Financial and HR Challenges: A Look into Charitable Capacity Expansion
Recent data from the Charity Insights Canada Project (CICP) show that 57% of charities have increased capacity in recent years and a further 66% have plans to increase service capacity going forward. Yet, a staggering 74% of charities surveyed are still facing higher demands for services than they can meet.* This push to increase service capacity is in response to the increased demand for services that charities are facing. According to an Ipsos report in 2023, 20% Canadians were accessing charitable services, with 70% of those individuals doing so for the first time.
But changing service capacity isn’t a straightforward process; our survey results show how it often depends on two critical factors: adequate funding and staffing. Increasing capacity often rests on securing new funding and hiring more staff or recruiting volunteers, and charities who are unable to expand frequently cite financial and staffing challenges as key limiting factors. These findings point to the urgent need for improved staffing supports and financial investments in the charitable sector as charities seek to address increased service demands or maintain current services.
How Many Charities Have Plans to Expand?
In May 2023, 66% of charities across the country had plans to expand their operations, while only a small fraction, 2.5%, anticipated a reduction (see chart below).
| Planned Changes to Capacity | % of Total |
|---|---|
| Yes, we have plans to significantly increase capacity | 8% |
| Yes, we have plans to increase capacity | 59% |
| No planned changes to capacity | 32% |
| Yes, we have plans to decrease capacity | 3% |
| Yes, we have plans to significantly decrease capacity | 0% |
How Do Charities Plan to Increase Capacity?
Most charities will need to increase funding or expand their human resources in order to meet capacity expansion targets. Survey respondents were asked: “If your organization plans to increase its capacity to provide programs and services – can you please describe why and how your organization plans to do so?” Out of the 498 who provided comments, many plan on increasing or diversifying funding sources (42%) followed by hiring more staff (26%).
Making investments in infrastructure, such as increasing program space and resources are mentioned by some (13%). Other less common strategies include restructuring existing services (8%), increasing the number of volunteers (7%) and developing and expanding partnerships (6%). Innovation and tech investments (3%), enhancing outreach efforts (2%) and increasing marketing and advertising of services (1%) were only mentioned by a few panellists.
Limiting Factors of Capacity Change in Charities
Some charities, however, do not have any plans to increase capacity. Survey respondents were asked: “If your organization does not have plans to change the capacity of its programs and services – can you please explain why?”. Of the 239 who commented, financial and human resource constraints were the most frequently cited factors in guiding their decisions to maintain their current capacity levels. Approximately half (53%) of those who responded cite a lack of funding and 29% human resource constraints. These constraints often coincide as well, as about half of those citing human resource constraints mention the need for funding to increase staffing levels. As one panellist noted:
“Our organization does not have plans to expand because unless our funding increases, we lack the capacity to run more programs. Funding directly impacts staff time.” Another panellist remarked, “we all work part-time. Without additional funding, we cannot afford to increase working hours.”
Beyond the common issues of funding and staffing, 4% of organizations also discuss a lack of adequate infrastructure or space limitations that prevent expansion. Other reasons for maintaining current service capacity mentioned by panellists are related to balancing demand for services with capacity:
- 12% state they are already meeting community demand
- 4% that demand for services is lower than capacity
- 4% have already made recent capacity increases
Key to Capacity: Solving Funding and Staffing Challenges
Although funding is key to capacity expansion for many charities, for most there is no guarantee of acquiring the necessary funding. Out of the roughly 210 charities seeking to increase or diversify funding for capacity expansion, nearly 90% discuss plans to acquire new funding, while only 11% expect or have secured new funding. One panellist highlighted their organization’s optimism around receiving increased support, stating, “we expect to receive increased funding for one of our core services, and we hope to enhance our general capacity through fundraising efforts, particularly through foundation giving.” However, many charities are still in the application or negotiation stage of acquiring funding. As one panellist explains, “we are in negotiations with our current contracts (mostly government) to increase their funding of our programs to at least cover basic services at a living wage level. We are also continually applying for grants. Two of our programs are 100% donor/grant funded.”
Will charities face challenges in securing adequate and stable funding to increase service capacity? Advocacy groups like Imagine Canada have consistently called for increased core or unrestricted funding to help charities operate more sustainably. While funders have offered more unrestricted funding since the COVID-19 pandemic, many charities still rely heavily on restricted project and program funding, which often does not adequately cover essential operations or provide a stable, long-term source of funding. Charities will also be competing with other nonprofits for available grants and increased donations.
Another hurdle charities may face in capacity expansion is in recruiting additional staff. Of the 127 charities discussing hiring paid staff in order to expand, only 9% have already hired new employees. The remaining 91% are seeking to fill positions or increase the hours of existing staff. This may also prove challenging for some charities, as previous CICP findings and research by YMCA Workwell indicate significant difficulties in staff recruitment and retention within the charitable sector that is connected to staff burnout from high workloads and employees leaving seeking higher wages.
CICP survey results highlight the efforts of many charities to meet the growing demand for services in their communities, despite facing substantial financial and human resource constraints. The findings underscore the urgent need for more staffing supports and investment in the charitable sector. Addressing these challenges will be crucial for charities to sustain or expand their operations and effectively serve their communities in the years to come.
Author
*Figures exclude ‘N/A’ and ‘not sure’ selected responses.
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