The erosion of charitable giving and some potential solutions to stop the bleeding

According to Statistics Canada Canada’s long tradition of supporting charities is showing signs of erosion.

The number of Canadians making charitable donations is falling sharply and the total amount donated has dropped by nearly $1-billion over the last two years. Meanwhile, the average age of donors has risen to 53, leaving many charities wondering where future funding will come from.

Figures released by Statistics Canada last week highlight a disconcerting trend for charities. The report showed that 5.6 million people donated money last year. That was down from 5.8 million in 2008 and was the lowest number of donors since 2002, when 5.5 million people gave money. In dollar terms, total donations dropped to $7.75-billion in 2009 from $8.19-billion in 2008 and $8.65-billion in 2007.

The participation rate – a measure of the percentage of tax filers reporting a donation – is even more troubling. Last year, 23.1 per cent of taxpayers claimed a deduction for making a charitable donation. That was down from 24.1 per cent in 2008 and marks a 30-year low. Not that long ago, nearly one-third of taxpayers reported a donation; now the percentage is less than one-quarter.

The trend indicates a growing gap between wealthy Canadians, who have largely continued to make donations, and the middle class, which has found giving difficult during tough times. Statistics Canada figures show that over the last decade the number of donors has fallen, but the median gift has increased from $190 to $250. That means fewer people are giving more money.

The average age of donors has also slowly moved upward, rising from 51 earlier this decade to 53 last year.  But a bigger concern is that young people don’t seem to be getting into the habit of donating. This obviously has implications for the future and the survival of charities and non-profits

So what is causing this decline? Nobody knows for sure but here is my take:

  • the  most recent  recession and the slump in the economy  makes it harder to give, especially tightened middle-class family budgets.
  • Religious participation, traditionally the route through which many Canadians give, has been falling.
  • The increase in non-profits and charities
  • Some believe that many Canadians  have simply become turned off from the act of giving, alienated by:

o   One too many fund-raising phone calls,

o   Direct mail and e-mails that have increased significantly by charities

o   Telethons , seems there is one every week

o   Charitable Lotteries ( does anyone remember that we once only had the Irish Sweepstakes)

o   Charitable organization solicitation at supermarket, shopping malls and other centres in the community

o   Numerous charitable auctions

o   Hospitals which are supposed to be funded by the taxpayer are now one of the largest fundraisers in the community

o   Alumni fund-raising (university graduates) which seems to be never-ending

o   Public schools use their students as their fund-raising arm selling cookies chocolates etc. Parents are not pleased

o   Religious institutions and related charities are heavy-duty into fund-raising and they have become much more aggressive but seem to be offering less and less to its members

o   Calls for financial support for disasters in Haiti, tsunamis in Asia floods in Pakistan earthquakes in Chile, China etc.

o   And there are the biggies like United Way and dozens of health and social charities which seem to need more and more money every year

o   And then there are charities like breast cancer which take all the oxygen out of the fund-raising room and have caused some to really question fund-raising in the health area. Pink M and M’s anyone?” How about pink football cleats and on and on it goes. See article

Some may argue that one of the reasons for decrease giving may be related to the headlines touting the six-figure salaries of some charity executives,(  a parliamentary committee is looking into a bill that wants to cap the salaries of CEO’s of charities at $250,000 and require the top 5 salaries of every charity to be publicly disclosed by name)   or the wasteful or unscrupulous ways of a few charities. Not to mention fraudulent charities ( think of the Ashley Kirlow cancer claim case )

If too many Canadians opt out of charitable giving, the character and face of Canadian philanthropy could change. Large signature projects such as hospital wings and university buildings which attract a few wealthy donors will keep getting built, but other sectors, and broad-based campaigns that depend on many small donors, such as the United Way, could start coming up short.Imagine Canada, an umbrella group for Canadian charities that there is real concern that “the donor base is shrinking and that’s very worrisome.”

For more info check out these links :

Link 1

Link 2

So what is the solution, well I suspect there will be cries for more tax concessions and of course handouts from government. But is there a better way ?

How about non profits developing revenue generation strategies using strategic marketing techniques . Or looking at how to use social  and digital media to attract donors, particularly younger donors? Surely it is time for senior managers who work in the non-profit sector to look at some innovative approaches to raising money for example through corporate sponsorships. We at the Centre of Excellence for Public Sector Marketing are always giving courses and workshops to non profits on how marketing can enhance their financial health. Check us out

4 Replies to “The erosion of charitable giving and some potential solutions to stop the bleeding”

  1. Great post Jim and I agree with the points made about why this is happening and would like to add a couple of more thoughts. I would love to see these official donation numbers cross-referenced with the fundraising numbers of the organizations to see if revenue has fallen in unison. I see 3 trends that can help to explain in addition to what you have provided here. One is the increase in non-deductable donating people do that they would consider support but would not be reflected in Revenue Canada of StatsCan numbers. I find it very disturbing to see every hockey team, and every school and so many grassroots clubs hitting the street to raise funds. To me there is something wrong when every team needs to fundraise…the cost structure is out of whack. Another trend is that people may be going where companies did about 10 years ago where they are more targeted with their giving. As a result of the constant bombardment they have been getting, as you point out, people are forced to pull back, select which charity or cause they are going to support and ignore all the rest. Companies reduced their scope of what they would even consider sometime ago and it is very possible people are doing the same. Finally there is the demographic issue that may be at play here. Several years ago we were raising the warning to charities of the huge wealth transfer that is going to be taking place over the next 15 years. This was both an opportunity and a curse, but the message was that the people that have been their core donors and that they have relationships with are passing their wealth to their children with whom they do not have a relationship with and who will have different perspectives and desires. The numbers you cite do not reflect a continuum or a shift of giving and perhaps we are in a transition period with the demographic shift taking place. If so we may, see donation numbers begin to rise again in the next 5 – 10 years as this generation x gets comfortable and searches for their way to scratch their philathropic itch. As part of this transition, the boomers as they transfer their wealth, may be more active in planned gifts and we may see a latent surge in donation revenue. It will be very interesting to watch, however, those who are most succesful at building the relationships and growing their core donors will still be the most successful.

    1. Your point on passing wealth to children is correct but I am not convinced that characteristics of Generation X born between 1965 and 1979 and there “what’s in it for me” attitude have built a culture of charitable giving.
      I think charitable organizations may have more luck with the Gen Y born between 1980 and 1995 (Net Generation) who have strong morals and a sense of civic duty but to reach them you have to be on-line . Generation Z (Digital Natives) born after 1995 are used to instant action and satisfaction due to internet technology. Their means of communication is mainly through online communities and social media like Google, MySpace, Twitter and Face Book rather than personally meeting their friends and developing relationships. Therefore unless charitable organizations are willing to learn how to use social media and digital engagement strategies effectively they will have a very hard time raising funds from the these generations .

    2. Dana – I think two of your points need to be re-emphasized and they are that people are indeed choosing amongst the many they used to give to and the need to nurture donors (as is true for clients in the private sector world) is truly going to determine success. Great perspectives.
      Hopefully the millions of pennies that will likely no longer be legal tender in a couple of years will help to offset some of what’s happening and buoy up the nfp sector.

      1. Funny you mentioned the pennies. For some odd reason our home has jars and jars of pennies . My wife has rolled up quite a few but was wondering last evening how many other Canadians have thousands of pennies in their home and have no idea what to do with them . Now with their imminent demise I was thinking if some smart charity came up with a campaign to dump their pennies in various locations in the city maybe in partnership with a bank etc. Could be a “big idea”

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