Largest Canadian Employer in Peril

…and It Directly Affects Your Quality of Life.

Canada’s non-profit sector represents one of the most significant contributors to our economy and as a sector is the largest employer in the country. It is a $100 billion industry. According to StatsCan, the sector is responsible for more than 7% of our GDP and employs more than 2 million people. The organizations they work for contribute disproportionally to our GDP, stimulate our economy with their spending, and generate significant tax revenues (sales, income, and property). And the whole sector is in jeopardy.

The current situation for the sector is dire and the potential consequences of decline are enormous for both our economy and our quality of life. Serious as these threats may be though, solutions to non-profit stability are within our grasp if Canadians come together to support the institutions they care about.

Cuts in Government Support are inevitable – Regardless of where you sit on the political spectrum or how you feel about support for various non-profit and charitable organizations, the reality is that all levels of government have fiscal deficits and significant levels of long-term debt and are cutting back their funding. The results of these cuts will be felt for many years and suggest that the non-profit sector cannot expect to operate on a business-as-usual basis moving forward. This is particularly worrisome given that business-as-usual has been challenging to begin with.

Contrary to what many believe, the vast majority of those working in the charitable sector are paid below the national average, and have less job security. In addition, the administrative burdens placed on non-profit organizations are extremely onerous. With personnel costs representing the most significant factor in non-profit expenses, with very heavy administrative burdens, and with a workforce already pushed to its limits, it is clear that without more sources of funding, our charities will be forced to significantly reduce their outputs.

Support from the private sector is far from secure. The Fraser Institute’s annual Generosity Index report shows a continued decline in donations from individual Canadians as a percentage of income. There has also been a steady decline over the years in the incidence of Canadians claiming tax credits for charitable donations in their annual tax filings. Most Canadians say they give, but we are seeing a decline in giving behaviour over the years.

As our charities compete for a piece of a shrinking pie, Canadians are feeling inundated by constant donation requests and are increasingly cynical about the value/use of their donations. This downward trend and increased competition for scarcer funding puts the non-profit sector at further risk.

There is an economic impact from a weaker non-profit sector – If we saw this kind of threat in the Canadian manufacturing sector, alarm bells would be going off. When we consider the importance of the non-profit sector, we generally fail to realize that the sector is an industry contributing to our economy like any other.

In fact, Canadian non-profits are highly efficient employers, providing one job for every $53K in revenue. This is 10 times the rate of Canadian manufacturing. When viewed in this light, it is clear that the financial pressures on non-profits will translate to negative economic impact for the country.

What of the social impact? Our charities provide a vast array of benefits to our local, national, and global communities. There are over eighty thousand registered non-profit organizations in Canada. The nature of their activities range from the mundane to the critical, and from the practical to the aesthetic. However, together all of these benefits represent a significant aspect of our culture, communities, and values.

More pragmatically, our non-profits provide many services that are necessary aspects of our lives together. Many of these services have been adopted from various levels of government as their responsibilities. Whether it’s settling immigrants, creating art, celebrating culture, feeding homeless, teaching skills, helping the abused, or finding cures, we rely on these services for our safety and quality of life. And these very services will not continue to be funded to the same extent by our economically challenged governments, and we are going to feel the pain of their cutbacks in our communities.

As our charitable sector faces increased pressure and decreased support, we must ask ourselves what price we will pay if we lose the social services we take for granted. What will our communities become? And what will the impact be to our economy? – In short, our social fabric is at risk.

The community solution – Many would say that the current climate of reduced public support for charity is part of a movement toward greater personal responsibility and choice. Others may argue that society is simply becoming more self-centred, insensitive to others, and impersonal. Regardless of your point of view on our social trends, the responsibility of our communities, our services, and the non-profit charitable sector lies with us. The decline in personal giving must be reversed if we are to preserve our non-profit institutions, the impact they contribute to our families and communities, and the quality of life we enjoy.

This is also a personal solution. – In our ever more stressed-out, always-connected, media-intrusive world, many Canadians wish they could slow down, be happier, with more personal family time (according to an Ipsos study conducted for GIV3). Canadians want to be more a part of their communities, making a difference, and being appreciated. In short, many want to step back from the rat race to be more human. Being charitable is a step in the right direction. The Ipsos study showed that Canadians who are more charitable (with their time and/or money) are happier, have more friends, feel more connected to their community, and feel less stressed. That is, helping others is a direct path to feeling better about ourselves.

Fortunately, solutions for our non-profit sector (and for our own personal self-esteem) are within our grasp. The collective impact of small changes in giving behaviour will have a tremendous impact on the non-profit sector. In a study by Ipsos, a large majority of Canadians said they wanted to give, but were unsure how much they should be donating. Respondents (everyday Canadians) said that just a few percent of income is a fair and reasonable level to be giving. Those that had this knowledge were/are indeed more charitable.

A small change will make a huge impact. – The average Canadian level of donating is less than 1% of income. If there was a small change in our collective behaviour it would be significant: If Canadians increased their giving to 1% of income it would result in over $2 Billion more for charity every year. Although the future structure and scope of our non-profit sector is uncertain, together we can provide a foundation for a more vibrant, stable sector for future generations, with a benefit to our economy, to our communities, and to our own personal self-esteem as a giver.

Could you live on 99% of your income, and donate 1-2%? – Admittedly, Canadians felt higher income earners should be giving somewhat more than 1-2% (as found in the Ipsos survey). – Please consider your charitable behaviour, and appreciate that just a little change can make a significant collective difference in supporting our non-profit sector, our communities, and our own happiness. Feel great giving.