The February 2, 2017 Toronto Globe and Mail front page headline was stark: “Financial constraints force merger of two largest cancer charities”. That is not the kind of message any charity wants their stakeholders to read, let alone two significant Canadian foundations, such as the Canadian Cancer Society (CCS) and the Canadian Breast Cancer Foundation (CBCF). This headline eclipses their original stated goal: “to have a greater impact on cancer research and support programs across Canada”. It also weakens the current joint messaging of “Together We Are Stronger”. What happened?
Shocking Declines
Financial concerns dominate the Globe coverage of the merger, which talks about “shocking declines” and deterioration in revenues, reserves and spending on cancer research. It presents ominous graphs showing these declines.
But when you combine the results, they don’t look as bad:
The resulting organization has over $200 million in annual revenues and $100 million in reserves. Yes, the decline is serious, but this starts to look more like professional organizations reacting responsibly to changing conditions, rather than charities in a financial crisis.
One of the problems is that public disclosure by the two Foundations has been vague. In October 2016, a public statement was issued with this reason for the merger: “It will improve our performance, increase opportunities, reduce costs, expand resources, enhance advocacy efforts and allow more funds to be directed to cancer research and support.” Nothing was said about financial pressures.
For its article, the Globe and Mail interviewed CCS Chair Robert Lawrie, the Toronto-based lawyer and international mergers-and-acquisitions specialist who is driving the merger. Private sector mergers are necessarily shrouded in secrecy, but charities are different. Charities are accountable to the public and need to be open and transparent. Instead of hiding the financial pressures for a reporter to find later, why not be frank about the challenges facing the organizations and point out that the common enemy is cancer, rather than competition? Then go to the “stronger together” argument.
The Real Problem
But are the financial pressures the real problem? Lynne Hudson, the CEO of the combined foundation and former head of CBCF attributes the lower revenue to donor fatigue, the explosion of health charities and one-off events such as the fire in Fort Murray. If those are the problems, one has to wonder about the Foundations’ response, because no amount of cost cutting will address donor fatigue.
While the article points to a study from the Fraser Institute (Charitable giving in Canada on the wane, hits 10-year low) saying “Canadians in general are becoming less generous”, Statistics Canada notes that the number of donors may be down, but total givings continue to rise. (Source: http://www5.statcan.gc.ca/cansim/a26?lang=eng&id=1110001 )
So, is the real problem that there is too much overlap between the lotteries, marathons and relays run by these foundations? Have the costs for these national events risen to the point of diminishing returns? That is the discussion that needs to happen.
Bottom Line
It is unfortunate that the Globe and Mail coverage has turned a good news story into a tale of financial desperation. The fact is that merging two charities is difficult. It is not just a matter of getting 50% of the vote plus one at an annual meeting. In a voluntary organization, supporters are free to vote with their feet, so the individual interests of funders, donors, volunteers and other supporters must be taken into consideration. The history and dignity of the former organizations must be recognized and respected, not to mention all of the internal staff and systems.
The merger between the Canadian Breast Cancer Foundation and the Canadian Cancer Society was announced in October and completed the following February. For two giants in the Canadian charitable sector, that’s quite the good news story!
Bill Kennedy, CPA, CA of Energized Accounting is a member of a professional network providing financial and revenue systems and management for Toronto charities.
Sources:
Globe and Mail Article – Online title changed to “Donation drop forces merger of Canada's largest cancer charities” http://www.theglobeandmail.com/news/national/rapid-donation-drop-forces-merger-of-canadian-cancer-society-breast-cancer-foundation/article33864407/
Merger announcement: https://www.cancer.ca/en/about-us/news/national/2017/together-we-are-stronger/?region=ab
Initial announcement: https://www.cancer.ca/en/about-us/for-media/media-releases/national/2016/ccs-cbcf-announcement/?region=ab
