According to a recent global survey, (with data from 87 countries) Canada was ranked the second best country in the world. Quality of life was one of the factors considered in the ranking and while most Canadians enjoy a relatively high quality of life compared to other peer countries, the increasing impact of inflation, the rise in cost of living, and economic stagnation has pushed more Canadians to depend on charity services to meet their basic needs.
An Ipsos Reid poll found that over the next 12 months, 22% of Canadians will rely on charities for life necessities such food, clothing and shelter—an increase of about 8% from the prior year. The charitable sector is playing an ever-increasing role in sustaining the high quality of life for Canadians, while also staving off the true impact of current economic challenges faced by our country. But the question remains: for how long?
As the charitable sector continues to insulate Canadians from declines to quality of life, it is simultaneously facing volatile headwinds, with no signs of relief. The sector is becoming increasingly vulnerable to these forces, and without immediate attention and collective intervention from industry leaders, policy-makers and para-sector organizations, Canadians may see their quality of life diminish precipitously over the coming decade.
This series is exploring the critical role the charitable sector plays in sustaining the wellbeing and quality of life of Canadians. In part one, we reviewed how the sector’s reach is contracting due to a talent shortage. Charities are struggling to sustain their impact as Boomers retire, Gen X and Millennials move to other sectors, and Gen Z foregoes working in the charitable sector altogether. This week, we explore another headwind: the chronic decline of charitable giving in Canada.
Charitable giving in decline
Traditional charitable giving has been deteriorating in Canada for at least 15 years. While the total amount of dollars given to charity has risen slightly, once factored for inflation, charitable giving is waning.
This is best observed in the declining percentage of Canadians making charitable gifts. According to the 2023 Giving Report from CanadaHelps, from 2010 to 2020 the percentage of Canadians who made donations is down 5%—with only 18% of Canadians giving to charity. At the same time, 22% of Canadians expect to rely on charity services in the next six months. In other words, more Canadians are depending on charity, than are giving to charity. It is not shocking then to learn in this same report that almost a third of charities say they have raised less funds than the year prior, and over 57% of charities say they cannot meet the current level of demand for their services.
According to Statistics Canada, the decreasing participation of Canadians in charitable giving is being slightly offset by a few people giving larger gifts to sustain the overall pie. While this may seem positive, larger donations tend to be directed at more traditional institutions such as hospital and universities, while smaller, community-based organizations experience a disproportionate decline in donations. The trend of mega-philanthropists also puts growing power and influence in the hands of society’s rich and powerful with a concentrated few determining which causes and organizations receive funding. Not only could this affect smaller grassroots and community-based organizations, but it could fundamentally shift democratic practice if decisions being made about quality of life for all are increasingly made by a small group of powerful and wealthy, but nonetheless, generous Canadians.
If charitable giving continues to decline, it is not unthinkable that Canadian philanthropy will slowly resemble giving in the US, where less than 20% of charity goes to support poor and historically marginalized communities. (Note: many of these statistics are two or three years old and do not account for the current cost-of-living crisis facing Canadians. We can assuredly anticipate that the decline in giving, particularly among smaller donors most impacted by economic fluctuations, has only grown.) In 2022, 82% of Canadians expected their finances to be negatively impacted by inflation, and only once Statistics Canada releases its 2023 charity tax receipting data in a few years will the full impact be understood.
How can Canada reverse its declining charitable giving trends?
One avenue that has been historically effective includes changes to the tax regime. However, Canada already has one of the most generous charitable tax incentives programs in the world, with the government well aware of this fact.
The current trend under this government has been to reduce the generosity of the current charitable giving tax regime as witnessed with the proposed 2024 changes to the Alternative Minimum Tax and the rejection of advocacy efforts to remove capital gains on the donation of private shares. That being said—there is opportunity for the Federal government to consider additional tax incentives for smaller donors with the goal of encouraging more grassroots philanthropy that tend to support smaller, community-based organizations. About a decade ago, there was some success on this front when Ottawa provided special tax incentives for first-time donors.
With tax incentives limited in their ability to catalyze charity, there is an opportunity for non-traditional forms of philanthropy to play an increasing role in the quality of life of Canadians.
Non-traditional philanthropy includes any form of philanthropy that is not recorded in tax filings. For many years, non-traditional forms of philanthropy have thrived in Canada, particularly among diverse communities, but have not been rightly acknowledged for their impact. More charities should take proactive steps to support grassroots philanthropy by adopting inclusive philanthropy practices and recognizing the vital role diverse communities hold within their organizations and in achieving their mission.
And lastly, one of the most important antidotes to reverse the decline in giving is simply to stimulate stronger economic growth, that is inclusive.
Economic prosperity is one of the most important factors in maintaining both charitable giving and quality of life. While these ideas are by no means exhaustive, there are many steps that need to be taken to reverse the decline of charitable giving in Canada. While there may be different points of view on what those interventions may be, there is likely unanimity in the fact that we must reverse this trend if Canada is to continue to be recognized as one of the best countries in the world.
Caroline Riseboro has raised over $3 billion in her 25-year career. She currently serves as President & CEO of TrilliumHealth Partners Foundation, where she is leading a ground-breaking fundraising campaign to build the largest hospital in Canada.
