Numbers don’t lie.

Of the four priorities for action identified at the recent National Summit for the Charitable and Nonprofit Sector, priority theme two — more diverse and sustainable financing — had the highest number of attendees. The interest and engagement of participants in topics relating to financial sustainability is a testament to the critical stage that this issue has reached at the national, provincial, regional and local level.

At the core of this priority area for action is the question: How can individuals and organizations collaborate to secure sustainable financing for operations and growth? It is this problem that has led nonprofit leaders from across Canada to address how we can better cooperate, collaborate and innovate to address issues of financial concern.

By the numbers

There is no denying the nonprofit sector’s financial impact on the Canadian economy. In 2008, the economic output for the nonprofit sector was $106.4 billion making it the third largest sector in Canada and totaling 7.1% of the county’s economic activity (Statistics Canada 2010). According to the 2007 Canada Survey of Giving, Volunteering and Participating, Canadians donated a total of $10 billion, a 12% increase in donations from $8.9 billion reported in 2004. (This figure has likely declined as a result of the recent economic recession and ongoing financial uncertainty). The human resource situation within the nonprofit sector also appears to be strong, employing over two million people and representing 11.1% of the economically active population (Imagine Canada, 2011).

In praise of change

Yet while numbers may not lie, they may also not tell the full story.

Participants highlighted numerous challenges associated with short- and long-term funding. The government grants and contributions process has been widely criticized for being inconsistent, untimely and too complex. Government appears to be reducing spending across the board, which will have a major impact on the charitable sector. Generating earned income and creating social finance opportunities also present challenges to nonprofits. Barriers to earned income, such as an adverse regulatory environment, combined with a fear of “mission drift”, have prevented some nonprofits from pursuing or expanding earned revenue activities. Across the sector a lack of awareness and understanding about different charitable giving pathways, and limited tax incentives for those who do give, have weakened philanthropic participation. And finally, a shortage of cross-organizational financial training and an effective exchange of financial knowledge have left some charities and nonprofits struggling to assess and adapt their current financial model.

Compounding these obstacles are perhaps some cold, hard truths that the nonprofit sector may have to acknowledge if it wishes to move forward productively. In his opening address to Summit participants, pollster and social commentator Allen Gregg noted that while 80% of Canadians have made some form of charitable donation in the past year, of those who donated the top 14% were accountable for 60% of the total value of donations. “Those that give the most are in the minority,” says Gregg. “Canadians are also donating less because they have less.”

Gregg also argued that while Canadians may have a reputation for charitable giving, sympathy may not be at the heart of charitable acts. “Compassion has very little bearing on charitable giving,” cautions Gregg. He maintains that church services, shopping malls, direct mail, door-to-door sales and employee payroll deductions remain key avenues for fund seeking, making the case that Canadian’s may be more likely to give, not because of some sense of altruism, but because they have been prompted to do so, in a way that is convenient and because it provides some kind of intrinsic reward. Thus rather than trying to change the attitudes of donors, says Gregg, we must instead try to change giving behaviour and, more broadly, the financial culture of the nonprofit sector.

Committing to action

After two days of Summit roundtable discussions and keynote speakers it was the notion of change that appeared at the heart of tackling the sustainable financing problem.

A plethora of proposed solutions to enhance the long- and short-term sustainability of nonprofit funding were offered. Some advocated changing practices regarding financial literacy and collaboration.

“As a small organization it’s often difficult to know what financial resources are available to us. In the future we want to commit to finding and using better tools to improve financial literacy, fundraising and accountability,” says Jen Peirce, board chair for One World Arts, an Ottawa-based charity focused on using arts to educate citizens about global issues. “We also want to think about partnerships in more than just financial terms. This will allow us to stretch the limited financial resources that we have. By working with the various members of our community — be they volunteers, corporate donors or other NGOs — we are able to provide stronger programming the area of arts education.”

Other participants supported change to create more earned income and social enterprise opportunities. “We must eliminate the regulatory barriers both nationally and provincially that limit organization’s ability to earn income,” says Nora Spinks, CEO of the Vanier Institute of the Family. “One solution could be to create a national inventory of case studies and a checklist of best and promising practices (that are innovative, legal and profitable) that may serve as a financial resource for organizations. Such a document could in turn help highlight and inspire organizations to share knowledge and develop creative ways to earn income.”

Further action items arising from the Summit included: a desire for multi-year government funding agreements, to work with federal agents to improve Canada Revenue Agency (CRA) guidelines that support social finance and social enterprise activities, to adopt recommendations put forth by the Blue Ribbon Panel on Grants and Contributions, to implement the proposed Stretch Tax Credit for Charitable Giving, and to build nonprofit financing into business, law and accounting education programs.

The road ahead

Clearly, improving sustainable financing is a key pillar in the moving the nonprofit sector forward. Bringing participants from across the country to engage in dialogue about funding issues, as well asking nonprofits to make tangible commitments to enhance their financial sustainability, is an important first step.

“Overall, there was a strong interest in building a common sectoral understanding of financial possibilities and opportunities,” says Hilary Pearson, President and CEO of Philanthropic Foundations of Canada. “Through roundtable discussions on sustainable financing, we ended up with more than 130 short- and long-term commitments from individuals and organization across Canada. Some of these commitments included: to build individual and organizational financial management skills, to commit specific sums money towards social investments, and to support Imagine Canada in the development of a national awareness campaign about nonprofit and charitable financial issues.”

Other commitments from participants ranged from large-scale activities like lobbying government departments and engaging financial institutions in the development of nonprofit internship programs, to smaller guarantees such as designing financing training materials for board members and starting earned income pilot projects.

The personal and professional commitments made at the Summit are indeed a laudable achievement. Yet while it was clear what needed to change, there was far less consensus and clarity about who was going to create change, where that change would take place, when it would happen and who would hold the sector accountable for changes proposed.

One expects that the follow up on each of the priority areas for action emerging from the Summit will provide some answers for when, where, how and by whom change will take place, as well as hold nonprofit leaders and organizations to their commitments. As Marcel Lauziére, president and CEO of Imagine Canada remarked at the outset of the event, “Success will be measured by our collective commitment. We want to be summiting after the Summit.”

Let’s just hope the mountain isn’t too big to climb.

David Venn is an Ottawa-based public relations consultant focused on helping nonprofit organizations create positive and sustainable social change. He currently works as a Communications Advisor with the Canadian Centre on Substance Abuse. Follow David on Twitter @davidjvenn or on his nonprofit PR blog.

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