Canadian charity, Part 2: Sector faces challenges

By Todd Cohen

[Note: This article was written for Blackbaud.]

Canada’s charitable and nonprofit sector historically has “invested poorly in skills, human beings, and technology,” and charities now “need to step back and make longer-term investments to survive and thrive,” said Michael Johnston, founder and president of Hewitt and Johnston Consultants, a fundraising consulting firm in Toronto.

“There’s such short-termism in Canadian charities to go after money in single donations,” he said. “But the donor expects more.”

Studies like The Next Generation of Canadian Giving of younger generations of donors, for example, show that they want “more specificity, more impact,” Johnston said. “They want more from a charity when they give, and that demands better communication, better skills to show impact, and better technology to allow them to better direct their gifts, and for the charity to show transparency.”

Growing Gap

Despite the sector’ stability, the gap is growing between, on the one hand, large- and medium-sized nonprofits that can afford the technology and manage the change needed to keep pace with evolving needs, and, on the other hand, smaller nonprofits that find it “more difficult to afford that help,” Johnston said.

Derek Fraser, chair of the AFP (Association of Fundraising Professionals) Canadian Council and president of iDoPhilanthropy in Calgary, agreed.

“The strong continue to be strong, and the weak try to compete within a very competitive marketplace,” he said. “We have small organizations that are not able to hire and resource their fund development activities to the level they need to be successful.”

Smaller nonprofits must compete with charity “Goliaths” such as hospitals, educational institutions, and churches that traditionally have received more donated dollars, he said.

Still, he said, volunteers can be a valuable resource for smaller nonprofits.

Transparency, accountability

Awareness about the need to be more transparent and accountable is growing among charities and nonprofits in Canada, Fraser said.

Spurring that growing awareness, he said, have been news reports of rule-breaking by an “extremely small percentage” of charities and nonprofits, by rankings from watchdog groups that track financial reports that charities submit to the Canadian Revenue Agency, and by expectations by donors for greater openness.

Postal changes

Canada Post, which is now losing more than $100 million per quarter and is looking at a billion-dollar-a-year loss by 2020 if it doesn’t change its business model, is ending delivery to home mailboxes and instead will deliver residential mail to “superboxes” in every community and city, Johnston said.

That change is the “canary in the cage” for charities, representing a “warning about the future of mail in conjunction with other channels” for marketing and fundraising, he said.

Next: Volunteer leadership key to fundraising

The series:

Part 1: State of the sector.

Part 2: Sector faces challenges.

Part 3: Volunteer leadership key to fundraising.

Part 4: SickKids Foundation invests in fundraising capacity.

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