In a recent Imagine Canada post, authors Cathy Barr and Emily Jensen review macro trends that are impacting Canada’s charities in the second quarter of 2022.

Financial uncertainty and inflation

In the most recent Canadian Survey of Business Conditions (CSBC), more than half of nonprofits (53%) reported having lower revenues in 2021 than they had in 2019; almost a quarter (23%) said their revenues were down by 25% or more[1]. In 2021, Imagine Canada reported that the sector was experiencing a K-shaped recovery with some organizations having recovered while others were still facing significant financial challenges. These latest numbers from Statistics Canada suggest that, overall, that trend held throughout 2021. We do not yet have data on how the fifth and sixth waves of the pandemic or the war in Ukraine have impacted the nonprofit sector financially, but we expect that it will continue to have an uneven impact. 

Staffing concerns 

Concerns about recruiting and retaining staff increased sharply in the final quarter of 2021 and these concerns persisted into 2022. The most recent CSBC found that 36% of nonprofits expected recruiting skilled employees to be an obstacle over the next three months while 32% expected retaining skilled employees to be an obstacle.[2]

Mergers and closures

Since the pandemic began, many have speculated on whether we’ll see a wave of closures or mergers due to financial and operational challenges. So far, we have not seen evidence of a large number of pandemic-related closures. However, last year many organizations were supported by the Canada Emergency Wage and Rent Subsidies as well as other emergency funding opportunities. As those supports dry up, we may start to see more nonprofits close their doors or merge with other organizations.

Crowdfunding

Budget 2022 included an announcement that the federal government intends to implement new anti-money laundering and anti-terrorist financing requirements for crowdfunding platforms and payment service providers. This announcement came on the heels of the major protests in Ottawa and other cities and the blockades of border crossings that dominated the headlines earlier this year. The organizers of these events raised money to support their efforts through crowdfunding platforms, and both the media and Parliamentarians have questioned where the money came from and how it was used. 

Crowdfunding platforms are a digital tool that are easy to set up, making them a convenient way to fundraise. Understandably, charities also use these platforms. But donating to a charity is different from donating to an individual or an unregulated “cause.” If approached by someone concerned by recent media coverage of crowdfunding, we recommend responding that charities are subject to extensive transparency and accountability measures that individuals on crowdfunding platforms are not subject to. 

Final thoughts

Despite the challenges that the nonprofit sector continues to face, a majority of nonprofits indicated that they were optimistic about their organization’s outlook over the next 12 months[3]. This is above the economy-wide average and demonstrates the high level of resiliency that exists in the sector. 

Read the full article, here.