Category Research: Non-Profit Trends

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Category Research: Non-Profit Trends

Four trends in the Canadian non-profit sector are the social enterprise model, the effects of austerity, online donations and greater awareness/diligence by donors.

Social Enterprise

  • A University of British Columbia survey found a growing number of "social enterprise" non-profits in Canada, that is, those that combine social and business components. These non-profits usually sell goods or services for income, in addition to their charitable offering.
  • Around 75% of non-profits in Canada are "social enterprises", though many do not self-identify as such due to confusion around the term.
  • For example, the YMCA operates an ideal model of mixing social programs with business, and has been highly successful in doing so.
  • One analysis found that the most successful non-profits are the ones who figure out who to integrate commercial activities "more deeply with their social goals".

Effects of Austerity

  • The global economic downturn of course effected non-profits in kind. Despite this, Canadian charities are still reporting modest growth.
  • Non-profits now count for around 8.5% of Canada's GDP, whereas in 2007, it was only 7.4%. Employment in the industry is also up 300,000 people compared to a decade ago.
  • Nevertheless, organizations are still feeling the effects of funding cuts across the board. For example, the Ontario Trillium Foundation recently saw a $15 million reduction.
  • Another study found that only 20% of taxpayers are reporting charitable donations, compared to 30% in the 1980s.
  • There are concerns that additional financial pressures could keep effecting the non-profit sector. As the middle class "disappears", and Canada possibly faces a new wealth gap, mid-level donors could disappear.
  • Additionally, as some families grow poorer, non-profits face pressure for more people in need of support.

Online Donation Amounts Continue to Rise

  • While cash is the still most preferred donation method, online giving keeps rising in Canada.
  • This trend is being largely driven by Gen Xers and millennials, who prefer less-conventional methods of giving.
  • Social media is also driving this trend. One survey found 20% of donors did so after responding to a request on social media.
  • Facebook is the social media inspiring the most donations, by a wide margin. Many also respond to e-mail and liked to be thanked via e-mail.
  • For example, GivingTuesday is an annual drive to entice Canadians to give money on a certain day of the year. The campaign uses hashtags and social media stories to help organizations solicit more donations. Last year, more than $21.9 million was raised in online donations, a 1247% increase since its inception in 2012.

Greater Awareness/Diligence

  • As trust in organizations drops, donors are not necessarily holding back their money, but they are looking for transparency and good management in larger numbers.
  • There is no longer the feeling of "blind trust", but instead they are scrutinizing non-profits more closely before giving. For example, Canadian donors want to see information about how their money is making a difference more than wanting blanket acknowledgment of their donation.
  • This also means local charities are enjoying more engagement. Organizations with a local focus have enjoyed a 5% increase in donations since 2013, whereas donations to national non-profits have dropped by 7%.
  • Charities are following this trend by being more and more transparent. For example, WE Charity's FAQ page contains robust information about their administrative costs and structures. The page states, "We are proud of the fact that we consistently exceed industry standards. WE Charity spends less than 10% of its funds on administration, with, on average, 90 cents of every dollar donated going directly to support our projects and programs...For fundraising, we spend (on average) no more than $3 for every $100 we raise. That’s an amazing 3% fundraising cost on average!"
  • This trend is also being driven by millennials, as this generation has been shown to do more research before buying than any other before it.