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Dwindling donors, deeper pockets

Canadians do care. But fewer are putting their money where their hearts are.

By Kevin Spurgaitis

On a typical day in any Canadian city, you’ll likely find fundraisers buttonholing passersby on behalf of charities; grocery store and pharmacy cashiers asking customers at the checkout for charitable donations of a dollar or two; activists drumming up financial support over the blogosphere in an effort to end poverty and abuses overseas; and friends and family members soliciting funds over Facebook as they prepare to walk, run or even grow their facial hair in the name of a given cause. And that's all before dinnertime. Then, you'll probably receive phone calls from canvassers, which herald an evening of slickly produced TV ads in between prime-time programs. Simply put, we are bombarded by philanthropic messaging. But is it really working?

Canadians gave generously in 2011, contributing nearly $8.5 billion to charities, according to Statistics Canada, an increase of 2.6 percent over the year before. This works out to $1,482 per tax filer, with half of those claiming donations giving more than $260. But the worrying news for charities is that proportionately fewer people are giving than in previous years. About 5.7 million Canadians — 23 percent of all tax filers — reported charitable donations on their 2011 tax returns. This is slightly down from 23.4 percent in 2010 but significantly lower than 1990 figures, when 29.5 percent contributed, about 5.5 million people. In other words, while Canada’s population is growing, the number of donors isn’t keeping pace. Charities are relying on a dwindling pool of givers, and often ones with deeper pockets: people who earn $80,000 or more a year now account for half of all donations.

“There is a changing demographic that we are seeing all across Canada — one I’ve seen during my entire life in the charitable sector,” says David Armour, the president of the United Church of Canada Foundation and the church’s director of philanthropy. “Quite simply, less people are giving more. People who grew up after the Second World War and those who grew up in the church had a strong sense of stewardship, gratitude, civics and community responsibility. But this core group that has supported the charitable sector is getting smaller [as members die].”

Tithing — the practice of giving 10 percent of one’s income to the church — goes back hundreds of years. So perhaps it’s not surprising that religious organizations still receive the largest share of donations — an estimated 46 percent — followed by health organizations (15 percent) and social services organizations (10 percent), according to a 2007 report by Community Foundations of Canada. In fact, people who are older and religiously active tend to be bigger donors overall. United Church members, in particular, give $12 million to non-religious charities and service organizations every year, according to the church’s own math.

Of course, charitable giving is influenced not only by one’s faith but by a host of other factors, from the emotional to the philosophical. Maggie Leithead, president and CEO of CharityVillage, an online resource for the non-profit sector, says that people choose their charities based on a personal connection with a cause, which could mean knowing a friend or family member who has Alzheimer’s or simply having an affinity with the environment.

“It’s important to keep an eye on the trend in the volume of donors, but we have to pay close attention to the reasons why people are not donating, too,” Leithead says. “What exactly is preventing them from giving these days?”

Studies suggest that finding money for charity is becoming harder in Canada today. Well-paying jobs continue to disappear. Middle-class incomes remain frozen. Pensions are under threat. Meanwhile, the concentration of wealth is rising, with the assets of the wealthiest 10 percent equal to the net worth of 70 percent of the population, according to Canadian Business magazine. Struggling the most to get ahead are young Canadians, a new Manulife Financial survey reveals. Nearly half of respondents between the ages of 25 and 34 say they are worse off financially than they were two years ago, and 40 percent of those aged 35 to 44 concur. Paying down debt is this group’s top financial priority, the survey shows.

The sheer number of organizations vying for funds may also overwhelm new donors. More than 85,000 charities are registered with the Canada Revenue Agency. More robust than the retail trade industry, the charitable and non-profit sector represents close to eight percent of the country’s GDP. And with 1,000 new charities registered in Canada every year, the field is most certainly crowded, observers say.

Says Leithead, “I think that the proliferation of organizations may have something to do with donors’ gifts dropping year-over-year. . . . There are more of them across more channels, so there’s more clutter in terms of their overall messaging. . . . The charitable sector is not much different from the private sector in this regard.

“I do, however, think that donors are becoming more strategic with their giving these days, and more concerned about how their donations will be put to good use. Donors are asking more questions and are looking for more accountability from organizations.”

More than half of Canadians feel that charities overspend on fundraising, according to a 2013 survey by the Muttart Foundation, which monitors the sector. Fundraising costs that exceed 35 cents on the donor dollar will lead to more scrutiny by the Canada Revenue Agency. As the CRA’s Charities Directorate, which acts as a charity watchdog, told the Toronto Star in 2007, “the vast majority” of the country’s charities are putting donations to good use. Still, news stories about fraudulent or ill-managed charities may discourage people from giving.

In-your-face fundraising tactics are also an issue for present and would-be donors. Typically, charitable organizations raise money with the help of volunteers and paid staff. But sometimes, they use third-party fundraising companies, who handle tasks like knocking on doors and stopping people on the street.

In 2007, two prominent Canadian charities, the Sick Kids Foundation and World Vision Canada, admitted to using a discredited, commission-based fundraising technique after being duped, they said, by a company working on their behalf. Basically, fundraisers only got paid if people donated. The result was a high-pressure pitch that misrepresented what the charities do and how donor money is spent.

Hoping to reverse the downward trend in donor numbers, the federal government has tried to sweeten the tax pot for givers by increasing incentives and deduction limits for gifts to charities and foundations. First-time donors can now take advantage of a “super credit” that gives them an extra 25 percent tax credit on top of the existing federal and provincial credits.

The country’s charitable sector received another boost last November, when Governor General David Johnston announced the launch of My Giving Moment, a campaign encouraging Canadians to raise their charitable contributions. Corporate partners, ranging from Tim Hortons to Target Canada, signed on to the four-year campaign, which will have a startup budget of $2 million and operate through the newly created Rideau Hall Foundation.

The idea, Johnston told the Globe and Mail, is to inspire Canadians to do more for others. “It is giving in all its manifestations, not simply money, but talent and time [as well],” he said. “Study after study has demonstrated that a spirit of giving or volunteerism . . . plays a central role in our happiness and sense of well-being. I would love to see in Canada a renewed and deeper spirit of giving in everyday culture, where helping out is second nature.”

Still, it’s no longer enough to shake a tin and count on newer patrons to support charities. For many young people, charity begins on their smartphone.

Crowd-funding is a global phenomenon providing an alternative route to giving. Facilitated by social networking sites such as Facebook, Twitter and LinkedIn, it’s an extension of what people have been doing for centuries: patronage of family, friends and the surrounding community. Such websites allow a large network of people to pool small amounts of money and other resources in support of individuals or organizations.

Despite its reputation for financing obscure or offbeat projects, crowd-funding is not just to raise money for burlesque troupes, independent films or a video of Toronto Mayor Rob Ford allegedly smoking crack cocaine. Through websites like Indiegogo and the Vancouver-based FundRazr, millions of dollars have been given to charities, too. (Incidentally, the website Gawker donated $200,000 worth of crowd-sourced funds to four Toronto charities after it learned that it could not purchase and publish the Ford video.)

Granted, the crowd-funding model is still in its early days. And not every organization using it is registered with the Canada Revenue Agency, so there is no way to guarantee where a donation is going. But it appears to be attracting people who haven’t given philanthropically before: the millennials, born between 1980 and 1995.

“We’re seeing younger Canadians really embrace this type of giving. People are motivated by seeing others support a cause,” says CanadaHelps President and CEO Marina Glogovac. Since 2000, CanadaHelps has facilitated more than $300 million in charitable donations through its own website. “By doing it online, fundraisers can share their causes with their wider social communities, and the giving process is quicker and more secure.”

Glogovac is optimistic about the changing charitable landscape. “Ultimately,” she says, “I really believe that we are hard-wired to be a part of larger communities. We want to take care of each other and help the less fortunate for the sake of the whole group. . . . And such peer-to-peer [donation drives] are a great opportunity for charities to engage with donors, and really work to change this [downward fundraising] trend.”

People say there is only so much water in the well, the United Church’s David Armour acknowledges. “But a great need forces us to dig the well deeper,” he argues. “And there is always going to be water that wasn’t there before.”

When a typhoon hit the Philippines last November, many Canadians were inspired to donate after witnessing the devastation: more than 6,000 people killed and almost two million left homeless. United Church congregants alone gave more than $1.5 million, Armour says. It was “the beauty of spontaneous generosity.”

As far as the future of charitable giving is concerned, he has faith in Canadians: “I don’t think [donors] are disillusioned, generally speaking. Whether it’s aiding the people in the Philippines, helping the homeless or supporting young Olympians who have a chance to represent their country, people will continue to give. There is, after all, that profound sense of stewardship that cuts through each and every one of us.”  

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