COVID-19 and Canada’s Charities: An Existential Funding Crisis

The fourth in a series of articles for Policy by Master’s students at the Max Bell School of Public Policy, McGill University.

Jameson Voisin

June 18, 2020

From foodbanks to women’s shelters, the COVID-19 pandemic has Canada’s charitable sector fighting against the transmission of suffering. Lacking immunity, the sector has been hit especially hard. With marathons, golf tournaments, and bake sales canceled – Canada’s 85,000 registered charities are estimated to lose between $10-$15 billion of revenue this year alone. Less funding means less operational capacity at a moment when demand for social services is anything but flattening. Our charities are overstretched and underfunded as never before: without urgent intervention, COVID-19 may be the final straw for many of them.

Recognizing the important role that charities play in communities, Prime Minister Trudeau has vowed support for Canada’s charitable sector by providing wage subsidy programs. But charitable sector leaders are demanding more. Charities play an invaluable role in society – shedding light on and providing assistance in domains of life that few other organizations can act, or areas where the government has decided not to act themselves. As the government ponders how to support the charitable sector, conversations need to take place about the level of accountability we expect from charities.

In March, the Emergency Coalition of Canadian Charities (ECCC)–comprised of over 150 Canadian charities including heavy hitters like the Canadian Cancer Society, David Suzuki Foundation, and YMCA Canada–requested urgent federal assistance. To avoid permanent closures the ECCC requested a $10 billion stabilization fund, loan guarantees, increases to the Charitable Donation Tax Credit, and assurance that charities will have access to the same recovery programs as businesses.

Charitable organizations are a key part of Canada’s economy, employing over 2 million people, and accounting for nearly 9 percent of GDP. Support is needed, but continued oversight is important. In addition to the ECCC request, the coalition is asking for flexibility to redesign programs, allowing donor funds to be redirected as they see fit. In some instances, this would mean more efficient responses to COVID-19, but universal flexibility also means increased discretion in other areas.

In line with growing trends in responsible consumerism, there has been a call for charities to be more transparent regarding what they do with donor dollars. Canadians are increasingly unwilling to blindly hand over their hard-earned money without understanding exactly where it is going. To address this, efforts have been made by Charity Intelligence Canada and Maclean’s magazine to measure non-profit transparency and inform donors about charities’ oversight. There are hopes that greater scrutiny will increase donor confidence and ultimately grow the frequency and amount of donations.

Heightened donor oversight has been approached with caution. One concern is that an overemphasis on transparency may result in charities under-compensating staff and cutting corners to reduce overhead costs. Studies have shown this is not only ineffective, but dangerous. As Canadians, we need to alter the way we think about the non-profit sector. Not only is fair compensation deserved, it is needed for the results we want.

Boundless programmatic agility and flexibility should be approached cautiously. Although some organizations have very targeted missions – such as the Food Banks of Canada or Kids Help Phone – others do not. A donation to WE Charity, for example, can support anything from a celebrity-infused WE Day event (which is considered a program, not a fundraiser), to providing access to education in rural Kenya. Flexibility will not always work nor align with a donor’s intention.

The Canadian government must act to protect our charities from collapse. There has been a growing charitable gap in Canada for many years now. The government not only depends on non-profits to deliver important programming on complex issues like homelessness, healthcare, and access to food – they frequently fund it directly. The current crisis is an opportunity to change how charities operate so that donor confidence remains high and trust in government support increases.

While a strong foundation exists for financial reporting, we need to move beyond numbers when discussing accountability. Like businesses, charities have become Public Relations masters. It has become difficult to dissect exactly what charities are delivering with donations and to whom. Accountability should include non-financial measures, and respond to scandals that have bruised donor confidence in the UK and US. Action taken now to increase transparency can ensure that COVID-19 is not providing the recipe for obfuscation and scandal here in Canada.

Charities need to find innovative ways to communicate what they do and highlight the integrity of their mission. Doing so will not only benefit Canadians concerned about government spending, but charities themselves. Transparency is part of the solution and must go hand-in-hand with building trust, confidence, and the respect that charities deserve. Pushing charities to better communicate their work will highlight to Canadians the vital role they play within our society.

While this may be an uncomfortable conversation to have right now, we must recognize an opportunity when we see it. Charities help those left in society’s shadows, it is time we shine light on their activities and ensure they are adequately supported.

Jameson Voisin is currently a Master’s student at the Max Bell School of Public Policy at McGill University. Previously, he worked for over a decade in management and director roles for charities and social enterprises based in Canada, Ecuador and Afghanistan.