Charities and non-profits bracing for change
In the 1960s, Bob Dylan’s song, The Times They Are A-changing, captured the rising tide of social changes that was sweeping across America. It may be time for Alberta’s charities and non-profit to consider adopting this anthem, for signs that change is in the wind are everywhere.
As governments in Canada, like their counterparts elsewhere, grapple with how to bring their revenues and expenditures in line, striving for a smaller role for government is becoming a prominent theme. Smaller government is about more than cost containment, it is about re-examining the role of government in meeting social needs. As a result, the private and non-profit sectors are being called upon to shoulder more of the work and funding of social services, cultural, educational, health and community initiatives.
Change is nothing new to charities and non-profit organizations. Organizations that have served the community for 20, 50, even 100 years, have been able to do so simply because they have adapted to changing circumstances. And the expectation is that they will continue to do so.
The big question is how these organizations will collectively raise the funds to replace reduced government funding, not to mention the revenue necessary to meet increasing demands for their services. (Seventy per cent of organizations responding to a recent Calgary Chamber of Volunteer Organizations survey indicated increased demand for their services, a consistent upward trend over the past three years.)
Social enterprise — basically a profit-generating program or business operated by a charity or non-profit to supplement its income — is often suggested as an alternative revenue source. This is not a new concept; in fact, many organizations have operated some kind of social enterprise for years — fitness centres, daycares, thrift shops and catering services are just a few examples.
The concern is that the potential for social enterprise to generate sufficient revenue to meet growing community needs is often over sold. Any entrepreneur knows that running a successful business is no easy thing and the rate of failure is high. While social enterprise is a viable option for some organizations, it is not a general panacea to compensate for reduced funding levels.
New ways of financing the delivery of government services, such as social impact bonds, are also gaining attention. Federal Human Resources Minister Diane Finley, in a recent speech to the Manning Centre, indicated the government is considering developing social impact bonds as an option for funding service delivery. Social impact bonds would transfer the financial risk away from government and taxpayers, to social groups who would be paid for producing results.
Social impact bonds are a relatively new approach to financing service delivery, with limited experience in the U.K. The potential for these instruments is largely untested, but will have significant implications for voluntary sector organizations if governments move in this direction.
Another trend that is impacting the non-profit sector is the growing emphasis on measuring outcomes and social impact. This is largely driven by the desire to see the results of the activities undertaken by non-profit organizations and is an increasing focus of governments, as well as other funders, including corporations and private donors.
It is important that organizations understand and con- sider how to adapt to this changing requirement. It is also important for funders and donors to understand the challenges this poses to many organizations, because of the complexity of the social issues they address. Unfortunately, many of these issues don’t lend themselves to easy resolution, but require sustained, co-ordinated effort by many partners to address.
Finally, non-profit, particularly charities, are also facing changing, and increasing, expectations for what and how they report on their activities. Changes introduced in the federal budget requiring increased reporting of funding sources and political activities are just the most recent examples. While expectations for more extensive reporting are increasing from many sources, not just governments, organizations struggle to balance these requirements with unrealistic expectations about the real costs of generating this information.
The squeeze is on — Alberta’s non-profit and charities face a future with reduced government funds, fewer workers, more government scrutiny and accountability, and increased demand for services.
The Calgary Chamber of Volunteer Organizations provides leadership on broad issues that impact the voluntary sector, helping these organizations anticipate, prepare for and create the future environment. To that end, we are hosting our Connections 2012 Conference: Three Sectors for Strong Community, which begins Wednesday and will provide a forum for non-profit leaders, together with representatives from the corporate and public sectors, to learn and engage in dialogue about the implications of this shifting environment for our communities.