Can Canada’s slide in charitable donations be stopped? A few ideas

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The latest data on charitable giving in Canada shows that the number of tax filers claiming charitable donations on their returns has dropped for the 11th year in a row. Just under 5 million people claimed a donation on their return in 2021, according to Statistics Canada.

It’s difficult to pinpoint a reason. Donations made via crowdfunding are not registered, nor are small donations made via text. Inflation and economic conditions in general could also be contributors.

So could the decline in religious affiliation. Donations to religious organizations make up the largest segment of charitable giving, and the 2021 census revealed that the number of Canadians who identify as non-religious has doubled in the past 20 years, to 34.6 per cent from 16.5 per cent in 2001.

Ultra-high-net-worth donors have other things to contend with, including proposed changes to taxes and donor fatigue.

Here, three experts offer their takes on challenges in the charitable sector and where opportunities lie.

Ed Sluga, president and managing consultant, PGgrowth, Guelph, Ont.

Sluga says there are three main ways to raise money – annual giving, major giving and planned giving.

“We focus primarily on the planned giving side – estate giving and asset giving. It’s a growing area of fundraising simply because of the intergenerational transfer of wealth that’s happening right now. For baby boomers, this is becoming more attractive as a strategy.

Because of COVID, he says, “our clients are seeing some of their best-ever years from planned giving. The problem is that to start engaging with donors now will mean gifts in five or seven or 10 years. It’s not going to be a gift by the end of the fiscal year. You need long-term engagement.

“If you look at the history of charity and/or charitable giving of bequests, high-net-worth individuals since the dawn of charity have been at the forefront. They know how important the charitable functions are in our community. Whether they believe in them or not is different. They might not actually go to the local hospital if they need treatment, but what they do know is that their businesses that reside in these communities require a good hospital or they can’t attract people to come and live in those communities and work for them. So they’ve been at the forefront of making sure that they’re providing support for these important charities for centuries.

“Today the need is everywhere. I think high-net-worth individuals need to be playing a leadership role, and they need to act. It’s not obligatory, but it’s an opportunity for them to lead the way for our society to be civil and livable and attractive for people to come to and live and work. It’s about deliberately deciding to be a leader in that area as well.”

John Bromley, founder and CEO, Charitable Impact, Vancouver

“If you look at the overall dollars being given to the charitable sector, they’ve been on the increase, despite the data showing otherwise, because of the ultra-rich,” Bromley says. “They often are very involved in society, but they’re also incentivized, as they should be, to donate in return for a tax credit. And the population of donors in Canada is shrinking. The same amount or more fundraising is targeting a smaller and smaller group of people.

“Charities are struggling, particularly in today’s economic environment. And it’s not just about inflation. The demands on charities are growing while fewer Canadians are donating and they’re donating less of their income.

“It’s really tough to get someone who’s not really in the culture of giving to start giving based on a fundraising pitch. You could probably make an argument that with too much fundraising, too much donor fatigue, people actually tap out of the market.

“It’s not like all these charities have just forgotten how or have gotten bad at fundraising, and as a result no one’s giving. The problem is that people are just making giving a smaller part of their lifestyle. There’s no short term remedy to a systematic fundraising problem and the problem we’re facing is a systematic problem.

“The big question becomes, why don’t we take more time and money to enable teaching people about giving rather than just fundraising all the time. Because fundraising isn’t teaching about giving. It’s asking people to give. I think it has to come back to learning about giving and committing to creating a bit of a lifestyle for yourself or your corporation or your family around giving.”

Bruce MacDonald, president and CEO, Imagine Canada, Burlington, Ont.

Giving is actually up in Canada, but the number of people giving is down, MacDonald says. “What we are noticing is that giving is getting more concentrated in older, more affluent donors.

“From a public policy perspective, the burning platform right now is on the alternative minimum tax. I’m hearing from organizations who are saying donors are changing their behaviour in anticipation of this coming in the next budget.

“As we understand it, the government wants to ensure that very, very wealthy Canadians pay their fair share of taxes, however that’s defined. We don’t disagree with that policy interest. What we disagree with is the way they’re getting there, which is a change to the formula, and the calculation, that is already starting reductions in charitable giving. There is the need for a home in the federal government related to charities and non-profits because things like the AMT come in part because nobody’s there advocating internally who knows a lot about the sector.

“I was talking to an organization who said they were on the cusp of receiving a $10 million gift. The donor then contacted them and said, ‘As a result of the changes to the alternative minimum tax, instead of giving it to the organization, I’m going to put it in my family foundation. You will get monies over a longer period of time.’

“The problem for the organization was that $10 million was about to launch a new service for the community. They can no longer move forward on that service because this is changing the donor behaviour. We’re also hearing from organizations who are saying that if they were doing multi-year campaign pledges, that donors have been contacting them saying ‘I’d like to renegotiate my pledge down.’ It’s one of these issues that is not going to affect most organizations, but those that it will affect will be affected significantly.”

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