Small charities see challenges intensify as revenues drop, demand climbs
Why It Matters
Seventy-eight per cent of Canadian charities are classified as small charities. They provide programs and services across all sectors, including those serving vulnerable populations, advocating for the climate and protecting animals.
Joel Muniz, Unsplash
A new survey is shedding light on the challenges facing small charities, as they grapple with rising inflation and the ongoing effects of the pandemic.
The country’s largest platform for online fundraising, CanadaHelps, polled more than 600 small charities this August and found that a growing demand for services, compounded by rising inflation rates, has intensified difficulties faced by many organizations with annual revenue below $500,000.
“Many Canadians may not be aware of the critical role that small charities play in communities across this country or how much they are struggling to deliver services,” said Jane Ricciardelli, chief operating officer and acting CEO of CanadaHelps.
In response to these concerns, the organization launched its first Small Charities Week this September — an initiative designed to empower organizations by providing resources and supports, such as webinars and online tools like holiday campaign templates, aimed at optimizing digital fundraising. More than 1,100 people are participating in daily webinars, focused on topics such as diversifying revenue streams, and best practices for social media and email campaigns.
“I think one of the things we’ve really tried to emphasize is monthly donations. That’s something that really helps year-round when it comes to making sure charities have sustainable sources of revenue,” said Nicole Danesi, senior manager of public relations for CanadaHelps.
While 29 per cent of small charities saw donations increase at the pandemic’s start, a further 51 per cent saw donations decrease. Two-thirds of the organizations that experienced an increase have since seen donations return to previous levels and half of the respondents who reported a drop in donations said the decrease has become a “new normal.”
Ten per cent of those polled said charitable donations continue to decline.
More troubling is that 59 per cent of charities also noted current demand exceeds their capacity, Danesi said.
In the early days of the pandemic, 41 per cent of charities surveyed saw an increased demand for their services, but only five per cent said demand has since returned to pre-pandemic levels. A further 23 per cent of respondents continue to face increasing demands for service.
Roughly one third of charities experienced a decrease in demand at the beginning of the pandemic; about half of those organizations have since seen demand return to pre-2020 levels.
“I can tell you anecdotally, that we’ve heard from a lot of charities across the country about various struggles that they’ve been facing,” said Danesi. “So I can’t say it was a surprise when it came to some of the results that we saw.”
CanadaHelps also analyzed 2019-20 data from the Canada Revenue Agency and found charities with less than $500,000 in annual revenue experienced the biggest drop in year-over-year receipted donations: $1.016 billion. By comparison, so-called large charities or organizations with more than $2.5 million in annual revenue, saw revenue increase by a combined total of $731 million.
Small charities also experienced a decline in the margin, the difference between the revenue and expenses, by about 2 per cent. In comparison, medium and large charities actually saw a positive margin of about 5 per cent.
One thing the survey didn’t look at was the impact of COVID-19 relief funding on charitable organizations, although Danesi said it’s an issue that could be examined in the future. Another data-point outside of the poll’s scope was breakdown of impact by charitable subsectors, such as healthcare, social services or environmental advocacy.
Danesi cites the pandemic and inflation as root causes of the current situation small charities find themselves in. “That is where a lot of the discussion has been, and I think those are two key pressures that we could point to.”
The survey found that inflation had increased service delivery costs for 83 per cent of respondents, while 65 per cent believed inflation had decreased donations from individual Canadians. Staff burnout was also a concern and 55 per cent of those asked said they’ve seen a decline in volunteers since the pandemic began.
Fifty-eight per cent of small charities in Canada are entirely run by volunteers.
Danesi said it’s clear problems that began early in the pandemic are persisting — and if nothing changes, 39 per cent of small charities predict they’ll have to reduce programing or cut services. Another 17 per cent said they’ll have to reduce staff unless donations pick up in the coming months.
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