadians volunteered 2.1 billion hours — equivalent to more than a million full-time jobs. But as with donations of money, it's a small percentage of the population that does most of the heavy lifting.
The survey found that 21 per cent of Canadians accounted for 82 per cent of the total value of donations that year. About 12 per cent of Canadians were responsible for 78 per cent of all volunteer hours.
The spirit of giving is still alive in the hearts of Canadians. It's just not kicking as vigorously as it could be.