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June 2015 Charities in Canada as an Economic Sector Discussion Paper 

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Page 1: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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June 2015

Charities in Canada as an Economic Sector

Discussion Paper

983138983154983145983137983150 983141983149983149983141983156983156 983137983150983140 983143983141983151983142983142983154983141983161 983141983149983149983141983156983156

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Charities in Canada as an Economic Sector Discussion Paper

Brian Emmett and Geoffrey Emmett

Published by

Imagine Canada

65 St Clair Avenue East

Toronto Ontario Canada M4T 2Y3

T 416 597 2293 | F 416 597 2294

Copyright copy2015 Imagine Canada

Copy editors Marnie Grona David Lasby Cornelia Schrecker

Design and production Shanti HadioetomoFrench translation Cornelia Schrecker

All rights reserved The content of this publication may be reproduced in whole or in part by charitable

and nonprofit organizations for non-commercial use and where Imagine Canada is acknowledged as

the original publisher including year of publication publication title and original document source

(electronic publication link or website link) Otherwise no part of this report may

be reproduced without prior written agreement from Imagine Canada

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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155

Summary 4

1 Introduction 6

2 The Role and Scope of the Charitable Sector

in Canadian economy 9

21 Chariable Secor Conribuion o GDP and

Employmen is Large and has been Growing 9

22 The Chariable Secor Shares Many of he

Characerisics of he Broader Service Secorof he Economy 11

23 The Chariable Secor has Much in

Common wih he Small Business Secor 13

24 Produciviy and Innovaion in he Chariable Secor 16

25 The Chariable Secor as a Place o Work 18

3 Revenue for Charitable Organizations 21

31 Sources of Funds for Broad and Core Chariable Secors 21

32 Donaions 24

33 Governmen Funding 26

34 Membership Fees and Sales of Goods and Services 29

4 Policy Implications 30

About the Authors 32

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983155983157983149983149983137983154983161

1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada

supporing a large number of jobs and creaing

significan economic growh

2 This growh is no supply driven mdash creaed by an increase

in he number of chariies mdash bu is driven by demand As

populaion grows ages and becomes more diverse and as

economies become richer he demand for he services

ha he secor provides mdash healh social services recreaion

culure and so on-end o increase The growh of he

chariable secor is hus driven by demand and value he

secor produces

3 The secor has expanded rapidly in mos advanced indus-

rial economies and is increasingly an inegral par of he

global service and knowledge-based economy

4 Because he growh in he chariable secor in Canada is

mirrored by similar developmens in oher advanced econ-

omies i provides Canada wih an imporan and expanding

se of connecions o growing economies worldwide

5 The secor is in many ways similar o he small business

secor of he economy and makes a similar conribuion o

jobs and growh I also faces similar problems mdash for exam-

ple wih financing as well as wih invesmen in innovaion

and produciviy improvemens

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6 The jobs he secor creaes are good ones requiring skills

and educaion levels somewha higher han he Canadian

work force in general People enjoy high levels of job sais-

facion The secor is also a good firs employer for graduaes

and new Canadians

7 The rapid expansion of he secor and he jobs i has brough

wih i have been financed by a combinaion of income

earned by he chariable secor from he sale of member-

ships and services from governmen funding and from

donaions from individuals

8 Donaions from individuals have shown a endency o

weaken and governmen conribuions are in decline as

a resul of fiscal pressure

9 Canadarsquos chariies are a a financial crossroads Wih radi-

ional revenue sources declining chariies are increasingly

looking a ways o finance heir nonprofi aciviies hrough

business income mdash boh in areas direcly relaed o heir

chariable missions and in areas ha are no

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

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While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 2: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Charities in Canada as an Economic Sector Discussion Paper

Brian Emmett and Geoffrey Emmett

Published by

Imagine Canada

65 St Clair Avenue East

Toronto Ontario Canada M4T 2Y3

T 416 597 2293 | F 416 597 2294

Copyright copy2015 Imagine Canada

Copy editors Marnie Grona David Lasby Cornelia Schrecker

Design and production Shanti HadioetomoFrench translation Cornelia Schrecker

All rights reserved The content of this publication may be reproduced in whole or in part by charitable

and nonprofit organizations for non-commercial use and where Imagine Canada is acknowledged as

the original publisher including year of publication publication title and original document source

(electronic publication link or website link) Otherwise no part of this report may

be reproduced without prior written agreement from Imagine Canada

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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155

Summary 4

1 Introduction 6

2 The Role and Scope of the Charitable Sector

in Canadian economy 9

21 Chariable Secor Conribuion o GDP and

Employmen is Large and has been Growing 9

22 The Chariable Secor Shares Many of he

Characerisics of he Broader Service Secorof he Economy 11

23 The Chariable Secor has Much in

Common wih he Small Business Secor 13

24 Produciviy and Innovaion in he Chariable Secor 16

25 The Chariable Secor as a Place o Work 18

3 Revenue for Charitable Organizations 21

31 Sources of Funds for Broad and Core Chariable Secors 21

32 Donaions 24

33 Governmen Funding 26

34 Membership Fees and Sales of Goods and Services 29

4 Policy Implications 30

About the Authors 32

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983155983157983149983149983137983154983161

1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada

supporing a large number of jobs and creaing

significan economic growh

2 This growh is no supply driven mdash creaed by an increase

in he number of chariies mdash bu is driven by demand As

populaion grows ages and becomes more diverse and as

economies become richer he demand for he services

ha he secor provides mdash healh social services recreaion

culure and so on-end o increase The growh of he

chariable secor is hus driven by demand and value he

secor produces

3 The secor has expanded rapidly in mos advanced indus-

rial economies and is increasingly an inegral par of he

global service and knowledge-based economy

4 Because he growh in he chariable secor in Canada is

mirrored by similar developmens in oher advanced econ-

omies i provides Canada wih an imporan and expanding

se of connecions o growing economies worldwide

5 The secor is in many ways similar o he small business

secor of he economy and makes a similar conribuion o

jobs and growh I also faces similar problems mdash for exam-

ple wih financing as well as wih invesmen in innovaion

and produciviy improvemens

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6 The jobs he secor creaes are good ones requiring skills

and educaion levels somewha higher han he Canadian

work force in general People enjoy high levels of job sais-

facion The secor is also a good firs employer for graduaes

and new Canadians

7 The rapid expansion of he secor and he jobs i has brough

wih i have been financed by a combinaion of income

earned by he chariable secor from he sale of member-

ships and services from governmen funding and from

donaions from individuals

8 Donaions from individuals have shown a endency o

weaken and governmen conribuions are in decline as

a resul of fiscal pressure

9 Canadarsquos chariies are a a financial crossroads Wih radi-

ional revenue sources declining chariies are increasingly

looking a ways o finance heir nonprofi aciviies hrough

business income mdash boh in areas direcly relaed o heir

chariable missions and in areas ha are no

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 732- 7 -

measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 832- 8 -

bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 932- 9 -

983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1032- 10 -

Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -

The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -

The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -

ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1832- 18 -

As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 3: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155

Summary 4

1 Introduction 6

2 The Role and Scope of the Charitable Sector

in Canadian economy 9

21 Chariable Secor Conribuion o GDP and

Employmen is Large and has been Growing 9

22 The Chariable Secor Shares Many of he

Characerisics of he Broader Service Secorof he Economy 11

23 The Chariable Secor has Much in

Common wih he Small Business Secor 13

24 Produciviy and Innovaion in he Chariable Secor 16

25 The Chariable Secor as a Place o Work 18

3 Revenue for Charitable Organizations 21

31 Sources of Funds for Broad and Core Chariable Secors 21

32 Donaions 24

33 Governmen Funding 26

34 Membership Fees and Sales of Goods and Services 29

4 Policy Implications 30

About the Authors 32

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983155983157983149983149983137983154983161

1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada

supporing a large number of jobs and creaing

significan economic growh

2 This growh is no supply driven mdash creaed by an increase

in he number of chariies mdash bu is driven by demand As

populaion grows ages and becomes more diverse and as

economies become richer he demand for he services

ha he secor provides mdash healh social services recreaion

culure and so on-end o increase The growh of he

chariable secor is hus driven by demand and value he

secor produces

3 The secor has expanded rapidly in mos advanced indus-

rial economies and is increasingly an inegral par of he

global service and knowledge-based economy

4 Because he growh in he chariable secor in Canada is

mirrored by similar developmens in oher advanced econ-

omies i provides Canada wih an imporan and expanding

se of connecions o growing economies worldwide

5 The secor is in many ways similar o he small business

secor of he economy and makes a similar conribuion o

jobs and growh I also faces similar problems mdash for exam-

ple wih financing as well as wih invesmen in innovaion

and produciviy improvemens

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6 The jobs he secor creaes are good ones requiring skills

and educaion levels somewha higher han he Canadian

work force in general People enjoy high levels of job sais-

facion The secor is also a good firs employer for graduaes

and new Canadians

7 The rapid expansion of he secor and he jobs i has brough

wih i have been financed by a combinaion of income

earned by he chariable secor from he sale of member-

ships and services from governmen funding and from

donaions from individuals

8 Donaions from individuals have shown a endency o

weaken and governmen conribuions are in decline as

a resul of fiscal pressure

9 Canadarsquos chariies are a a financial crossroads Wih radi-

ional revenue sources declining chariies are increasingly

looking a ways o finance heir nonprofi aciviies hrough

business income mdash boh in areas direcly relaed o heir

chariable missions and in areas ha are no

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1032- 10 -

Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -

The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -

The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1432- 14 -

Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -

ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1732- 17 -

businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1832- 18 -

As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 4: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983155983157983149983149983137983154983161

1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada

supporing a large number of jobs and creaing

significan economic growh

2 This growh is no supply driven mdash creaed by an increase

in he number of chariies mdash bu is driven by demand As

populaion grows ages and becomes more diverse and as

economies become richer he demand for he services

ha he secor provides mdash healh social services recreaion

culure and so on-end o increase The growh of he

chariable secor is hus driven by demand and value he

secor produces

3 The secor has expanded rapidly in mos advanced indus-

rial economies and is increasingly an inegral par of he

global service and knowledge-based economy

4 Because he growh in he chariable secor in Canada is

mirrored by similar developmens in oher advanced econ-

omies i provides Canada wih an imporan and expanding

se of connecions o growing economies worldwide

5 The secor is in many ways similar o he small business

secor of he economy and makes a similar conribuion o

jobs and growh I also faces similar problems mdash for exam-

ple wih financing as well as wih invesmen in innovaion

and produciviy improvemens

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6 The jobs he secor creaes are good ones requiring skills

and educaion levels somewha higher han he Canadian

work force in general People enjoy high levels of job sais-

facion The secor is also a good firs employer for graduaes

and new Canadians

7 The rapid expansion of he secor and he jobs i has brough

wih i have been financed by a combinaion of income

earned by he chariable secor from he sale of member-

ships and services from governmen funding and from

donaions from individuals

8 Donaions from individuals have shown a endency o

weaken and governmen conribuions are in decline as

a resul of fiscal pressure

9 Canadarsquos chariies are a a financial crossroads Wih radi-

ional revenue sources declining chariies are increasingly

looking a ways o finance heir nonprofi aciviies hrough

business income mdash boh in areas direcly relaed o heir

chariable missions and in areas ha are no

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -

The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1432- 14 -

Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -

ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1732- 17 -

businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1832- 18 -

As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 5: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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6 The jobs he secor creaes are good ones requiring skills

and educaion levels somewha higher han he Canadian

work force in general People enjoy high levels of job sais-

facion The secor is also a good firs employer for graduaes

and new Canadians

7 The rapid expansion of he secor and he jobs i has brough

wih i have been financed by a combinaion of income

earned by he chariable secor from he sale of member-

ships and services from governmen funding and from

donaions from individuals

8 Donaions from individuals have shown a endency o

weaken and governmen conribuions are in decline as

a resul of fiscal pressure

9 Canadarsquos chariies are a a financial crossroads Wih radi-

ional revenue sources declining chariies are increasingly

looking a ways o finance heir nonprofi aciviies hrough

business income mdash boh in areas direcly relaed o heir

chariable missions and in areas ha are no

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

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While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 6: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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9831459831509831569831549831519831409831579831399831569831459831519831501

Chariable organizaions are no like oher firms inhe economy

The charity sector will never be like other sectors In-

deed its special role means we donrsquot want it to be

It is driven by a sense of mission and passion mdash few are

involved to maximize profits improve share prices or

earn as much as they can 1

Neverheless i is useful from an economic poin of view o

regard chariies as being in many ways analogous o firms

Each chariy uses inpus mdash labour (voluneers and paid saff)

capial maerial and energy mdash o produce oupus in pursui of

is goals and objecives Operaions are paid from a number of

sources including memberships governmen grans and con-

ribuions and donaions from corporaions and individuals

The secor as a whole consiss of a large number of generally

quie small eniies which provide valuable bu ofen diffi-

cul-o-measure services from povery alleviaion o culure

and recreaion

The comparison wih privae secor firms is useful bu no ex-

ac mdash chariies pose special problems from an economic poin

of view Chariies are mission-oriened ofen saffed largely or

in par by commied voluneers and do no make a profi by

definiion In he absence of profi and share value (he marke

economyrsquos effecive way of comparing apples and oranges) i

is difficul for economiss o develop a way of measuring he

performance of one chariy compared o anoher or of chari-

ies compared o oher valuable economic aciviies In addi-

ion he services provided by chariies end o be difficul o

983089 How do we Drive Producivi

and Innovaion in he Chari

Secor Dan Corry Lecure

hosed by he Royal Sociey

for he encouragemen of

he Ars Manufacures and

Commerce 983096 May 983090983088983089983092

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 932- 9 -

983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1032- 10 -

Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -

The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -

The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1432- 14 -

Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -

ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1732- 17 -

businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1832- 18 -

As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 7: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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measure in dollar erms mdash povery reducion improvemens in

lieracy reducions in recidivism he provision of ars culure

and recreaion and myriad oher services are highly valued

bu ofen inangible in naure This makes he oupu of chari-

ies difficul o measure and o compare o oher marke-based

aciviies such as providing haircus or producing auos for

example Key indicaors of economic performance such as

produciviy and innovaion can also be elusive2

Bu he chariable secor in Canada is simply oo large and

significan NOT o be looked a hrough he same lens as oher

economic acors Indeed he secor is iself seeking o improve

is abiliy o speak he language of economics and posiion

iself appropriaely as a source of jobs innovaion and growh

in he modern Canadian economy 3 Taking an economic per-

specive opens up a wide range of quesions of fac and analy-

sis mdash wha is he srucure of he secor Is i labour or capial

inensive Is i a source of (good) jobs and growh How does i

fi ino broader developmens in he global knowledge econo-

my Where does is revenue come from and wha does his say

abou he oulook for he secor

The purpose of his paper is o ake a balanced look a he

Canadian chariable secor from an economic poin of view

aking he same approach ha an analys looking a any secor

would ake mdash be i semi-conducors or naural resources I will

aemp o presen a general picure of Canadian chariies as an

economic secor using exising daa and analyses

The second secion of he paper focuses on srucure

bull he role and scope of he chariable secor in he economy

as compared o oher ypes of economic aciviy

bull he chariable secor as a service secor

bull he chariable secor as a small business secor

983090 Governmen shares many

of hese elemens and

poses some of he same

challenges o economiss

983091 The appoinmen of a Chief

Economis by Imagine

Canada is a good example

of his

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 8: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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bull he chariable secor as a source of innovaion and

produciviy growh in he economy and

bull he chariable secor as an employer of saff and voluneers

The hird secion urns o sources of revenue and he financial

susainabiliy of he secor Secion four hen lays ou some

preliminary and broad policy implicaions Subsequen papers

are planned o look a wo specific areas he policy landscape

facing chariies going forward and he growing ineres in

social impac invesing

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 932- 9 -

983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1032- 10 -

Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -

The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 9: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161

2

There has been rapid growh in organized volunary aciviy

in boh developed and developing economies over he pas few

decades Because of his ldquoassociaional growhrdquo he secorrsquos

share of employmen and income is growing boh here in

Canada and elsewhere in he world4 This growh has naurally

caugh he aenion of economiss and policy makers seeking

o undersand he role of he secor in boh an economic andsocial conex

A Johns Hopkins Universiy sudy of eigh differen counries

shows worldwide growh of he nonprofi secor oupacing he

growh of GDP in each of eigh developed economies wih he

excepion of he Czech Republic In Canada he nonprofi secor

is growing a 64 annually compared o 56 for GDP

21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing

FIGURE 983089

Average annual

growth Nonprofit

vs aggregate GDP

Source

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

983092 The Rise of he Nonprofi

secor Leser Salamon

Foreign Affairs July 983089983097983097983092

-6

-4

-2

0

2

4

6

8

10

12

8-CountryAverage

Ca na da Jap an U ni te d St at es Cz ec hRepublic

Be lg iu m T hai lan d N or way Au st ral ia

Nonprofit GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 10: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Today in many counries (including Canada) he chariable and

nonprofi secor is a major acor ouweighing he conribuions

o income and employmen of many of he secors people gen-

erally hink of as driving economic aciviy and employmen

In 2003 he secor employed jus over 2 million people Of

hose people approximaely 13 million were employed in he

core 5 chariable secor 6 These figures accouned for abou 13

and 85 of he oal workforce in Canada respecively

The oal chariable secor conribued 81 of GDP in 2008

while he core chariable secor conribued 33 ha same

year7 When compared o oher imporan secors of he eco-

nomy he nonprofi secor employs nearly as many people

as he manufacuring secor in Canada and more people han

any one of consrucion agriculure foresry and he uiliies

FIGURE 983090

Employment Share of

Different Sectors 983090983088983088983091

Source

National Survey of

Nonprofit and VoluntaryOrganizations Statistics

Canada 983090983088983088983091

CANSIM table 983090983096983090ndash983088983088983088983096

Statistics Canada

983093 Where i is useful o do so

his paper disinguishes

beween he core chariabl

secor and he broader

chariable secor The broa

secor includes universiie

and hospials he core

secor does no In mos

discussions of he secor in

he press and he academic

lieraure he broader

definiion of he secor is

more frequenly used

983094 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983095 CANSIM ables 983091983096983096ndash983088983088983088983090

and 983091983096983088ndash983088983088983094983092 Saisics

Canada

0

2

4

6

8

10

12

14

16

Manufacturing CharitableSector

CoreCharitable

Sector

Co nstru ct io n A gr icu lture Fo restryFishing Mining

QuarryingOil and Gas

Utilities

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -

While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -

The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -

The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 11: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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While chariies operae in a number of fields some of

which are goods producing he chariable secor is largely

a service secor8

FIGURE 983091

GDP contribution

of different sectors

(including volunteer

contributions) 983090983088983088983096

Source

Satellite Account of Non-

profit Institutions and

Volunteering Statistics

Canada 983090983088983088983096

CANSIM table 983091983095983097ndash983088983088983091983089

Statistics Canada

State of Global

Civil Society and

Volunteering

Johns Hopkins

University 983090983088983089983091

22 The Charitable Sector Shares Many of the

Characteristics of the Broader Service Sector

of the Economy

FIGURE 983092

Contribution of Core

Nonprofit Sector by

Area of Service 983090983088983088983096

Source

CANSIM table 983091983096983096ndash983088983088983088983090

Statistics Canada

983096 The service secor broadly

encompasses hose

indusries ha do no

produce angible oupu

ransporaion and

sorage communicaions

wholesale and reail rade

1047297nance insurance and

real esae (FIRE) and

communiy business and

personal serv ices (CBPS)

Lagging Produc iviy

Growh in he Service

Secor Mismeasuremen

Mismanagemen or

Misinformaion Dinah

Maclean Research

Deparmen Bankof Canada

Manufacturing EnergySector

CharitableSector

Oil and Gas CoreCharitable

Sector

AgricultureForestry

Fishing and

Hunting

Utilities0

2

4

6

8

10

12

14

0

5

10

15

20

25

C u l t u

r e a n

d

R e c r e

a t i o n

O t h e

r E d u

c a t i o

n

a n d R

e s e a

r c h

O t h e

r H e a

l t h

S o c i a

l S e r v

i c e s

D e v e

l o p m e

n t

a n d H

o u s i n

g

F u n d

r a i s i n

g G r

a n t m

a k i n g

a n d V

o l u n t a

r i s m

R e l i g

i o n

B u s i n

e s s P

r o f e s

s i o n a

l

A s s o

c i a t i o

n s a n

d U n i o

n s O t h e

r

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 12: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The service secor is he fases growing componen of ad-

vanced indusrial economies The growh of he chariable

secor reflecs he growh in he service secor in general In

Canada for example he share of goods-producing aciviy in

he economy has fallen from 35 in 1997 o 30 in 2013 mdash he

coninuaion of a rend o a more service-dominaed economy

which has been observed since abou 1960

Daa on employmen published by Saisics Canada reveals

ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians

employed in he chariable secor) Because mos chariies fo-

cus on service delivery hey end o be quie labour inensive 9

Many service industries deliver personalized serviceshellip

on average about one third of operating expenses in

the service industry goes toward paying salaries and

wages The share is even higher in industries reliant on

highly trained employees wages account for 54 in

the accounting and book keeping industries and 47 in

engineering services10

Service indusries end also o employ more women han men

In 2014 55 of employees in service indusries were women

FIGURE 983093

GDP Contribution of

Goods-producing

and Service Sectors

983089983097983097983095ndash983090983088983089983091

Source

Statistics Canada

CANSIM table 983091983095983097-983088983088983091983088

983097 The degree of labour

inensiy is ypically

measured in proporion

o he amoun of capial

required o produce he

goodsservices he higher

he proporion of labour

coss required he more

labour inensive he

business htpwwwinvesopediacomermsl

laborinensiveasp

983089983088 Canada Yearbook 983090983088983088983094

Saisics Canada

983090983088983088983094 htpwww983092983089

sacangcca983090983088983088983094983088983089983094983091

ceb983088983089983094983091_983088983088983088-enghm Thi

places he amoun char iie

wih heir highly educaed

work forces spend on

wages and salaries in an

appropriae conex

0

10

20

30

40

50

60

70

80

20132012201120102009200820072006200520042003200220012000199919981997

Goods-producing

Service

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 13: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The healh care and social assisance indusries employ an

especially large number wih 18 million women occupying

82 of jobs in he field11

The labour inensiy of he secor has led o concerns abou

produciviy growh and he rise of he knowledge economy

which will be explored in a subsequen secion

Chariies are small businesses albei wih some special

characerisics Boh he chariable secor and he small busi-

ness secor consis of a large number of small eniies Daa

from he NSNVO12

shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed

no paid saff Only 2 had paid saff of 100 or more

Irsquos a similar sory in he small business secor which is dom-

inaed by a large number of small firms13 he vas majoriy of

which (98) employ fewer han 100 paid saff Less han 2

employ 100 people or more

23 The Charitable Sector has Much in

Common with the Small Business Sector

FIGURE 983094

Charities by number

of employees 983090983088983088983091

Source

National Surveyof Nonprofit and

Voluntary Organizations

Statistics Canada 983090983088983088983091

983089983090 Naional Survey of Nonprofi

and Volunary Organizaion

Saisics Canada 983090983088983088983091

983089983089 Saisics Canada CANSIM

able 983090983096983090ndash983088983088983088983096

983089983091 Key Small Business Sai sic

Indusry Canada Augus

983090983088983089983091 htpwwwicgcca

eicsie983088983094983089nsfeng983088983090983096983088983092

hml

100+25 to 99

54

26

8

6

4 2

None

1 to 4

5 to 9

10 to 24

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1432- 14 -

Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1532

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -

ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1832- 18 -

As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 14: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Boh secors are characerized by significan risks o success

and coninuiy Barriers o enry are relaively low and barriers

o success are relaively high Therefore here is a significan

rae of enry and exi in boh he chariable and small business

secors for a variey of reasons including bankrupcy illness

reiremen or he fulfilmen of mission

FIGURE 983095

Businesses in Canada

by size 983090983088983089983090

Source

Key Small Business

Saisics Industry Canada

FIGURE 983096

Net business entrants

983090983088983088983088ndash983090983088983088983096

Source

Firm dynamics Firm

Enry and Exi Statistics

Canada 983090983088983088983088ndash983090983088983088983096

Small (1ndash99)

Medium (100ndash499) Large (500+)

9822

164 014

0

5000

10000

15000

20000

25000

30000

200820072006200520042003200220012000

Goods-producing

Service

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 15: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 16: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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ldquoProductivity isnrsquot everything but in the long run it is

almost everything A countryrsquos ability to improve its

standard of living over time depends almost entirely

on its ability to raise its output per workerrdquo

Job creaion and economic growh remain core objecives for

governmens and ldquohe fases way o boos produciviy and

economic growh is o innovaerdquo 15 I is ineviable hen ha

produciviy issues will generae a significan amoun of policy

and research aenion Wih he absolue size of he chariable

secor and is rapid growh quesions abou produciviy and

innovaion are in many ways difficul o answer

The chariable secor is essenially a service secor and

Over the past three decades the rapid growth of the

economyrsquos service sector and the increasing interest

in the sector on the part of both scholars and policy

makers have helped give currency to three perceptions

about service industries The perceptions are that

(1) the service sector is composed entirely of industries

that have very low rates of productivity growth

(2) service industries are highly labor intensive and low

in capital intensity and (3) shifts in employment to the

service producing sector have been a major reason for

the slowdown in productivity growth over the past

10 to 15 years16

Funding for innovaion is difficul Boh he small business

secor and he chariable secor are dominaed by small firms

mdash and he availabiliy of resources o spend on research and

developmen (RampD) is ied o he size of businesses Large

24 Productivity and Innovation in the Charitable Sector

mdash Paul Krugman The Age of Diminished Expectations (1994)

983089983093 Indusr ial Research and

Developmen Inenions

Saisics Canada 983090983088983089983090

and calculaions by

Indusry Canada

983089983094

The service-producingsecor some common

percepions reviewed Rona

E Kuscher and Jerome

A Mark Monhly Labor

Review April 983089983097983096983091

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1932- 19 -

FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 17: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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businesses accoun for fewer han 02 all employer business-

es bu accouned for over 50 of all RampD expendiures in 2009

(Figure 10) Small businesses make up 98 of all employer

businesses on he oher hand bu accouned for only 31 of

oal RampD expendiures17

In addiion chariies may exhibi oher characerisics ha

make innovaion difficul

Changes in the market and new opportunities mdash often

the result of new technologies mdash drive economic pro-

gress Social organizations are slower to adapt since

their revenues are less sensitive to changes in demand

need and performance and their market is often seen

to be their funders rather than the constituencies or

causes they serve Funding models are based on avoid-

ing risk rather than experimenting with new approaches

that might increase effectiveness Fresh ideas emerge

through the creation of new organizations but they

enter a crowded marketplace and are often unable to

demonstrate convincingly their superior efficacy For

established organizations technological innovation is

frequently viewed more as a problem than as a source

of creativity18

FIGURE 983089983088

Percentage of total

expenditures on RampD

by firm size 983090983088983088983097

Source

Industrial Research and

Development Intentions

Statistics Canada 983090983088983089983090

and calculations by

Industry Canada

983089983095 Ibid

983089983096 On No Leting a Crisis Go

o Wase Tim Brodhead

The Philanhropis

Vol 983090983091 No 983089 983090983088983089983088

Small (1ndash99)

Medium(100ndash499)

Large (500+)

31

18

51

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 18: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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As chariies posiion hemselves as an imporan economic secor

as a source of jobs and growh o be encouraged and suppored

by governmen quesions of innovaion and produciviy will

become more and more pressing

In many ways chariies are seen as good places o work where

well moivaed and well educaed people wih a sense of mis-

sion of waning make a difference can find meaningful and

fulfilling employmen Beyond his hough here are a hos

of more boom-line pracical quesions abou he desirabiliy

of working in he secor How do wages and benefis in he

chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos

markeable skill se producing a resume ha is aracive in

he broader economy Is HR capaciy in he secor adequae o

arac and mainain he necessary work force

The work force in he chariable secor is well educaed relaive

o he general levels of educaion in he work force wih more

han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or

graduae degree

25 The Charitable Sector as a Place to Work

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 19: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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FIGURE 983089983089

Education level of

nonprofit employees

Source

Towards a Labour Force

Sraegy for CanadarsquosVolunary and Non-profi

Secor HR Council for

the Voluntary and

Non-profit Sector 983090983088983088983097

While he chariable labour force is well educaed and

herefore mobile hisorically he secor pays less han mar-

ke wages o mos of is full-ime employees The someimes

dramaic gap is said o be jusified by he psychic or nonndashmon-

eary rewards afforded by he work or by he high level of mo-

ivaion and commimen demonsraed by many who work in

he secor In a recen survey by he HR Council for he Volun-

ary amp Nonprofi Secor an impressive 96 of respondens said

hey were somewha or very commied o heir organizaion19

Organizaions are beginning neverheless o experience diffi-

culy aracing and reaining saff The lack of job securiy due

o irregular and shor-erm projec funding limied opporuni-

ies for advancemen wihin organizaions long hours (usually

unpaid) and someimes poor personnel pracices are cied

as reasons for his difficuly Surveys of younger employees

and job seekers also sugges ha expecaions are changing

enrans ino he labour marke wan a beer balance beween

work and personal lives which is a odds wih he ehos of

selfless service ha permeaes many chariies In he same HR

Council Survey nearly half of employers who ried o recrui

saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo

983089983097 Toward a Labour Force

Sraegy for Canadarsquos

Volunary and Nonprofi

Secor HR Council for he

Volunary and Nonprofi

Secor 983090983088983088983097

Some Post-secondary

College Diploma

Undergraduate DegreePost-graduateDegree

Grade Schoolor some High School

High School

311

263

188

141

85

12

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 20: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -

Aenion o HR managemen can be under-resourced in boh

he small business and he chariable secor

Research conducted recently by Framework Founda-

tion reveals that of 197 courses offered by Canadian

post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)

address such human resource issues as engaging

training and managing staff and volunteers On the

other hand one-third deal with fundraising and financial

management More attention needs to be directed to

how the community sector engages and trains a new

generation of volunteers who have different and more

demanding expectations but also much to contribute

20

FIGURE 983089983090

Professional

development

opportunities for

nonprofit staff

Source

Towards a Labour Force

Sraegy for Canadarsquos

Volunary and Non-profi

Secor HR Council for

the Voluntary and

Nonprofit Sector 983090983088983088983097

983090983088 Brodhead opci

0

10

20

30

40

50

60

In-houseTraining

Paid TimeOff for

ProfessionalDevelopment

Paymentof Some

All Fees

In-houseCareer

Counselling

In-houseMentoring

JobShadowing

UnpaidTime

Off forSelf-Study

Other None

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 21: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -

983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553

Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure

susainabiliy and o inves o increase produciviy Unlike

mos for-profi firms hough chariies face a disconnec

beween sources of revenues and cusomers or cliens In he

privae secor i is cusomers who judge wheher producs or

services are adequae and heir decisions deermine wheher a

firm succeeds or fails There is lile or no conflic beween he

aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable

secor i is funders who provide he revenue while cliens

are somewha passive beneficiaries of funding decisions by

governmens and donors

Chariies and nonprofis are funded by a variey of sources

Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-

grams and prioriies and receive donaions from individual

households and businesses

For he broadly defined chariable secor governmen ransfers

are he mos imporan source of revenue mdash reflecing he role

of universiies and hospials in achieving governmen objec-

ives in healh care and educaion

31 Sources of Funds for Broad and Core Charitable Sectors

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 22: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -

The breakdown of he various sources shows a high degree

of sabiliy over ime wih some indicaion ha he role of

governmen is declining slighly which is also rue of inves-

men income (reflecing he recession afer 2008) and ha

here is some sofness in donaions from individuals The core

chariable secor is much more member- and donor-driven

while governmen ransfers play a sill significan bu less

prominen role

FIGURE 983089983091

Sources of revenue

for broad charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983092

Sources of revenue for

the broad charitable

sector 983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

32

78

7121

51

Sales of Goods amp Services

MembershipFees

Current Transfers fromHouseholds amp Businesses

Current Transfersfrom Governments

Investment Income

0

10

20

30

40

50

60

200820072006200520042003200220012000199919981997

Sales of goods

Investment income

Membership fees

Current transferfrom governments

Current transfer fromhousehold amp businesses

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 23: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -

Wih respec o rends he decline in he role of governmen

is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also

more eviden

FIGURE 983089983093

Sources of revenue

for the core charitable

sector 983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

FIGURE 983089983094

Core nonprofit revenues

983089983097983097983095ndash983090983088983088983096

Source

Statistics Canada

CANSIM table 983091983096983096ndash983088983088983088983089

133

209

171

36

451

Sales of Goods amp Services

Membership Fees

Current Transfersfrom Households amp

Businesses

Current Transfersfrom Governments

Investment Income

200820072006200520042003200220012000199919981997

Sales of goodsamp services

Investment income

Membership fees

Current transferfrom governments

Current transferfrom householdamp businesses

0

5

10

15

20

25

30

35

40

45

50

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 24: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -

Donaions accoun for 13 of all income for core chariies and

nonprofis bu donaions have a value o chariies ha is ou of

proporion o heir relaive size21

Donations may only contribute some 11 of charitiesrsquo

revenue but their value lies in their being (mostly) unre-

stricted unlike most of the money provided by govern-

ments foundations and corporate donors This source

therefore underwrites much of the operational costs of

organizations in the sector 22

Chariies receive donaions from boh corporaions and house-

holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-

ions by Canadians o chariies have generally racked GDP

wih donaions as a percenage of GDP seady a roughly jus

under 05 of GDP However since 2007 he level of donaions

has fallen noiceably o 0439 of GDP This amouns o a

subsanial proporion of wha Canadians give each year

I is emping o aribue his decrease o recession and eco-

nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih

32 Donations

FIGURE 983089983095

Donations as a

percentage of GDP

983089983097983097983095ndash983090983088983089983090

(minus tax shelters)

Source

CANSIM tables 983089983089983089ndash983088983088983090

and 983091983096983088ndash983088983088983094983092 Statistics

Canada Charities

Directorate Canada

Revenue Agency

983090983090 Broadhead op ci

983090983089 CANSIM 983091983096983096ndash983088983088983088983089

Saisics Canada 983090983088983088983096

040

042

044

046

048

050

052

054

056

058

060

2012201120102009200820072006200520042003200220012000199919981997

Percentage of GDP

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 25: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -

GDP increasing slowly bu seadily over his period This

means changes in he underlying behaviour of donors mus

be examined

More roubling he percenage of people who file axes and

who claim chariable donaions is also on he decline The

percenage of people who file axes and claimed chariable

donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu

fewer members of boh sexes are claiming donaions

The populaion of hose who end o donae he mos is geing

older From 1997 o 2012 he percenage of donors beween

he ages of 55 and 64 increased by 7 from 14 o 21 The

percenage of donors above he age of 65 also increased by

3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o

44 decreased by 8 while he percenage of donors aged 25 o

34 decreased by 2

FIGURE 983089983096

Percentage of taxfilers

claiming donations

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

16

18

20

22

24

26

28

30

32

2012201120102009200820072006200520042003200220012000199919981997

Male

Total

Female

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 26: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -

These rends sugges ha chariies are failing o arac young-

er donors who are enering he workforce for he firs ime

There are a number of possible explanaions for his phe-

nomenon Religious insiuions play a very large role in he

chariable secor and place a significan emphasis on chariy

bu Canadians are becoming increasingly less religious Young

professionals may also feel ha chariies are no doing a good

job and are failing o innovae If chariies fail o innovae

people migh perceive hem as old fashioned and ineffecive

which would make hem less likely o donae I is also possible

ha people feel ha he ax reamen hey would receive for

donaing is no a sufficien incenive

Despie he poenial issues wih donaions chariies sill

receive he majoriy of heir funds from he governmen

Governmen funding represens a subsanial porion of he in-

come for chariies in he form of grans and reimbursemen for

delivering services Of he oal funding for he core chariable

secor for example 15 comes from provincial and erriorial

governmens 55 comes from he federal governmen and

08 comes from municipal governmens23

FIGURE 983089983097

Percentage of

donors by age group

from 983089983097983097983095 to 983090983088983089983090

Source

Statistics Canada

CANSIM table 983089983089983089ndash983088983088983088983090

33 Government Funding

983090983091 CANSIM able 983091983096983096-983088983088983088983089

Saisics Canada 983090983088983088983096

0

5

10

15

20

25

30

2012201120102009200820072006200520042003200220012000199919981997

0 to 24

25 to 34

35 to 44

45 to 54

55 to 64

65+

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 27: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -

The role of he federal governmen is saisically small relaive

o he provinces reflecing he predominan role of provincial

governmen in healh educaion and social services Bu he

role of he federal governmen canno be underesimaed mdash i

is he level of governmen which deermines he ax reamen

of he donaions under he Income Tax Ac for example I is

also he level of governmen responsible for overall economic

policy affecing he growh of GDP and employmen and here-

fore of he capaciy of people o donae I is also he funder of

huge ransfer programs such as unemploymen insurance old

age securiy and pensions The generosiy or lack of i of hese

broad social programs goes a long way o deermining he role

chariies need o play in meeing he needs of sociey

The federal governmen is becoming relaively smaller in

economic erms This is in par relaed o he goal of he

presen governmen o reduce he role of governmen in he

lives of Canadians I is also par of a longer-erm rend as

governmens world-wide have encounered fiscal pressures

In fac he size of he federal governmen has been declining

seadily since 1997 as successive governmens have sruggled

wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o

2009 wih an upick in 2010 o reflec a shor-erm increase in

expendiure in response o recession

FIGURE 983090983088

Government expenditure

as a percentage of GDP

from 983089983097983097983095 to 983090983088983088983097

SourceStatistics Canada

CANSIM tables 983091983096983093-983088983088983088983089

and 983091983096983088-983088983088983094983092

0

5

10

15

20

25

2009200820072006200520042003200220012000199919981997

Local Governments

Federal Government

Provincial amp Territorial

Government

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 28: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -

One response o reduced federal expendiure can be a move by

provincial and municipal governmens o ake up he resuling

fiscal room and expand heir own expendiures This in gene-

ral has no occurred in recen years Provincial and municipal

spending has remained relaively sable as a percenage of GDP

as provinces and municipaliies have had o cope wih heir

own fiscal pressures

An addiional concern is he make-up of expendiures as he

federal governmen has become smaller has spending on

social programs become relaively smaller The answer appears

o be no mdash he federal governmen has chosen o keep hings

like ransfers o individuals relaively sable as a percenage of

federal expendiure However since overall federal spending

is declining in relaion o GDP so is overall federal spending on

social programs

The picure his pains is one of a Canada which is aking on

a differen characer one in which governmen will do less and

chariies will need o do more This rend isnrsquo likely o reverse

iself soon mdash he curren conservaive governmen is expeced

o lower axes in he near fuure meaning ha governmen

FIGURE 983090983089

Federal social

services spending as

a percentage of GDP and

as a percentage of total

federal spending

Source

Statistics Canada

CANSIM tables 983091983096983088ndash983088983088983094983092

and 983091983096983093-983088983088983088983089

GDP

Federal Expenditures

0

5

10

15

20

25

30

35

40

45

2009200820072006200520042003200220012000199919981997

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 29: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -

spending will likely coninue o shrink making i relaively

difficul for fuure parliamens o increase spending and he

role of governmen

While facts speak to the robustness of Canadarsquos non-

profit sector and its integral role in Canadian society

more organizations are facing increasing sustainability

challenges in the face of uncertain revenues and esca-

lating service demands driven by demographic changes

and exacerbated by the recent recession 24

The chariable secor has enjoyed rapid growh over he pas

couple of decades or so oupacing he rae of growh of he

economy and of he service secor as a whole Bu growh and

he jobs i generaes can only be susained if here are reve-

nue sreams o suppor i Chariies rely on he hree pillars

of governmen funding philanhropy and earned income Of

hese boh philanhropy in he form of donaions from indi-

viduals and governmen funding are under hrea because of

fundamenal changes in demographics culure and he ongo-

ing fiscal pressures encounered by governmens worldndashwide

While earned income aciviies have done well increasing as a

percenage of chariable revenues over he las few years i is

quesionable wheher hey can be expeced o fill a gap which

is emerging and which will grow as governmens cu back

on social spending This is especially rue in Canada where

chariiesrsquo effors o increase earned income are consrained by

legislaive and regulaory barriers

34 Membership Fees and Sales of Goods and Services

983090983092 Srenghening he Third Pill

of he Canadian Union An

Inergovernmenal Agenda

for Canadarsquos Chariies

and Nonprofis ElizabehMulholland Mathew

Mendelsohn Negin

Shamshir Mowa Cenre

for Policy Innovaion 983090983088983089983089

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 30: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -

983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554

While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-

ribuion o he Canadian economy are clear Canadarsquos chariies

and nonprofis are a large and growing par of he Canadian

economy They generae jobs and growh and provide valuable

services ha are more and more in demand In his respec

Canadarsquos economy is changing and keeping pace wih develop-

mens in oher advanced indusrial economies The growh of

he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury

Firs his means ha effecive overall managemen of he

economy (he fiscal framework moneary policy indusrial

policy) should increasingly be sensiive o he needs of he

chariable and nonprofi secor as well as secors more radi-

ionally hough of as ldquoeconomicrdquo Of course his means ha

chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic

policy as well as for example social and environmenal

policy issues

Second o suppor jobs and growh and value he full suie of

suppor programs available o small privae business should be

exended o he chariable secor and would produce significan

benefis o he economy in erms of jobs and growh increased

produciviy and he abiliy o innovae

Third if chariies are o be able o susain conribuions o

jobs and growh hey will need o work wih governmen o

explore opions o increase funding in wo key areas conri-

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 31: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -

buions from individuals (hrough improved ax reamen of

donaions) and opions o expand earned income from heir

own effors and use i for chariable purposes The laer means

addressing regulaory and income ax barriers o expanding

earned income and exploring social finance and invesmen

more broadly

Fourh as an imporan and rapidly growing secor of he

economy he secor requires and warrans beer daa collec-

ion and analysis by governmen similar o daa collecion

analysis and suppor for he small business secor

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International

Page 32: Imagine canada Charities in Canada as an Economic Sector 2015-06-22

7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22

httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232

983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155

983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector

In 2013 Brian Emmett joined Imagine Canada in the unique role of the

Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief

Economist Brian is tasked with measuring the impact of the sector and

bringing economic issues facing charities and nonprofits to the forefront

of public policy decision makers imaginecanadacachief-economist

The position of the Chief Economist for Canadarsquos Charitable and Nonprofit

Sector is made possible through funding received by The Muttart Foundation

Ontario Trillium Foundation mdash an agency of the Government of Ontario

Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers

Canada Foundation

983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant

Geoffrey Emmett is an honours graduate of south Carleton High School in

Ottawa where he captained the basketball and rugby terms and was named

male athlete of the year He is currently enrolled in management engineering

at the University of Waterloo Other assignments have included work in

logistics for Magna International