Zack Gross
Zack Gross

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Non-Profits Face Challenges in Our Current Economy 

Brandon Sun “Small World” Column, Saturday,  June 12 / 10

Zack Gross

This is the time of year when many non-profits hold their annual meetings, reporting to their members and to the public what they have been doing, and how they are doing. 

We have recently been hearing in news reports that food banks, medical charities and many others are suffering from empty shelves or depleted bank accounts as donations follow the economy in a downward trend.  As well, it has been well publicized that, due to financial restraint and/or philosophical differences, government (especially federal) has cut back on funding for many groups.

Imagine Canada, which describes itself as the “national voice of the non-profit sector," surveyed organizations across the country in late 2009 and early 2010 and published its findings on the state of the sector. 

Half the more than 1500 leaders of registered charities that were surveyed admitted that their organizations are having difficulty fulfilling their mission due to the economy, and a quarter of the respondents actually said that their groups are at risk of closing and don’t know how they will cover expenses over the next year.  At the same time, half the groups are experiencing increased public demand for their products and services.

Areas of Canada having the largest percentage of at-risk organizations seem to be B.C., Ontario and the Maritimes, while the situation is less dire on the Prairies and in Quebec.  Larger groups also seem to be more financially stable, that is those with twenty-five or more staff and budgets higher than $1.5 million. 

To remedy the current situation, 90% of leaders in the non-profit sector said that they are trying to improve their financial position by finding new sources of revenue or by increasing what they get from existing sources.  Of course, any of us who have tried to raise more money than normal know how difficult that is!

There is only so much out there and funders, businesses, churches and the public are being asked every day to give.  The research into potential sources of money, the application processes, and the effort to organize effective fundraisers are all time-consuming and potentially expensive themselves.

Two-thirds of non-profits have reacted to financial problems by reducing overhead costs, and one-quarter by reducing staffing and programming.  More than half are seeking to increase voluntarism within their organizations and one-third are relying on staff to work unpaid overtime. 

About 10% of organizations are actively seeking to merge with other groups in order to save their programs. 

On average, non-profits today are suffering from increased costs as well as decreased or stagnant revenues.   Decreases are measured in loss of donations, less successful fundraising initiatives, loss of government funds and corporate sponsorships, and decreases in investment income. 

Fifty percent of non-profits report that they have cash on-hand that would operate their organizations and their programs and services for six months or less.  Their leadership predicts that one-third of all non-profits will run a deficit this fiscal year. 

With the switchover from paid to volunteer staff, and with less money to invest in current programming, a general weakening of the non-profit sector is taking place.  And this is at a time when demands are growing in a weak economy due to lost wages in the general public.  The stress level in the sector is very high.

There is no doubt that the spirit of giving and voluntarism is alive in our province, as more than three-quarters of Manitoba residents aged fifteen and over donate money each year and more than half donate time.  People put their support into categories such as health and hospitals, social services, religious organizations, international aid, cultural, sports and political organizations. 

They feel compassion for people in need, want to promote causes they believe in, want to contribute to the betterment of their neighbourhoods and communities, and they want to contribute their own professional and technical skills and experiences.

However, there are challenges to the future of individual charitable giving and volunteering.  Of course, when people have less money, they give less, either making their donations smaller or, what is more usual, donating to fewer charities.  As well, with shift work and two-job couples, fewer adults are available to volunteer. 

New technologies also narrow the field as to who has the skills to help in many charitable offices and commercial operations.  Many organizations who expect volunteers to help out and donors to send in cheques are being forced to re-think their approaches to very busy seniors and youth, to new Canadians and to farmers and workers struggling to make ends meet.

Thus, the non-profit sector in our province and across Canada faces new challenges brought on by the economic downturn, by changing government policies and by new social patterns.  

The non-profit sector really is the social infrastructure that helps people to meet their personal and public needs and goals. 

We should be aware of the risks faced by that sector today and find ways to be active citizens helping society through this difficult time and preserving the kind of Canada of which we are proud.

Zack Gross works for the 
Manitoba Council for International Co-operation (MCIC), a coalition of more than 40 international development organizations.

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