Charities aren’t immune to COVID-19.
“What’s at stake, without being too dramatic, is the survival of large swaths of the charitable sector,” explains Bruce McDonald, president of Imagine Canada. The social good sector has seen greater declines in revenue and more job losses than during the 2008 recession. Yet more Canadians are vulnerable, relying on charitable services.
It’s a recipe for disaster—but there are solutions.
As the pandemic ravages the economy, talks turn to bailouts for sectors deemed too important or big to fail, from the airline to the energy industries. Canada’s 170,000 registered charities have lost an estimated $10 billion and should be part of the conversation.
More than just keeping organizations afloat, government support conveys social value. What we chose to bailout represents what we believe should survive.
Charities employ more than two million Canadians and account for 8.4 per cent of the GDP; what’s more, they buoy individuals and communities in times of need. In the best of times, more than 800,000 Canadians turn to food banks, since COVID-19, they’ve seen a 20 per cent jump in demand.
We have to support the private sector and retain jobs, of course, but we also need to ensure charities and nonprofits are ready to help the most vulnerable. This crisis presents an opportunity to strengthen the social good sector.
First, there’s a systemic solution. In 2018, the Canadian government unveiled plans for a Social Finance Fund, a $755 million pool for charities and social entrepreneurs to draw from to grow and scale their impact. Now is the time to unleash that financing, especially focused on helping non-profits to launch social enterprises to earn income to support their projects.
Then, there’s a change in perspective that should guide how Canadians help charities bounce back. Typically, donors give restricted funds for specific projects. Those dollars can’t be reassigned, no matter how dire external circumstances. Charities have to be agile, though. If you believe in the organization, hopefully you believe in the charity’s capacity to spend unrestricted donations responsibility.
Consider not only giving to the mission, but also investing in the charity’s organizational ability to fulfill that mission. That means funders need to give them the space to innovate by giving unrestricted funds, supporting organization’s administration costs and allowing them to develop cash reserves.
One of the biggest changes for many charity’s budgets in this downturn are technology costs to shift programming online. But few donors want to pick up the tab for technology transformations. Today, charities need unrestricted and administration funding to be more effective and efficient.
Unlike for profits, most charities can’t secure loans and few have funds tucked away to weather economic storms. Reserves are even looked down on by funders who want their money going directly to projects. But without reserves or access to capital, we’ve left charities no room to continue programs uninterrupted during economic downturns.
I’m the first to admit that some communities and issues may be better served if organizations merged and pooled their resources. But right now we run the risk of losing hard won expertise and dedicated teams capable of driving change. We need to help charities survive.
COVID-19 didn’t create the problems in the charitable sector. It revealed them. But it also offers a chance to fix them.
Craig Kielburger is co-founder of the WE Movement, which includes WE Charity, ME to WE Social Enterprise and WE Day.