This article was originally published in Carleton University’s PANL Perspectives newsletter and is excerpted with permission.
While the effects of the COVID pandemic may be diminishing, several emergent forces will likely preclude sliding into a comfortable new normal in 2023. In particular, five trends, already apparent in 2022, stand out that will require adaptation and innovation across the sector.
1. The long-term decline in giving and volunteering will be amplified.
Fewer Canadians are giving to charities: this has been a consistent decline over the past decade that has resulted in a concentration of giving among a shrinking older population. In recent years, the decrease in participation rates and amounts donated has been most acute among families earning $150,000 or more (CanadaHelps, 2022). Inflation, mortgage costs and household debt can be expected to take a bite out of charitable giving across the general population in 2023. This will put pressure on fundraising for a wide range of charities, which, when coupled with impending government austerity and rising costs due to inflation, will likely necessitate cutbacks or revamping of programs and services.
Formal volunteering (through organizations) has experienced a similar long-term decrease and concentration among the Baby Boomer generation. While GenZs (born 1996–2012) and Millennials (1981–1995) volunteer in substantial numbers and in different forms, their number of hours is about half that of the Boomers, leaving a substantial gap in volunteering.
So far, the decline in giving and volunteering hasn’t been on the radar of Canadian governments, even though it has significant public policy implications. For example, in times of disaster, governments count on the public stepping up with donations; this is likely to drop quite dramatically or become even more unpredictable in coming years. Given that contracts with charities for “public” services rarely cover the real costs of these services, governments rely on philanthropy to subsidize the delivery of these services. These invisible subsidies can be expected to shrink in 2023.
2. An increase in big gifts.
In spite of the general decline in giving, demographics and growth in the number of ultra-affluent households may lead to a rise in very large gifts. The signs are already evident in the historically large gifts made in recent years, including: $105 million from the Peter Gilgan Foundation to rebuild a hospital facility in Mississauga, the largest gift ever made to a Canadian hospital, and a $500 million bequest by Miriam Bergen to the Winnipeg Foundation.
As retiring professionals sell their practices, and as older entrepreneurs sell their family businesses – and as wealth passes from one generation to the next, some of the sudden increase in wealth is likely to be donated.
Other than windfalls for a few select charities, this results in the growing importance of wealth advisors and family offices. If advisors are going to serve their clients well by having conversations and providing guidance about philanthropy, they’ll need to be well informed about the sector.
Philanthropy is in for a shake-up as we see more mega-gifts directed toward systems change and radical innovation. Some of these are already in motion, including the $100 million gift by the Wilson5 Foundation to protect pristine wilderness in BC.
3. Philanthropy and the sector will be under greater scrutiny, with higher expectations.
The critiques that have been levied at philanthropy in the U.S. – that it’s founded on injustice and inequality and is elitist and elite-serving – have moved (albeit less vigorously) into Canada, producing greater scrutiny of institutional philanthropy.
The federal government’s 2022 consultation on what percentage of registered charities’ assets (then at 3.5%) must be disbursed annually opened up vigorous discussions about the work of foundations, the value of perpetual endowments, and the need for better data. While the question of the mandatory Disbursement Quota (DQ) has been resolved by an increase to 5% (for organizations with investment assets over $1 million), the debate surrounding the DQ decision has led to wider questions about the work of foundations.
On the positive side, this may prompt greater use of impact investing to put assets to work, and may lead to more transparency and strategic efforts to make philanthropy more impactful. Charities, too, can expect increased scrutiny, particularly related to their governance following the scandals surrounding WE Charity and Hockey Canada.
4. Leadership transition and labour-market shortages.
In the U.S., COVID-19 is said to have sparked the Great Resignation of workers leaving their jobs. This hasn’t been the case in Canada. Indeed, 2022 was a banner year for the Canadian labour market: the economy gained jobs and unemployment decreased. The exception is in health and social services – jobs that are a significant part of the nonprofit sector, particularly for women, immigrants and Indigenous and racialized people. Despite record high numbers of job vacancies in health and social services (higher than in any other industry), employment declined in this sub-sector; people are leaving and not entering this field due to burnout, compassion fatigue, working conditions and low pay.
While not experiencing massive resignations, Canada seems to have experienced a Great Rethink during the pandemic: people reconsidered what they want out of work and life. This rethink is being manifested at the top end of leadership in the sector – in Executive Director/CEO positions – which already faced an aging demographic and has led to retirement in substantial numbers (although we don’t have good data).
Replacing leaders won’t be easy as the sector has never invested heavily in training and professional development or in building a successful pipeline, particularly a diverse and inclusive one.
5. Engaging digital and configuring core business.
As organizations moved to remote work during the pandemic, we all became more proficient at working online – with all the challenges and creativity that entailed. With the speed of technological change, however, that experience may seem like dipping a toe in cold water when organizations need to take the full, polar-bear plunge. Few of us know how to do that or appreciate the opportunities and pitfalls that ChatGPT and other AI applications will create for nonprofits’ core business operations and the kinds of skills this new digital era will require.
In short, there are new challenges ahead for the sector but also the advantage of young, diverse leaders who can lead change. Their work needs to be supported with better data and analysis, with cultivation of new leadership and governance skills, and critical conversations about the direction of philanthropy. Now in its tenth year, the Master of Philanthropy and Nonprofit Leadership (MPNL) program was created to be a key part of this support system.
Read the full article, here.
Dr. Susan D. Phillips is a Professor in the School of Public Policy and Administration and Graduate Supervisor of the Philanthropy and Nonprofit Leadership program at Carleton University, and an Editor of “PANL Perspectives.” Phillips is on Twitter and LinkedIn.
