Over-burdened charities need more help

The charitable sector has been doubly stretched during this pandemic. Most commercial businesses are suffering from a great reduction in sales, even if they are open. A great many are closed and so have little or no revenues. No sales, no work — so staff are laid off. Hence the government wage subsidy plan to keep the paycheques flowing.

For many charities, though, demand for their service has increased, due to the economic and social pain that has accompanied this health crisis. Food banks, homeless services, meal delivery to the disabled, practical aid for seniors, women’s shelters, mental health phone lines, poverty relief of all kinds — demand is up, up, up. But revenues and staffing levels are down.

Revenues have taken a hit because all fundraising that involves getting together has stopped — dinners, donor meetings, raffle ticket sales, the lot. And fundraisers who are trying to raise money online or through direct mail are encountering donors who themselves are in precarious circumstances.

Charities are also suffering from a decrease in staff. Some have to stay home to look after children who are no longer in school. Others are isolating to protect the vulnerable.

So demand is up precisely when resources are low. Is there a government policy response that would help?

The massive government effort to prop up the entire economy, assuming 75 per cent of the payroll of many private-sector companies for at least three months, underscores the gravity of this pandemic.

When originally launched, it was not clear that charities and non-profits would be included. The government quickly decided to include them. This will allow many such institutions to keep their staff, or at least continue operating with only partial reductions in staff.

There is one important detail to iron out, however. The eligibility criteria were announced this week. Businesses qualify if they can show a year-on-year reduction in revenues of 30 per cent, comparing March 2020 with March 2019. That will work just fine for some charities, like most houses of worship. They have fairly stable revenues based on weekly giving. A typical church that has been shut down for the past three Sundays will certainly have dropped more than 30 per cent in the collection plate as compared with last year.

But many other charities do not have steady revenues throughout the year. Many have an annual event that brings in more than half their total revenues. Depending on when that annual event is, revenues may not have dropped immediately, but a careful board of directors knows that a big fall is likely coming. Many charities pull in most of their annual revenues in the last quarter, even the last six weeks of the year. They may now be only down slightly in their year-on-year revenues, but expect a huge drop at year end.

Running a deficit is not usually an option. Getting a loan in this economy would be hard. Even in good times, charities in a cash crunch have little collateral and no profits to offer lenders as security.

The government knows this. In releasing its 30 per cent eligibility criteria, it noted that “for non-profits and charities, the government will continue to work with the sector to ensure the definition of revenue is appropriate to their specific circumstances.” That will not be easy to do without looking at a whole year at a time. The challenge is that the urgent work is needed now, as charities begin to retract in anticipation of shrinking donations next fall. There is no time to wait to look at a whole year’s worth of data.

DEMAND IS UP, UP, UP. BUT REVENUES AND STAFFING LEVELS ARE DOWN.

My Cardus colleague Brian Dijkema, along with Sean Speer, who’s familiar to readers here, made a proposal two weeks ago for the government to match donations to houses of worship for three months, noting Cardus research that shows that “for every dollar in a religious congregation’s annual budget, a city gets an estimated $4.77 worth of common good services.”

Now Dijkema and Speer have expanded that proposal to include all charities. Charitable giving in Canada averages some $830 million a month. Replacing that in toto for three months would be about $2.5 billion. That figure would have seemed intolerably large just a few weeks ago. But now, when the wage subsidy plan comes in at over $70 billion?

Matching funds maximizes the impact now, when it’s needed most. An increase, for example, in the tax credits for charitable donations will be less effective, as the benefit to donors will not come until next year. A matching program would permit donors to know that they could cut back their donation by a third and still leave their charity of choice better off in a time of rising need.

The threat to charities and the vital services they provide is not just short term. In the past economic downturn in 2008-2009, some 200,000 Canadians stopped giving to charity (decreasing to 5.6 million from 5.8 million). They never came back.

The deadly coronavirus will be with us for some time. We need healthy charities to fight it.