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Edward Czarnecti, eating his lunch at The Good Neighbors Club in Toronto on Oct. 26, 2011, is one of the 300 people who are given daily meals at the agency that receives funds from the United Way. (Fernando Morales/Fernando Morales/The Globe and Mail)
Edward Czarnecti, eating his lunch at The Good Neighbors Club in Toronto on Oct. 26, 2011, is one of the 300 people who are given daily meals at the agency that receives funds from the United Way. (Fernando Morales/Fernando Morales/The Globe and Mail)

Giving Changed

For Canada's charities, this is a time of crisis and a moment of opportunity Add to ...

Again the sudden decline sprang from a long-standing trend. A recent study by the Conference Board of Canada found that virtually all of the wealth created in the past 30 years has gone to the top 20 per cent of income earners, about one-third of it to the top 1 per cent.

The middle class, meanwhile, “are feeling, not just poor, but insecure,” says Anne Golden, the Conference Board’s chief executive and a former head of the United Way of Greater Toronto. “And I know from talking to charity heads that it’s not just not feeling rich that causes people not to give. But if you feel anxious about your current income or your future retirement income, that is a big factor in your life.”

Such anxiety resonates with current United Way head Susan McIsaac, whose campaign kicked off in earnest this week in the hope of collecting $116-million by Christmas.

One of North America’s largest annual fundraising drives, it provides the lifeblood for 200 social agencies and in the past could count on double-digit growth every year. But now, Ms. McIsaac says, the United Way is looking to the future and “preparing for the worst.”

Tax deductions are often proposed to remedy the donor decline. Imagine Canada advocates a “stretch tax credit” for people who make small donations. “We are targeting this to young donors, young families who haven’t yet gotten into the habit of giving,” says Imagine CEO Marcel Lauzière.

In recent years, the biggest breaks have largely benefited the well-off by making donations of publicly traded securities and other assets more tax-friendly. This has translated into major gifts, especially for larger charities and foundations.

But increasingly those willing to donate large sums are determined not just to write a cheque but to become more involved.

After retiring from the federal civil service a few years ago, Calgary resident Elizabeth Marshall joined forces with her sister and some close friends to set up their own charitable foundation. “I wanted to find a way to make the donations count,” Ms. Marshall says. “And I wanted some control over where it went.”

Now volunteering with a local literacy program and as a tutor, she is pleased with the outcome. “It is wonderful when you see something you worked on get done.”

So many Canadians have begun to follow in Ms. Marshall’s footsteps that the number of private foundations has nearly doubled in the past decade to about 5,000. Soon they will outnumber public and community foundations, and already control far more in assets – about $13-billion.

As a result, existing charities can no longer just send out appeals and hope donors will respond. They often have to work with benefactors individually and figure out what they want; securing a major gift can take years of negotiation. The popularity of “donor-advised funds” (“accounts” created by agencies to let donors decide where their money goes) has left many charities with so many pockets of committed cash that launching a new program can be difficult.

Big donors aside, attracting support has become more complicated and costlier. The traditional workhorses – direct mail and telephone solicitation – are being overshadowed by the Internet and social media. But raising money online isn’t as easy as it may appear; social-media donors tend to give relatively small amounts and have little long-term attachment to a cause. That means charities must spend more on fundraising, even as increasingly savvy donors are scrutinizing their administration costs.

“We’ve all had to become a lot more entrepreneurial,” says Brian Levine, executive director of the Glenn Gould Foundation in Toronto, which has just launched its first major fundraising drive, hoping to raise $30-million.

“We are going to have to work very, very hard,” says Mr. Levine, acknowledging the danger in greater competition for finite resources. “We ’re going to have to find new pools of money, because we don’t want to just be cannibalizing someone else.”

There is also a serious push among charities to be more transparent about financial reporting, governance and even what they pay top staff. Many are joining a national verification program that will issue a sort of stamp of approval to those that meet certain standards.

“We have to ask ourselves, ‘Do we do this because we want to feel good about ourselves, or do we do it because we really want to change things?’ ” asks Imagine Canada’s Mr. Lauziére. “If it’s the latter, well then we have to look at how we bring in the right talent, how we have the right infrastructure and if we have the right resources.”

Said like a true entrepreneur.

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