“For every complex problem, there’s a solution that is simple, neat, and wrong.”
(April 2, 2020) In times of uncertainty, it’s natural to gravitate towards a simple, single solution, even if the issue is complex and multi-layered.
Today is no different.
For the past three weeks, the single, simple solution to the problems faced by charities as a result of the global pandemic has been for philanthropy lobby groups to ask the federal government for $10 billion to “stabilize the sector.”
And in the world of simple solutions, people with an idea outside the simple solution become part of the problem, causing “disunity.”
The government, they say, only wants to hear one voice.
So, here we find ourselves.
The sector is, of course, hugely diverse. By corporate definition, it is a collection of 87,000 groups that, in reality, range from the tiniest of butterflies to the largest herd of elephants. Forty-five percent of charities have no employment costs at all. Hospitals and universities account for nearly 40% of the revenue accumulated by the sector.
Let’s look at some of the back-of-the-napkin numbers. In 2017, the charity sector had:
- $279 billion in revenue
- $261 billion of expenditures
- $18 billion in unspent revenue
- $147 million of salary expenses (56%)
Where did the annual revenue come from?
- 65% of revenue was provided by government
- 29% was made up from charges for programs, sales of goods (Girl Guide cookies for example), fees for service, box office revenue and so on
- 6% was supplied by philanthropy
Overall, the sector was holding onto $177.7 billion of cash in bank accounts, short term investments and long term investments in 2017.
But given not all that wealth is distributed equally—90% of the assets mentioned above are held by 10% (or fewer) charities, how can $10 billion be distributed fairly to the people who need it?
Let’s just drill down on who needs what:
- More than $100 billion of the $279 billion in charity revenue went to hospitals and universities, so let’s take them out of the equation- they are well-equipped with well-paid lobbyists of their own.
- More than 30% of charitable revenue goes to faith-based groups, so let’s assume their congregations will look after them.
- Hospital foundations are cumulatively raising billions of dollars a year, and are sitting on billions of dollars in cash assets, so it doesn’t seem appropriate to make them eligible for reimbursement on the loss of their investment income. They can be excluded.
- Many organizations, from environmental groups to animal welfare organizations, have been able to accumulate operating reserves over the past decade. Charities should rightly access these reserves to keep their staff working or as much of their programming in place as possible. We would expect no less from a business. Some also have contractual arrangements with all three levels of government and can be talking to those government partners.
Yet, serious and immediate need does exist:
- International NGOs, who flow through almost all the money they receive, and who rely on large numbers of small donations, are in desperate need. They have been hammered in two ways. Firstly, because they are heavily reliant on direct marketing, they will likely see fundraising losses simply because they cannot fully execute their intricately designed direct marketing programs. It remains to be seen if they can make up the losses in the last quarter, when more than 65% of charitable giving takes place. But most iNGOs should be able to make a case for a 30% revenue loss in order to qualify for the government’s 75% wage subsidy. Secondly, while iNGOs are working to offset their own operating deficits, the task of dealing with the predictable horror about to sweep through refugee camps across the globe is being left to them. Global Affairs Canada should be on the phone with the appropriate iNGOs to figure out how the Canadian government can support their suddenly increased international mandate. Human lives are in the balance.
- Health research and support charities such as Canadian Cancer Society (CSS) are suffering losses. CCS recently had to lay off all the workers associated with the national Daffodil campaign. Not doing the campaign will cost them $20 million. It is likely they can make a case for a 30% revenue loss, so they will be eligible for the government 75% wage subsidy. When the dust settles, any additional losses may be able to be offset by the government-funded research institutes that provide a significant amount of CCS revenue. It is important to differentiate research charities like CCS from hospital foundations such as The Princess Margaret Cancer Foundation, who are holding onto more than $600 million in cash and investment assets, who should not be eligible for “stabilization.”
- Arts organizations, with no box office revenue for heavens knows how long, have taken a shellacking. Presumably, they will be able to demonstrate the 30% loss to qualify for the 75% wage subsidy. Additional support to arts organizations would be most effectively distributed through the established network of national, provincial and municipal arts councils who know the landscape, and have been working with arts organizations for decades. They have their own representation in government. Ensuring a healthy arts and culture sector will play a vital part in helping us find our equilibrium when this is over.
- The biggest problems facing community groups like shelters right now are not financially related. Instead, they are having complications getting staff to come to work, increasing their bed capacity by opening new locations and having the capacity for their clients to maintain social distancing. Most of these charities are in close contact with their local governments. Some say they may lose money in fundraising in the tens of thousands, not the tens of millions.
- Other community groups, who lurch from foundation grant to foundation grant (on a good day), are in deep trouble. These groups often provide 12-hour a day mentorship, support, education and other programs for people in high risk neighbourhoods—people who are often young, poor, black or brown. While foundations, generally speaking, are telling these charities they will keep their commitments to fund any given program when “all this is over,” they are not supplying any resources to keep them alive to execute their much-needed programs “when all this is over.” Most equity seeking groups fall into this category–a project-to-project model with no core funding. At the same time, many community foundations are showing great leadership in pro-actively determining needs at the community level. Perhaps funds could be channelled through them in order to reach those who need it on the ground.
But when $10 billion is the answer to every question, the danger (and likelihood) increases that people who really need support won’t get it, and the people with money will get more of it.
It is no secret that philanthropy sector and the charity leadership cohort in Canada generally has, what could be called a “diversity problem.” The Association of Fundraising Professionals (AFP) have been trying to work on this for several years, with marginal results.
“The demographics of the fundraising profession in Canada are remarkably homogeneous,” reported AFP Global in September 2019.
“Despite the diverse make-up of the 2.2 million people who work in Canadian charities, the majority of fundraising leaders are white men. About 70 percent of the fundraising workforce is women, with a very small percentage of fundraising leaders or people in the fundraising workforce identifying as part of a racialized or marginalized group.”
When people are talking about a “stabilization fund” of $10 billion for the charity sector, it is worth noting who leads that sector and how such a blanket approach could serve to increase the stark inequity that already exists.
The government wants to fix problems, not limit input.
And it might be worth noting that the current Cabinet doesn’t need the charity sector explained to them using small words, short sentences and simple solutions. They come to the table with significant sector backgrounds and bring their own knowledgeable perspectives. For example:
- Deputy Prime Minister, The Honourable Chrystia Freeland was a journalist and author before entering politics. Her 2012 book Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else is an international best-seller and won the Lionel Gelber Prize and National Business Book Award.
- The Honourable Carolyn Bennett, Minister of Crown-Indigenous Relations, was an Assistant Professor in the Department of Family and Community Medicine at the University of Toronto before. Her fight to save the Women’s College Hospital of Toronto inspired her to enter politics.
- The Honourable Patty Hajdu, Minister of Health, was the Executive Director of Shelter House Thunder Bay and a co-author of the Thunder Bay Drug Strategy before entering politics. She also previously worked in public health and focused on drug policy, youth development, and homelessness.
- The Honourable Navdeep Bains, Minister of Innovation, Science and Industry, was active in a variety of community organizations, as a board member for the Mississauga Food Bank and an Ontario board member with the Heart and Stroke Foundation before politics. He has also worked with JDRF, a diabetes research foundation, and the Guru Gobind Singh Children’s Foundation.
- The Honourable Jean-Yves Duclos, President of the Treasury Board, was the co-founder of the Poverty and Economic Policy Research Network. In 2014, he was elected a Fellow of the Royal Society of Canada, the highest accolade bestowed on Canadian researchers.
- The Honourable Marie-Claude Bibeau, Minister of Agriculture and Agri-Food, started her career at the Canadian International Development Agency, working in the National Capital Region and Montréal, as well as in Morocco and Benin.
- The Honourable Mélanie Joly, Minister of Economic Development and Official Languages, is the author of Changing the Rules of the Game, in which she shares her vision for public policy and civic engagement. She was named a Young Global Leader by the World Economic Forum.
- The Honourable Diane Lebouthillier, Minister of National Revenue, spent more than 23 years working with clients at the Rocher-Percé Health and Social Services Centre before entering politics.
- The Honourable Catherine McKenna, Minister of Infrastructure and Communities, previously worked as a lawyer in Canada and Indonesia and as a negotiator with the United Nations mission in East Timor and taught at the Munk School of Global Affairs and Public Policy. She also co-founded the charitable organization Level Justice.
When the Government of Canada indicates that it is interested in mitigating problems, we can conclude they understand many voices are needed.
So what motivates these aggressive calls for a single, simple message?
Other than the status quo, nothing gets stronger when a plurality of voices is silenced. Any response that meets the needs of organizations under the umbrella of the charity sector must be untaken with an equity lens. One voice is not that.