Caught between a pincer of low revenues and rising service demands, as many as half of Canada’s social purpose organizations used the Canada Emergency Wage Subsidy (CEWS) or the Canada Emergency Rent Subsidy (CERS) to ease the pressure. 

CEWS provided up to 50 percent of an employer’s wage costs, while CERS, intended for commercial landlords and tenants, provided up to 25 percent of rent payments. The two programs gave billions of dollars of aid to the Canadian social impact sector, according to Imagine Canada. But in October 2021, the Canadian government announced it would replace CEWS and CERS with the Hardest-Hit Business Recovery Program (HHBRP) and the Tourism and Hospitality Recovery Program — two programs sector leaders say won’t be as generous as their predecessors. (A bill to create both programs was still working its way through Parliament as of Dec. 15). 

The Canadian government has touted a pandemic recovery as inevitable over the past couple of months. Yet non-profits and charities are still finding traditional fundraising events difficult  — and the recent arrival of the Omicron variant in Canada will only worsen the situation. “I think now there are challenges as this winds down,” says Owen Charters, national president of BGC Canada, of the CEWS and CERS phase-out. “Will other revenues kick in to replace it?” Charters asks. “Are there other things that will help?” 

The answer, for many of the non-profits that depended on CEWS to make ends meet during the first tumultuous 18 months of the COVID-19 pandemic, isn’t clear. 

A ‘lifeline’ for non-profits and charities

Weeks into the COVID-19 pandemic, Canada launched CEWS as a way to subsidize employers during strict public health measures. By the following November, applications for the CERS opened up for property owners and tenants seeking rent relief. Relatively few non-profits and charities used CERS compared to CEWS — the former wasn’t particularly helpful for organizations who don’t rent or operate out of donated buildings. 

Bruce MacDonald, president and CEO of Imagine Canada, says CEWS nonetheless gave out somewhere between $3.9 billion and $4.3 billion to the charitable sector over its lifetime. And that money was a lifeline for non-profits and charities struggling with staffing costs, among the largest slices of any organization’s expenses. “When you think about the ability of the sector to keep staff in place to run programs, a significant number of them relied on federal government support to be able to do that,” MacDonald said in an interview with Future of Good. “It has been really, really important for registered charities.” 

Capilano Community Services Society (CCSS), a non-profit serving youth and seniors in North and West Vancouver, was one of the beneficiaries of CEWS. Stephanie Aldridge, its executive director, says CCSS didn’t have to lay anybody off during the pandemic or depend on volunteers who might not be able or willing to help. “It allowed us to be able to increase our staff hours,” she explains. “We didn’t increase our staff complement, but it made up for the loss of volunteers.” 

Charters says most of the organization’s clubs applied for the wage subsidy. “It’s been extraordinarily useful,” he told Future of Good. “It saved their bacon. They were down on revenue and this was what allowed them to keep their staff when they needed it.” When the COVID-19 pandemic first began, BGC Canada estimated that of its 7,000 workers nationwide, it would need to get rid of 2,000 to 3,000 positions. Thanks to the wage subsidies, Charters said, “the vast majority” of workers got their jobs back.

But both CEWS and CERS had their flaws. Many of the organizations that benefited from both programs tended to be larger non-profits or charities with HR departments capable of handling complex applications. “You needed capacity on your team to be able to do that,” says Pamela Uppal, a policy advisor with the Ontario Nonprofit Network (ONN). “You had to dig through your financials and do comparative analysis.” For small or midsize organizations, she adds, the effort or doing so might not have been worth the reward. 

An ONN survey of 3,000 Ontario non-profits in the summer of 2021 found that nearly two-thirds hadn’t applied for any federal government subsidies, including CEWS and CERS. Uppal says some non-profits not only didn’t have the expertise to access CEWS and CERS, but were also worried they weren’t really eligible in the first place — or didn’t know if they’d eventually have to pay the money back. “We didn’t know what was happening with the pandemic,” Uppal says. “It was a time of uncertainty, which I’m sure played into accessibility and applying for those programs.”  

Yet the new wage programs don’t appear to offer much more stability than their predecessors at a time when the finances of many Canadian non-profits and charities are not at all healthy. 

Meet the new wage subsidy

The Tourism and Hospitality Recovery Program and Hardest-Hit Business Recovery Program, launched on Oct. 21, 2021, are more targeted versions of the CERS and CEWS. According to a federal government announcement, the Tourism and Hospitality Recovery Program — as the name suggests — is only open to organizations like restaurants, festivals, tours, or convention centres. Any applicant needs to prove a 40 percent decline in average monthly revenue over the past 12 months and a current month revenue loss of at least 40 percent. 

Organizations that don’t qualify for the Tourism and Hospitality Recovery Program “and that have been deeply affected since the outset of the pandemic” can apply to the HHBRP for rent and wage support. According to the government announcement, they need to prove an average 12 month revenue reduction of at least 50 percent, as well as a 50 percent current month revenue loss. 

Charters and other sector leaders say they’re looking into whether the programs will work for them, but some non-profits and charities will undoubtedly be shut out. Uppal says the new programs are very narrowly focused on specific sectors of the economy — an approach that won’t make it easy to help the social impact sector. “We’re such a diverse sector,” she says, “whereas a lot of the targeted funding can just be for one industry. It might apply to a subset of our folks, but leaves so many others behind.” 

To make matters worse, overall charitable revenue remains quite low thanks to the lack of a substantial return to in-person fundraising as well as heightened demand for services. MacDonald says not much has changed since Imagine Canada’s last Sector Monitor report in August, which found 82 percent of charities had lost revenue and almost a quarter believed their financial situation would worsen in the coming months. 

“I call it the vice grip the sector is in,” MacDonald explains. “On the one hand is this steadily increasing desire for more services, and decreased supply of resources to provide those services. That narrative hasn’t changed much since the start of the pandemic.” 

In fact, the heightened demand for service is starting to overtake revenue loss as the most alarming factor for some non-profits. John Bailey, executive director of the Regina Foodbank, says his organization is actually seeing a rise in donations. “The demand is still exceeding anything we’ve ever seen before,” he says. At the moment, Regina Foodbank hands out 10,000 lbs of food every single day to clients. And what’s worse, Bailey says, Regina Foodbank didn’t qualify for CEWS because it only considered revenue loss, not increased demand. “It almost didn’t matter how great the demand spike was,” he says, “as long as you weren’t bringing in less revenue, you weren’t eligible.” 

Sector leaders have pushed the Canadian government to use other initiatives such as the Community Services Recovery Fund, a promised $400 million one-time investment, to help the sector out. Charters admits the Fund wasn’t intended to be used as a wage or rent subsidy, but the sector could use some help, and there isn’t a lot of clarity on the Fund’s fine print. “We’re not really sure where the government’s going on some of these COVID policies,” Charters says. 

Subsidizing impact

Organizations like the ONN believe the federal government needs to completely restructure the way it gives money to the non-profit sector. Uppal says government grants should include cost-of-living increases, higher general operating support, pay transparency. That said, she says, the sector remains resilient. “We’ve survived 19 months in pandemic mode,” Uppal says. “We’ve gone from zero digitization to hyper digitization. We’ve been innovative. We’ve been addressing community needs.” 

In a perfect world, Bailey says he’d like to see subsidies that support non-profits and charities based on their impact and demand, not just revenue shortfalls. 

He’s quick to mention that keeping revenue up is important — revenue keeps non-profit and charitable staff employed and is, obviously, very important. However, tying subsidies into an organization’s impact “would be really important for us to be functional and sustainable,” Bailey says. “Because it’s not all about revenue, especially when you have revenue that’s actually growing, but not growing at the same rate as demand.” 

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