Benevity cuts 14% of workforce: A ‘canary in the coal mine’ for corporate charitable giving?

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Last week, over 125 staff at one of Calgary’s tech darlings got the axe. 

At an online all-staff meeting on January 18, Kelly Schmitt, CEO of corporate donation technology company, Benevity Inc., announced that 14 per cent of employees would be let go. 

The explanation for the cuts was straight-forward. While the company has grown significantly over the last decade buoyed by corporate demand for community impact opportunities, the market has now slowed. 

“Over the last nine months macroeconomic conditions have changed dramatically,” said Schmitt in a blog posted to the company’s website last week. “Although we continue to experience healthy year-over-year growth, the hard reality is that as a company we are overbuilt for current market conditions.” 

The announcement came as a disappointment to Benevity staff, whose headquarters is located on the traditional territories of the Blackfoot Confederacy, Tsuut’ina First Nation, and Stoney Nakoda, and is home to the Métis Nation of Alberta, Region 3. But one former staff member and several fundraising experts say the layoffs may have broader implications for the charitable sector in Canada, too. 

They say Benevity’s layoffs could signal a forthcoming decline in corporate donations from some recession-wary industries, chief among them: technology. Some also worry staff cuts at the company could worsen the customer service experience of many Canadian charities and non-profits who access donations through its platform. 

Further, experts who spoke with Future of Good offered their advice for how best to make up for any forthcoming dips in corporate donor revenue. 

A gloomy time for tech, as broader recession fears mount

Across the technology sector, Benevity is just the tip of the layoff iceberg. 

Since the start of 2023, more than 57,000 technology sector workers globally have lost their jobs in layoffs at 185 companies, according to layoff tracking website Layoffs.fyi. 

The highest profile among them have been cuts at Google, Amazon and Microsoft, which have laid off 12,000, 18,000 and 10,000 employees respectively within the last few weeks. 

Cuts have also occurred closer to the charity sector, beyond just Benevity. In early January, Bonterra, a tech company that also offers a corporate donor platform announced, too, that they would be laying off 140 staff — or 10 per cent of their workforce. 

In many layoff announcements, the explanation for the reductions has been similar: the demand for products is less than what companies predicted. 

In his email to staff announcing cuts, Sundar Pichai, CEO of Alphabet, the parent company of Google explained: “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.” 

But while layoffs may be most dire in the technology sector, many analysts, Canadian CEOs and consumers are predicting a slow-down in additional sectors of the economy in 2023. 

In a January report, consulting firm Deloitte predicted Canada will experience a “deeper recession” than originally anticipated, owing, in part, to multiple interest rate hikes by the Bank of Canada. A recent Bank of Canada survey, too, found that a majority of Canadian business owners and consumers are predicting a “mild” recession. 

What would a recession mean for corporate giving? 

If a recession comes, the knock-on impact to corporate giving isn’t rocket science, experts say. Recessions often lead to job losses and lower profits, both of which often lead to reductions in corporate giving. 

Mark Hobbes, CEO of Halifax-based fundraising technology company, Fundmetric, says when it comes to the relationship between layoffs and corporate donations, it’s simply a numbers game. 

“One of the big channels for corporate giving is, of course, employees,” he says. “So when you see layoffs across big tech, and in general, that generally means that corporate giving will take a hit.”

Recessions can also impact the other main corporate giving channel: donations from the companies themselves. 

“If a company is preparing for a recession, their CSR program is going to be one of the first things to go,” says Clarke Foster, a philanthropy and technology professional who worked at Benevity for five and a half years before being laid off last week. “A lot of executives, even if they may believe in it strongly — when they get ruthless about their budget, it’s easily one of the first things to go.” 

For some companies, this relationship between profits and corporate giving is part of their philanthropic policy. Companies who sign onto Imagine Canada’s “Caring Company” pledge, for instance, commit to donate 1 per cent of pre-tax profits to charity each year. 

This means when times are good, as they have been for many companies over the past two years, donations rise. 

Data from CanadaHelps, a donation payment processing charity, shows from 2021 to 2022 corporate donations made through the organization’s platform increased by 6 per cent. This includes both donations made through CanadaHelps’ website directly and through the donation payment technology they offer to charities to process payments on their own websites. 

Liz Rejman, director of fundraising operations for Pathways to Education, a prominent education-focused charity, says her organization has seen a slight boost in corporate donations over the past two years. Her organization’s corporate donors, she says, have tended to renew their gifts over this period at the same donation amount or a little higher, in part, she believes, owing to strong financial performance. 

She also says the favourable market has contributed to a phenomenon she hasn’t ever seen before in her 25-year fundraising career: corporate donors asking if they can “front load” multi-year donation pledges. 

“They’ll say, ‘We’re going to make a three-year commitment, but we actually can pay two years’ of it off immediately,” she says. “So what we’re seeing is: they have the money, and they’re going to give it away while they can.” 

This has been good for Pathways and other charities who have received similar offers from corporate partners, Rejman says. But of course, there’s a flip side: If business performance sours, corporate donations can suffer.

Foster says Benevity’s layoffs are a “canary in the coal mine” — indicative of a possible forthcoming decline in corporate charitable giving in some sectors, including tech.

He says he doesn’t believe the staff cuts at Benevity will directly result in fewer donations flowing through the platform to Canadian charities — that the company continues to work with many major global companies that continue to give — but says the layoffs are indicative of broader economic forces which could impact the corporate giving landscape in the coming years. 

By way of example, he points to the announcement last week that Amazon is terminating their corporate giving program, AmazonSmile. The news comes hot on the heels of Amazon’s decision to shrink its workforce. The company says, however, the decision is not by cost-cutting, but a desire to make a more significant impact.

Through the AmazonSmile program, the company allowed customers to direct a small portion of the cost of an eligible product to a charity of their choice. Since 2013, this has facilitated about half a billion dollars to charities, according to the company — but it’s also resulted in a lot of small-value donations, which Amazon views as less impactful. 

Steven Ayer, a charity sector consultant, says it’s difficult to know if companies are beginning to cut back on corporate donations because there’s scant, real-time data on corporate giving and because companies rarely publicize their philanthropic cuts. 

“I think Amazon[Smile] was an exception because it was customer facing, so when they canceled that program it was really obvious,” he says. “The vast majority of changes are not obvious to anyone, sometimes even years later.” 

Charities may see a drop in employee donations from companies that have been hit with major layoffs, strictly owing to the drop in the number of employees present and able to give, but Ayer says it’s unlikely charities will see an immediate reduction in corporate grants. 

“It’s relatively rare for [companies] to drastically cut their budgets in the middle of the year,” he says, noting that companies often plan their giving at least one year in advance. 

Some companies, like Toronto-Dominion Bank, also calculate annual donations based on the pre-tax profits of the past five years. This provides these companies predictability with respect to the cost of giving and can help to insulate charity partners from swings in donation amounts. 

Moreover, Benevity’s CEO, Kelly Schmitt stressed that despite any signals her company’s layoffs might send, corporate giving remains strong. “Demand for our solutions and the appetite of companies to make an impact on social issues have been growing consistently for more than a decade,” she wrote, in her statement on the company’s website last week. 

In addition, Schmitt stressed that Benevity, too, despite the layoffs is in a sound position. “We continue to experience healthy year-over-year growth and believe in the long-term opportunity for Benevity, as the appetite for companies of all sizes to engage their teams and customers around social impact is still strong.” 

As of August, the company said it had 940 corporate clients and that it had facilitated more than $10 billion in donations to more than 325,000 non-profits. 

Ayer agrees the company remains in a strong position, noting that the cuts likely just bring the company back to pre-pandemic staffing levels. (In 2021, based on very aggressive growth targets, the company targeted hiring a staggering 300 roles, according to a company press release.)

Charles Buchanan, CEO of Calgary-based technology consulting firm, Technology Helps, agrees the company remains a juggernaut. “I haven’t seen enough to panic yet,” he says.

Will layoffs affect Benevity’s customer service for charities? 

Still, even if charities don’t see a drop in corporate donations, Tracy Kronzak says Benevity’s layoffs should give charities pause for another reason: a potential dip in customer service. 

“These cuts, near as I can tell, have come at all layers of the organization,” says Kronzak, a technology professional with two decades of experience, who was recently laid off by Benevity’s competitor Bonterra. “The customer service and the software development roadmaps are going to be the first things to suffer.” 

Indeed, the company confirmed last week that some staff who provide support to charities will be let go. Schmitt said, in her statement on the company’s website, that Benevity will “phase in” the layoffs affecting staff who work with corporate and charity partners over the next eight weeks in order to minimize disruption. 

In another effort to reduce potential impact on charities, Schmitt also said the company will continue to expand “investments in automation, product capabilities and efficiencies that improve the client and nonprofit experience.” 

Pathways to Education’s Rejman says, however, the promise of additional automation is of little comfort. She says while donations through the Benevity platform are valuable for her organization, they are a hassle to manage. 

Rejman says because of the way that donor data is provided by Benevity to charities, it can take a member of her team upwards of a week to clean the data in order to harmonize it with data in the charity’s customer relationship management (CRM) platform. Other charities have also been frustrated by this same issue, Rejman says. 

The longtime fundraiser says she’s reached out to the company to try and address the issue, but has never been able to talk with anyone who has been able to help. 

“If Benevity had built any sort of relationship with the charities, this probably could have easily been resolved,” she says. “But there isn’t any communication with the charities to understand what’s best for them.”

Rejman worries that with the recent layoffs, the company might have even less capacity to support charities in their use of the platform. 

Asked about this concern, spokesperson for Benevity said the company “remains as committed as always to providing support for nonprofits and the broader ecosystem.”

Charles Buchanan, whose firm’s focus is ameliorating the technology deficiencies of the charity sector, says it’s his experience that Benevity focuses more of their customer support on corporate clients. 

“Charities are downstream,” Buchanan says. “They’re part of the transaction. They’re not the client.” 

Nonetheless, he stresses the platform is of considerable value to charities, to companies and to their employees. He notes the important role Benevity has played in “democratizing” employee giving — by giving staff who work for many large and medium-sized companies the chance to direct where they want their donations to go. 

How can charities insulate themselves from potential dips in corporate donations? 

In the event an economic downturn does lead to a drop in giving from companies in some industries, experts who spoke with Future of Good offered several tips for fundraisers to recover lost funds. 

During his time at Benevity, Foster says, the best partnerships he saw between charities and corporations were forged by charities who invested deeply in just a few corporate partners and who identified, and built relationships with, one or a few staff members at their partner company who cared deeply about the charity’s mission. 

He’s says increasingly, fund development is being handled by charities’ fundraisers and company’s sponsorship staffers — but “that is not the only way to go about that relationship,” Foster says, “and it’s probably not even the best way for a lot of non-profits.” 

Foster acknowledges this fundraising approach may not lead to as many multi-million-dollar flagship gifts as the more traditional route. “But it’s a lot more durable as long as the people there care about the cause,” he says.  

Mark Hobbes says another key strategy for charities to deploy is to be transparent with your other “donor segments” if you do suffer donation losses with corporate donors. He says if company donations take a nosedive, it’s valuable to explain to other donors why it’s happened, and ask them for their help to make up the difference. 

“I’ve always been amazed,” he says. “If you’re transparent about the gap and you’re transparent about the opportunity that it creates — that will fundamentally shift your model.”

Beyond ways to boost donations, too, Hobbes says there may be another silver lining to Benevity’s layoffs: the opportunity it presents for charities to pick up tech talent, either in a volunteer or staff capacity. 

The non-profit sector struggles to get the technology expertise that’s needed to fulfill their mission, he says, while suggesting now is a perfect moment to try and remedy those gaps. 

“There’s probably groups in the Calgary area who have a huge opportunity to pick up some talent that’s no longer with Benevity,” he says. 

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