Charities “Scrambling to Sustain Growth”
The Canadian charitable sector faces growing challenges as the economy, interest rates, and inflation remain under close watch. The cost of living crisis is now a cost of giving crisis, with charities struggling to meet increased demand despite reduced income. Against this context, we recently conducted our second annual survey on the financial health of Canadian charities, seeking the opinions of sector leaders to build on last year’s insights. Over 850 charities participated this year, surpassing last year’s response rate (625 responses) and enhancing our understanding of financial thinking and fundraising trends. Our survey findings reveal that charities are still facing a mixed financial outlook and are working harder to sustain financial health through non-traditional revenue methods.
Charities’ Financial Outlook Still Mixed
Our survey respondents indicated a mixed financial outlook for charities. Specifically, we asked respondents to predict how they expect their organization’s financial condition or health to change in the upcoming months (6 months period for last year, and one year for this year). Overall trends indicate a mixed outlook, reflecting increased uncertainty and cautious optimism. Specifically, while the majority of organizations still expect stability, this has decreased from 61% in June 2023 to 53% in June 2024. Meanwhile, optimism for improvement has increased from 20% to 25%, and concern for potential decline has risen from 16% to 18%.
A Notable Shift to Non-traditional Income Strategies and Revenue Diversification
Compared with last year, there are some improvements and positive trends in certain non-traditional revenue sources in 2024. Notably, event-based fundraising saw a marked improvement, with fewer organizations reporting decreases (down from 22% to 17%) and an increase in those reporting growth. Investment income experienced a substantial positive change, with a higher percentage of organizations reporting increases (27% compared to 19% in 2023). “Other revenue sources” also showed a significant positive shift, with more organizations reporting increases and fewer reporting decreases. Individual donations showed a slight improvement, maintaining stability with minor increases. Meanwhile, foundation funding, government funding, and membership dues experienced some decrease in growth compared to 2023. These trends suggest that charities are diversifying their revenue streams and working harder to generate income independently rather than relying solely on traditional funding methods such as government grants and donations.
The mean score graph below highlights the changes in revenue trends between 2023 and 2024:
Charities are finding it challenging to focus on growth due to limited resources and the economic challenges facing more broadly facing the sector as a whole. Moreover, the reduction in government funding post-COVID has left many struggling to focus on revenue growth. In our respondents’ words:
“We need to work harder to increase our combined sources of income to support operations and the growth of the organization, but our current resources do not permit us to focus on revenue growth.”
“Community fundraising is not even an option anymore – nobody has any extra cash including local businesses. We generally get additional dollars from our corporate donors or long-time foundation supports.”
“The government funding increased a lot with the extra covid funding, but that’s all disappeared now leaving organizations scrambling to sustain growth”
Conclusion
Our survey findings have shown that charities are “scrambling to sustain growth” through diversified revenue strategies amidst economic challenges and increased service demands. However, while this shift demonstrates their resilience and innovation, the rise in business-like strategies could also divert focus from their core missions and strain resources.
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