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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 ...

This is part of The Globe and Mail's in-depth look at the evolution of philanthropy. Read more from the series here.

Philanthropy in Canada is in the midst of unprecedented upheaval. An uncertain economy threatens to send already dwindling donations from an aging base of givers into permanent decline, while deficit-fighting governments are cutting their support and imposing tougher regulations on agencies that issue tax receipts for the money they collect.

For the country’s charities, it is an undeniable crisis – but also a moment of unprecedented opportunity. New technology is allowing Canadians to flood emergency zones instantaneously with massive amounts of capital. And while governments like our own are beginning to apply tough, performance-based measures to their grants, a new breed of lean business-like charities is emerging to meet that challenge.

The situation is so pressing that Imagine Canada, an umbrella organization for the nation’s non-profit sector, has called its first-ever emergency summit. A month from today, hundreds of delegates from across the country will gather in Ottawa to discuss everything from how to shore up their finances to how to attract volunteers, recruit professional managers and engage more Canadians.

The summit’s three days of debate will feature addresses by Governor-General David Johnston and Calgary mayor Naheed Nenshi aimed at inspiring delegates, but the focus will be on the need to adapt to structural shifts in the charitable universe.

Around the world, the social-service landscape is being transformed. Billionaires such as software titan Bill Gates and investing magnate Warren Buffett have generated huge buzz by pledging to “give back” the fortunes they have amassed.

But in Canada, donations dropped for the first time in 30 years during the recent recession, and scrutiny of charities has never been higher. Contributors, including corporations, are seeking far more control over what is done with the gifts they bestow, even as the rise of the online microdonor is changing the climate for traditional agencies and the nation’s elected officials are rethinking the role charities play in delivering social services.

As revealed by The Globe and Mail on Friday, the government of Prime Minister Stephen Harper is about to begin making changes to how it finances charities and looking at linking financing to how well they perform.

Ottawa also is considering joining a growing global move to broaden the scope of charities by allowing them to become “social enterprises” able to generate profits that help to underwrite their social missions. Organizations would be asked to become more professional in how they are managed and more businesslike in how they raise money.

There will be losers. “Leaders of charities now are facing a much more complicated world ...,” says Hilary Pearson, president of Philanthropic Foundations Canada, which represents private foundations. “A lot of them need to rely on skills that they don’t necessarily have.”

“A lot of forces are coming to bear at the same time,” adds Ken Mayhew, chief development officer for the Multiple Sclerosis Society of Canada, and some agencies simply won’t survive.

Others, however, will emerge much improved, he adds.

They welcome the challenge and feel that, in the long run, the opportunities offered by the new businesslike approach to public service will reinvigorate a sector that employs hundreds of thousands of Canadians and, according to a 2007 report by Statistics Canada, generates more than $31-billion a year in economic activity.

The transformation springs from a trend – the aging and shrinking of the donor base – that has been taking shape for years but accelerated greatly in the three years since the recession took hold. Between 1990 and 2007, charitable donations in Canada almost tripled, from $2.9-billion a year to $8.6-billion. The number of charities soared as well, more than doubling from 42,000 in 1980 to 85,000 in 2007 (another 80,000 non-profit groups provide services, such as running a minor baseball league, but can’t issue tax receipts).

Yet the number of Canadians who donated slowly began to fall, from about 30 per cent of those who filed tax returns in 1990, according to Statistics Canada, to an all-time low of 23 per cent two decades later. Charities could cope as long as their remaining backers picked up the slack – and they did. The median donation increased from $120 in 1990 to $250 in 2007, even as those giving the money aged notably, from 47 on average to 53.

Then the recession hit. In 2008 and 2009, donations fell by almost $1-billion, an alarming figure only partly offset by the fact that Revenue Canada was cracking down on illegal tax shelters, and disallowing contributions to some charities.

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