How Well Does Canada’s Stimulus Package Support the Social Impact Sector?

As COVID-19 has made its way across the globe, the economic repercussions of the pandemic have caused nearly as much fear as its impacts on health, and governments worldwide have responded with stimulus packages and corporate bailouts. With a strong focus on corporations and individuals, however, these responses haven’t always explicitly included the social impact sector.

In the lead-up to Canada’s announcement of its own stimulus package, Imagine Canada CEO Bruce MacDonald wrote an open letter on March 11, 2020 to Prime Minister Justin Trudeau, asking for any COVID-19 economic responses to intentionally include charities and nonprofits.

Just seven days later, Canada delivered its expected economic relief plan, with Trudeau announcing a $82 billion stimulus package for businesses and individuals across Canada. The proposed economic measures are meant to increase federal benefits and support services for unemployed Canadians while helping businesses and individuals improve their financial situation. 

But just how well does the stimulus package address the needs of charities and non-profits, as well as the people they serve?

Measures that benefit the sectors’ organizations & workers

As part of the stimulus package, in order to help prevent layoffs, the federal government plans to provide eligible small employers, including non-profit organizations, and charities with “a temporary wage subsidy for a period of three months,” according to the Department of Finance. The subsidy will cover 10 percent of wages paid during the span of three months, with a maximum of $1,375 per employee or $25,000 per employer. 

Imagine Canada CEO Bruce MacDonald says there is one thing that stands out about the announcement, especially when compared to the stimulus package Canada announced over a decade ago in the wake of the 2008 financial crash.

“We were really pleased to see that the language of ‘small businesses, non-profits, and charities’ was used in the supports to employers,” MacDonald says. “[In 2009], we were excluded by omission. If they used language that was exclusive to small businesses, it was then interpreted as not being extended to charities and non-profits.”

At this time, another initiative — the EI Work Sharing Program — will provide EI benefits to workers who agree to reduce their working hours due to circumstances outside of employers’ control.

Charities and non-profits don’t generally have “deep reserves” that they can rely on during crises — nor do they have access to the bank loans that for-profit entities can turn to during times like these.

Workers in the field without paid sick leave can expect easier access to EI sickness benefits if they’re in imposed quarantine, ill, or caring for children barred from schools and daycare. For those who don’t qualify for EI, a proposed Emergency Care Benefit will provide $450 weekly for workers who are quarantined, sick, or caring for children or sick parents, while an Emergency Support Benefit will provide up to $5 billion to support other unemployed Canadians who don’t qualify for EI.

The government is also introducing an Emergency Care Benefit of up to $900 bi-weekly, for up to 15 weeks for people facing unemployment who don’t qualify for EI.

Measures to protect vulnerable Canadians

Many of the communities non-profits frequently serve will also be supported by the government’s stimulus package. Low- and modest-income families can expect a one-time special payment in May through the Goods and Services Tax credit (GSTC), helping boost incomes by $400 on average for individuals and $600 for couples.

The government also plans to increase the maximum annual Canada Child Benefit (CCB) for the 2019-2020 year by $300 per child. Combined with GTSC in May, the CCB increase could allow a single-parent, low-income family with two children to receive an income boost of close to $1,500 in the near future.

Other measures aim to support both vulnerable communities and the organizations who work with them. The stimulus package includes plans to create a $305 million Indigenous Community Support Fund, and women’s shelters and sexual assault centres will be equipped with $50 million in funding to manage potential COVID-19 outbreaks. The Reaching Home Initiative will receive $157.5 million in funding to support people experiencing homelessness while reducing overcrowding and allowing for social distancing.

Are these measures enough?

Within the government’s $82 billion stimulus package, there are many measures for the social impact sector to celebrate. But there are other areas where the sector will need more support in the days and weeks ahead. 

Charities and non-profits don’t generally have “deep reserves” that they can rely on during crises, says MacDonald — nor do they have access to the bank loans that for-profit entities can turn to during times like these. So while the stimulus package allows Canada’s large banks to add $300 billion of lending to the economy, non-profits aren’t well positioned to take advantage of that.

COVID-19 pandemic could even provide the conditions needed to provide non-profits and charities greater flexibility

“I think what’s missing are things like bridge financing options for the sector,” MacDonald says. “This is going to be difficult as we see a significant decline in donations in the short term. Are there ways to help organizations ride these out until we get to a new normal?”

Giving non-profits more flexibility could look like increasing charitable tax credits in 2020, or making funds from the recently announced Social Finance Fund accessible more quickly. MacDonald says the COVID-19 pandemic could even provide the conditions needed to provide non-profits and charities greater flexibility — allowing, for instance, “a destination of funds test to allow organizations in the short term to take on more innovative response projects, without getting caught up in the technicalities of charitable activities versus charitable purposes.”

In the days and weeks ahead, MacDonald plans to push for just that — inviting the government to look at “a whole menu of opportunities” to help support the sector in the next phase of stimulus, and asking the sector to rally together for more options.

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