Bruce MacDonald is president & CEO of Imagine Canada.
Recent data about charitable donations are raising alarm bells within the sector. Data released from Statistics Canada this spring show that just less than five million Canadian tax filers declared making charitable donations in 2022, 0.3-per-cent fewer than a year earlier, despite the number of tax filers increasing by 3 per cent year-over-year. It was the lowest number of donors ever recorded, with just 17.1 per cent of tax filers declaring donations. For the first time since 2016, the total amount donated to charities decreased.
Charities and non-profits are an essential part of our society’s social fabric. Every day, these organizations provide much needed services and support to millions of individuals from all walks of life. They are deeply engrained in our communities and have a profound, often life-changing, impact on people’s lives. According to a new poll commissioned by Imagine Canada and supported by BMO, 90 per cent of Canadians say that charities and non-profits are important to Canada and our way of life.
At the same time, Canadians are aware of the pressure faced by non-profits. Three-quarters of those surveyed say that recent economic conditions have increased demand for charity services overall. And they are right.
Times are tough for many Canadians. The proportion of individuals who find themselves in a difficult situation, whether due to the cost of housing or food, has increased drastically in recent years. In another poll in December, 17 per cent of respondents indicated that they had personally needed to engage the services of a charity or non-profit to help with the higher cost of living. This has nearly doubled from 9 per cent only a year earlier.
Charities and non-profits are there for people. It is no surprise that more than 80 per cent of Canadians consider the services they deliver essential to the wellbeing of the country and its citizens. As a sector, we step in to help those in need.
But there are limits to what we can do. Times are tough for charities and non-profits, too. It would be an understatement to say that the financial foundation that has supported our sector is under duress.
And unfortunately, the situation is poised to get worse.
The federal budget, tabled in April, contains changes to the alternative minimum tax, or AMT. Changes to the AMT include a reduction in fiscal incentives for high-income earners making charitable donations. While we were pleased that after sustained advocacy from the non-profit sector, the government modified its initial approach, the remaining changes will create revenue problems for charities. These changes also send the wrong message. At a time when demand is historically high and donations are already down, charities need more support, not less.
When non-profits struggle, vulnerable Canadians pay the price. The population relies on us to provide essential services, and they trust us to do that work. According to Imagine Canada’s poll, seven in 10 people say they trust charities generally. Moreover, six in 10 agree that charities operate as efficiently as they can and do the most with the resources they have.
Two-thirds also agree that the federal government should be providing ongoing funding to support core administrative expenses to the sector. Canadians understand that charities have costs and that they need to fund specific aspects of their operations, such as fundraising activities, technology, insurance, volunteer recruitment, financial audits, program staff salaries, marketing and promotion.
Non-profits have costs, and to serve the population properly, they need appropriate funding. In addition to not funding the sector adequately, the federal government may be discouraging those who can afford it the most from donating to charities.