The Community Services Recovery Fund is meant to modernize the charitable and non-profit sector — here’s what that means

What would a modernized social impact sector look like?

If all the dreams of the charitable and no-profit sector were fulfilled, it would mean workers in the non-profit and charitable sector would be well-paid. A combination of social finance, donations, earned revenue and government grants would pay for its programming and administrative costs. No organization would be unable to purchase the digital tools they need to thrive in a modern economy. 

The Community Services Recovery Fund is perhaps the most ambitious attempt to modernize the sector in recent history. Over the course of just one fiscal year, it promises to invest $400 million at a time when the average charity, according to Imagine Canada data from late 2020, saw a revenue decline of 16 percent. 

“These organizations have not been able to easily adapt and transition to remote work and online programming, which has made it hard for workers and left a gap in our communities, at a time when demand is higher,” reads a passage from the 2021 federal budget. 

But even a $400 million fund cannot provide all the changes sector advocates are hoping for. Most of the legislation and regulations governing charities and non-profits are at the federal level, but provinces bear responsibility for the overwhelming majority of labour laws — an essential part of the sector’s push towards better paid work for the sector’s employees. Civil society organizations such as the Ontario Nonprofit Network, Cooperation Canada, and Imagine Canada not only advocate for policy changes: they also suggest ways for member organizations to improve their own practices. 

Here are a few of the most recent studies, reports, and commissions calling for a more modernized sector — and the perspectives they’re missing: 

August 2018 — Recommendations from the Social Innovation and Social Finance Strategy Co-Creation Steering Group

Who was involved: A 16-member steering group co-chaired by Inspire Nunavut founder Ajmal Sataar and Catherine Scott, former director general of the community development and homelessness partnerships at Employment and Social Development Canada. 

The steering group was asked to share their perspectives on access to capital for social innovation and social finance projects, federal laws that affect how community organizations can participate in social innovation, and the capacity of both community organizations and governments to pursue social finance. 

What they found: The steering group’s list of recommendations called for the federal government to create “commitment and long-term policy action” for social innovation and social finance in Canada through legislation. It also proposed the creation of an Office for Social Innovation within the federal government, as well as a Social Innovation Council. 

In order to test out the implications of social finance and social innovation, the steering group also recommended the use of “sandboxes”, or simulations, that show just how new regulations might affect Canada’s economy. The federal government should also establish a Social Innovation Evidence Development and Knowledge Sharing Initiative to help share data about social innovation from coast to coast to coast. 

On top of all its other recommendations to improve the social innovation and social finance landscape in Canada, the steering group called on the federal government to actually create a Social Finance Fund of its own. 

Changes made: As of the time of writing, the Canadian government hasn’t announced an Office of Social Innovation or a Social Innovation Council. But Social Innovation Canada, an initiative that promises to “strengthen Canada’s social innovation ecosystem”, was launched in 2019 through support from Employment and Social Development Canada, as well as the McConnell Foundation and Suncor Energy Foundation. 

Innovation sandboxes are used by a variety of organizations, including at least one Canadian partnership. Pollution Probe, an environmental NGO, and QUEST Canada are participating in a four-year project that uses innovation sandboxes to help Canadian provinces and territories figure out how to reduce their carbon emissions. 

As for the Social Finance Fund — the Canadian government is offering up to $755 million over the next decade to make it happen (with up to $220 million over the next two years), along with another $50 million over two years to improve the ability of social purpose organizations to participate in social finance. 

What’s missing: The Steering Group’s recommendations include working with Indigenous communities to create Indigenous-led social innovation and social finance processes, but there is no mention whatsoever of doing the same for other racialized groups. 

June 2019 — The Special Senate Committee on the Charitable Sector’s “Catalyst for Change” report

Who was involved: The Special Senate Committee on the Charitable Sector, chaired by Sen. Terry Mercer with Sen. Ratna Omidvar as deputy chair, formed in early 2018 to examine Canada’s social impact sector and the laws and policies that govern it. “While the sector is resilient and innovative,” read the committee’s final report, “its potential is limited by what are seen by many stakeholders as complex, outdated rules and a lack of coordinated support within the federal government.”

Mercer and Omidvar had long histories in the sector. Before his appointment to the Senate, Mercer served as a fundraiser and administrator for the Kidney Foundation of Canada, St. John’s Ambulance, and the YMCA, among other organizations. Omidvar was a former president of the Maytree Foundation and founded the Global Diversity Exchange, a “think-and-do tank on diversity, migration and inclusion” according to her personal website. 

Over the course of its work, the committee heard from 160 witnesses, including government officials, policy experts, volunteers, and charity workers themselves. Another 695 people responded to a questionnaire about the sector put out by the committee. 

What they found: In its report, the Senate Special Committee made a slew of recommendations to reduce the complexity of government grant applications for charities, revise regulations for registered charities carrying out activities outside Canada, and clarify the types of activities — such as political action — charities can’t engage in. The report also calls on the federal government to create a national volunteer strategy, support the creation of pension and benefits plans for charities, and develop a human resources renewal plan to improve working conditions in the sector. 

The charitable sector has had a long and tumultuous relationship with the Canada Revenue Agency, particularly over who does and doesn’t receive charitable status. As part of its recommendations, the committee recommended that the federal government improve that relationship by reducing wait times for charitable status applications, offering more clear decisions, and reducing reporting requirements. 

Lastly, the committee called for the Canadian government to create an interdepartmental working group — a “secretariat on the charitable and non-profit sector” — to better coordinate the regulation of the sector. 

Changes made: In a response to the Special Senate Committee’s report, National Revenue Minister Diane Lebouthillier said the Canadian government will be launching a Social Innovation Advisory Council (SIAC) in 2021. This council will provide “strategic advice to the Government on how to encourage the growth of social purpose organizations in Canada,” her letter reads. Lebouthillier says the SIAC could also provide advice on the proposed human resources renewal plan.

But Lebouthillier says the CRA has already implemented several improvements to reduce wait times for organizations seeking charitable status and now includes legislative and common law requirements in “plain language” when denying applications for charitable registration. 

What’s missing: Survey respondents told the Special Senate Committee about the role that gender plays in the charitable sector’s low wages. Around 80 percent of all charitable workers are women. However, the committee’s final report says this was “beyond the scope of this study.” (It’s worth noting that labour laws for the charitable sector are overwhelmingly governed by provinces and territories, not the federal government). 

September 2019 — Ontario Nonprofit Network’s “Bridging The Gap” report on the gender wage gap in Ontario non-profits

Who was involved: The Ontario Nonprofit Network (ONN), an advocacy and policy organization that represents the province’s 58,000 non-profits, assembled a report on how to improve the sector’s gender wage gap across the board. Along with ONN’s advisory board, who included executive director Peter Honeywell, the report’s authors consulted 645 Ontario non-profit workers. 

What they found: “Bridging the Gap” recommends that non-profit managers ensure that salaries for their job posting actually match the job’s workload, offer flexible pay scales that consider equitable pay and an applicant’s experience, and ensure full and part-timers earn equal pay. It also recommends non-profit managers provide living wages (although it doesn’t offer a precise definition) at the very bottom of an organization’s pay grid, as well as boosting wages regularly to include cost-of-living increases. If doing so isn’t possible, the report recommends non-profit managers be open and honest with their staff’s concerns about compensation, rather than dismissing them out of hand. 

On top of setting up proper pay structures, the report also says non-profit organizations need to track demographic information about their workforces, especially by gender or race, to ensure everyone is being paid fairly for the work they’re doing. 

Changes made: At least one major non-profit, FoodShare Toronto, promised earlier in 2021 to bring its wage floor to roughly $22 an hour — what it called a living wage for the city — but it is difficult to say exactly how many non-profits have taken up the ONN’s advice.

What’s missing: This report is focused on Ontario’s non-profit workforce, but does not make comparisons to other jurisdictions. Other provinces or territories may have answers to some of the difficulties non-profits in Ontario have with paying their staff equitably. 

October 2019 — Cooperation Canada’s “Directed Charities and Controlled Partnerships” brief

Who was involved: Gavin Charles, the former policy team lead at Cooperation Canada, researched and wrote a policy brief on how the federal government can improve regulations for Canada’s charitable sector especially as it relates to humanitarian assistance. The report was financially backed by the Muttart Foundation.

“Directed Charities and Controlled Partnerships” was produced in collaboration with the International Civil Liberties Monitoring Group, who oversaw a section about the effects of Canada’s post 9/11 anti-terrorism legislation on charities operating abroad. 

What they found: “Direction and control”, a policy that holds Canadian charities responsible for anything done with their resources, even if their funds are being deployed through another charity, is described as being “at odds” with Canada’s commitment to treaties that call for local community empowerment. It calls on the federal government to loosen these restrictions in consultation with Canadian charities working abroad. 

Canadian anti-terror legislation only adds to the burdens faced by charities under “direction and control”, especially if they are operating in regions where armed groups listed as terror organizations by the Canadian government are the only functional government. The brief suggests Canadian authorities scrap the Charities Registration (Security of Information) Act, used to prevent charitable registration if they believe a charity is supporting a terrorist entity. Alternatively, if authorities want to keep the Act, the brief asks for a loosening of its secrecy provisions. 

Changes made: In February 2021, Bill S-222 was introduced in the Senate by Sen. Ratna Omidvar. If passed, it would redefine “charitable activities” to include providing resources to non-qualified donees, and remove the requirement that charities exercise “direction and control” over an intermediary.

What’s missing: The brief says Canadian charities working abroad should be consulted on improvements to “direction and control” that favours local communities, but doesn’t offer much in the way of language around decolonizing aid.

December 2020 — The “Unfunded” report on Black communities overlooked by Canadian philanthropy

Who was involved: Four lead authors — Rachel Pereira, an alumna of Carleton University’s Masters of Philanthropy and Nonprofit Leadership program, along with PhD student Fahad Amad, Youth LEAPS executive director Liban Abokor, and researcher Firrisaa Jamal Abdikkarim — investigated systemic racism in Canadian philanthropy. This research report was prepared by the Network for the Advancement of Black Communities and Carleton University’s Philanthropy and Nonprofit Leadership program. 

The report was sponsored by the Counselling Foundation of Canada and the Lawson Foundation. 

What they found: Public and private foundations in Canada underfund both Black-led organizations and organizations that primarily serve Black communities. Grants to Black-led organizations were “miniscule”: just 7 cents on every $100 offered by Canadian grantmakers. Community foundations more consistently fund primarily Black-serving organizations, but are still lagging. 

The report ultimately recommends the establishment of a Foundation for Black Communities devoted to specifically addressing the issue of systemic underfunding for Black-led and primarily Black-serving organizations. 

Changes made: The Foundation for Black Communities has launched and is seeking donations of capital from other foundations for its endowment. One of the report’s lead authors, Liban Abokor, is now a working group member of the Foundation. 

What’s missing: The report was specifically about a lack of funding to Black communities in Canada, but other social impact professionals have noted an ongoing lack of data for non-profits in other underserved communities, including South Asians, Indigenous peoples, and disabled Canadians. 

June 2021 — CanadaHelps’ Digital Skills Survey

Who was involved: CanadaHelps, a major online platform that allows charities to fundraise, puts out an annual survey on the state of digital transformation among Canada’s charitable sector. Their report specifically looks at how fast charities are adopting digital processes and technology, their willingness to learn new skills, and the competencies of their workforce. 

In February 2021, CanadaHelps surveyed 1,400 charities. Roughly 1,110 were from CanadaHelps’ own database of users, while the remaining 330 or so were charities that had no connection to the platform. 

What they found: Around 58 percent of charities with annual revenue of under $100,000 said they have no plans to adopt digital processes into their everyday operations. But at the same time, 54 percent of CanadaHelps respondents and 38 percent of CRA respondents “believe they’ll soon find it harder to do what they do if they don’t improve their digital capabilities,” the report’s executive summary said. 

Charities are, by and large, most interested in funding streams for digital tools, help developing digital strategy plans for their organizations, and hiring more staff with technical skills. 

Changes made: The report didn’t offer explicit recommendations.

What’s missing: CanadaHelps’ survey doesn’t break down racial, ethnic, or other demographic categories in their survey findings. As has been demonstrated with other reports (particularly Unfunded), organizations led by and for marginalized groups often have a difficult time securing funding in the first place — which may impact their ability to integrate digital tools into their operations. 

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