A weak economy is making a dent in charitable donations in some parts of the country, as the oil price slump cuts into discretionary spending.
“Charitable giving generally mirrors the state of the economy,” said Bruce MacDonald, president of Imagine Canada, an advocacy group that works to strengthen the charitable sector. If families are having a tough time making ends meet, they will donate less, he said. Resource sector corporate donations are also being affected. “There definitely is, in economically stressed areas of the country, a correlation to charitable giving weakening.”
At the same time, there is a growing need for the work done by charitable organizations in places such as Alberta and Newfoundland because of the tough economic times, Mr. MacDonald said. “When families are under stress, the demand for services goes up.”
A Globe and Mail compilation of the financial condition of Canada’s top 1,000 non-profit organizations – which includes medical and educational institutions as well as foundations and charities – shows that a majority of the charities reported revenue growth in their most recent financial reports. However, those figures reflect reporting from 2014 and 2015, before oil prices took their significant tumble.
Hilary Pearson, president of Philanthropic Foundations Canada, a co-ordinating group for organizations that give grants to charities, said foundations do not often cut back their donations because of a stagnant economy. Foundations are usually endowed, so it takes a dramatic downturn to make a significant dent in assets and a consequent cut in money to donate, she said. That happened during the recession of 2008-09, but the current situation is not the same kind of crisis.
Still, there is a possibility that the distress in the oil sector may be sufficiently intense to sharply cut gifts to some western-based foundations – and thus their ability to support charities, she said. Unfortunately, there is such a lag in data collection and reporting that this will probably not become clear until 2017, Ms. Pearson added.
At the Vancouver Foundation, Canada’s largest community foundation, president Kevin McCort said the organization’s finances are strong because its money mainly comes from estate gifts. However, the charities it supports are facing higher demand for services because of the weak economy, he said.
Brian DePratto, an economist at Toronto-Dominion Bank, said the most recent data show that on a national basis, total donations to charities are keeping pace with economic activity, even though the proportion of Canadians who donate is slipping. The lower “giving rate” is offset by the fact that those who give, give more. “There is a core group of donors who are willing to fill the gaps … through a downturn,” he said. Consequently, “the [total] level of giving is pretty constant.”
While Statistics Canada hasn’t released data more recently than 2013, in that year Canadians gave almost $13-billion to charities.
In a report released in late February, Mr. DePratto said younger Canadians are much more likely to say they don’t donate because they have not been asked to. More older people, on the other hand, say they are overwhelmed with the number of requests, and are more concerned with charity fraud.
One reason for this dichotomy, Mr. DePratto said, is that many younger Canadians don’t have a land-line phone, so they are not getting phone requests for donations. At the same time, older citizens are often already on many mailing lists, so they also tend to get a lot more requests in the mail. Over the long term, charitable organizations are going to have to find new ways to connect with young people, and with new Canadians who are also not being asked as much for donations, he said.
Marvi Ricker, vice-president of philanthropic services at BMO Harris Private Banking, said the weak economy does not appear to be putting a dent in charitable giving from the richest Canadians. While the deep recession of 2008-09 did put a damper on their donations, that has been reversed. “2008 was awful,” she said. “Everyone suffered. The assets of foundations went way down, and people who were creating new foundations were hesitant. But I am not finding any of that now.”
She notes that most wealthy people made money over a long period of time, and they also have a long-term vision of how they are going to use –or donate – those funds. “They may have some fluctuations in their investment portfolios, but they are not going to feel it as much as other people.”
Ms. Ricker said donations from the wealthy could actually increase sharply next year, when new rules come into place that will allow capital gains exemptions for the donation of private company shares and the proceeds from real estate sales. Currently, that exemption applies only to public company shares. This means there will be “more and more incentive to give,” she said. “Taxes are not the only incentive, but they certainly help people to give more.”
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