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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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June 2015
Charities in Canada as an Economic Sector
Discussion Paper
983138983154983145983137983150 983141983149983149983141983156983156 983137983150983140 983143983141983151983142983142983154983141983161 983141983149983149983141983156983156
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Charities in Canada as an Economic Sector Discussion Paper
Brian Emmett and Geoffrey Emmett
Published by
Imagine Canada
65 St Clair Avenue East
Toronto Ontario Canada M4T 2Y3
T 416 597 2293 | F 416 597 2294
Copyright copy2015 Imagine Canada
Copy editors Marnie Grona David Lasby Cornelia Schrecker
Design and production Shanti HadioetomoFrench translation Cornelia Schrecker
All rights reserved The content of this publication may be reproduced in whole or in part by charitable
and nonprofit organizations for non-commercial use and where Imagine Canada is acknowledged as
the original publisher including year of publication publication title and original document source
(electronic publication link or website link) Otherwise no part of this report may
be reproduced without prior written agreement from Imagine Canada
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155
Summary 4
1 Introduction 6
2 The Role and Scope of the Charitable Sector
in Canadian economy 9
21 Chariable Secor Conribuion o GDP and
Employmen is Large and has been Growing 9
22 The Chariable Secor Shares Many of he
Characerisics of he Broader Service Secorof he Economy 11
23 The Chariable Secor has Much in
Common wih he Small Business Secor 13
24 Produciviy and Innovaion in he Chariable Secor 16
25 The Chariable Secor as a Place o Work 18
3 Revenue for Charitable Organizations 21
31 Sources of Funds for Broad and Core Chariable Secors 21
32 Donaions 24
33 Governmen Funding 26
34 Membership Fees and Sales of Goods and Services 29
4 Policy Implications 30
About the Authors 32
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983155983157983149983149983137983154983161
1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada
supporing a large number of jobs and creaing
significan economic growh
2 This growh is no supply driven mdash creaed by an increase
in he number of chariies mdash bu is driven by demand As
populaion grows ages and becomes more diverse and as
economies become richer he demand for he services
ha he secor provides mdash healh social services recreaion
culure and so on-end o increase The growh of he
chariable secor is hus driven by demand and value he
secor produces
3 The secor has expanded rapidly in mos advanced indus-
rial economies and is increasingly an inegral par of he
global service and knowledge-based economy
4 Because he growh in he chariable secor in Canada is
mirrored by similar developmens in oher advanced econ-
omies i provides Canada wih an imporan and expanding
se of connecions o growing economies worldwide
5 The secor is in many ways similar o he small business
secor of he economy and makes a similar conribuion o
jobs and growh I also faces similar problems mdash for exam-
ple wih financing as well as wih invesmen in innovaion
and produciviy improvemens
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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6 The jobs he secor creaes are good ones requiring skills
and educaion levels somewha higher han he Canadian
work force in general People enjoy high levels of job sais-
facion The secor is also a good firs employer for graduaes
and new Canadians
7 The rapid expansion of he secor and he jobs i has brough
wih i have been financed by a combinaion of income
earned by he chariable secor from he sale of member-
ships and services from governmen funding and from
donaions from individuals
8 Donaions from individuals have shown a endency o
weaken and governmen conribuions are in decline as
a resul of fiscal pressure
9 Canadarsquos chariies are a a financial crossroads Wih radi-
ional revenue sources declining chariies are increasingly
looking a ways o finance heir nonprofi aciviies hrough
business income mdash boh in areas direcly relaed o heir
chariable missions and in areas ha are no
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Charities in Canada as an Economic Sector Discussion Paper
Brian Emmett and Geoffrey Emmett
Published by
Imagine Canada
65 St Clair Avenue East
Toronto Ontario Canada M4T 2Y3
T 416 597 2293 | F 416 597 2294
Copyright copy2015 Imagine Canada
Copy editors Marnie Grona David Lasby Cornelia Schrecker
Design and production Shanti HadioetomoFrench translation Cornelia Schrecker
All rights reserved The content of this publication may be reproduced in whole or in part by charitable
and nonprofit organizations for non-commercial use and where Imagine Canada is acknowledged as
the original publisher including year of publication publication title and original document source
(electronic publication link or website link) Otherwise no part of this report may
be reproduced without prior written agreement from Imagine Canada
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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155
Summary 4
1 Introduction 6
2 The Role and Scope of the Charitable Sector
in Canadian economy 9
21 Chariable Secor Conribuion o GDP and
Employmen is Large and has been Growing 9
22 The Chariable Secor Shares Many of he
Characerisics of he Broader Service Secorof he Economy 11
23 The Chariable Secor has Much in
Common wih he Small Business Secor 13
24 Produciviy and Innovaion in he Chariable Secor 16
25 The Chariable Secor as a Place o Work 18
3 Revenue for Charitable Organizations 21
31 Sources of Funds for Broad and Core Chariable Secors 21
32 Donaions 24
33 Governmen Funding 26
34 Membership Fees and Sales of Goods and Services 29
4 Policy Implications 30
About the Authors 32
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983155983157983149983149983137983154983161
1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada
supporing a large number of jobs and creaing
significan economic growh
2 This growh is no supply driven mdash creaed by an increase
in he number of chariies mdash bu is driven by demand As
populaion grows ages and becomes more diverse and as
economies become richer he demand for he services
ha he secor provides mdash healh social services recreaion
culure and so on-end o increase The growh of he
chariable secor is hus driven by demand and value he
secor produces
3 The secor has expanded rapidly in mos advanced indus-
rial economies and is increasingly an inegral par of he
global service and knowledge-based economy
4 Because he growh in he chariable secor in Canada is
mirrored by similar developmens in oher advanced econ-
omies i provides Canada wih an imporan and expanding
se of connecions o growing economies worldwide
5 The secor is in many ways similar o he small business
secor of he economy and makes a similar conribuion o
jobs and growh I also faces similar problems mdash for exam-
ple wih financing as well as wih invesmen in innovaion
and produciviy improvemens
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6 The jobs he secor creaes are good ones requiring skills
and educaion levels somewha higher han he Canadian
work force in general People enjoy high levels of job sais-
facion The secor is also a good firs employer for graduaes
and new Canadians
7 The rapid expansion of he secor and he jobs i has brough
wih i have been financed by a combinaion of income
earned by he chariable secor from he sale of member-
ships and services from governmen funding and from
donaions from individuals
8 Donaions from individuals have shown a endency o
weaken and governmen conribuions are in decline as
a resul of fiscal pressure
9 Canadarsquos chariies are a a financial crossroads Wih radi-
ional revenue sources declining chariies are increasingly
looking a ways o finance heir nonprofi aciviies hrough
business income mdash boh in areas direcly relaed o heir
chariable missions and in areas ha are no
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
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983156983137983138983148983141 983151983142 983139983151983150983156983141983150983156983155
Summary 4
1 Introduction 6
2 The Role and Scope of the Charitable Sector
in Canadian economy 9
21 Chariable Secor Conribuion o GDP and
Employmen is Large and has been Growing 9
22 The Chariable Secor Shares Many of he
Characerisics of he Broader Service Secorof he Economy 11
23 The Chariable Secor has Much in
Common wih he Small Business Secor 13
24 Produciviy and Innovaion in he Chariable Secor 16
25 The Chariable Secor as a Place o Work 18
3 Revenue for Charitable Organizations 21
31 Sources of Funds for Broad and Core Chariable Secors 21
32 Donaions 24
33 Governmen Funding 26
34 Membership Fees and Sales of Goods and Services 29
4 Policy Implications 30
About the Authors 32
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983155983157983149983149983137983154983161
1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada
supporing a large number of jobs and creaing
significan economic growh
2 This growh is no supply driven mdash creaed by an increase
in he number of chariies mdash bu is driven by demand As
populaion grows ages and becomes more diverse and as
economies become richer he demand for he services
ha he secor provides mdash healh social services recreaion
culure and so on-end o increase The growh of he
chariable secor is hus driven by demand and value he
secor produces
3 The secor has expanded rapidly in mos advanced indus-
rial economies and is increasingly an inegral par of he
global service and knowledge-based economy
4 Because he growh in he chariable secor in Canada is
mirrored by similar developmens in oher advanced econ-
omies i provides Canada wih an imporan and expanding
se of connecions o growing economies worldwide
5 The secor is in many ways similar o he small business
secor of he economy and makes a similar conribuion o
jobs and growh I also faces similar problems mdash for exam-
ple wih financing as well as wih invesmen in innovaion
and produciviy improvemens
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6 The jobs he secor creaes are good ones requiring skills
and educaion levels somewha higher han he Canadian
work force in general People enjoy high levels of job sais-
facion The secor is also a good firs employer for graduaes
and new Canadians
7 The rapid expansion of he secor and he jobs i has brough
wih i have been financed by a combinaion of income
earned by he chariable secor from he sale of member-
ships and services from governmen funding and from
donaions from individuals
8 Donaions from individuals have shown a endency o
weaken and governmen conribuions are in decline as
a resul of fiscal pressure
9 Canadarsquos chariies are a a financial crossroads Wih radi-
ional revenue sources declining chariies are increasingly
looking a ways o finance heir nonprofi aciviies hrough
business income mdash boh in areas direcly relaed o heir
chariable missions and in areas ha are no
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -
The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
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983155983157983149983149983137983154983161
1 The chariable secor has expanded rapidly in he laswo decades and is now a major secor in Canada
supporing a large number of jobs and creaing
significan economic growh
2 This growh is no supply driven mdash creaed by an increase
in he number of chariies mdash bu is driven by demand As
populaion grows ages and becomes more diverse and as
economies become richer he demand for he services
ha he secor provides mdash healh social services recreaion
culure and so on-end o increase The growh of he
chariable secor is hus driven by demand and value he
secor produces
3 The secor has expanded rapidly in mos advanced indus-
rial economies and is increasingly an inegral par of he
global service and knowledge-based economy
4 Because he growh in he chariable secor in Canada is
mirrored by similar developmens in oher advanced econ-
omies i provides Canada wih an imporan and expanding
se of connecions o growing economies worldwide
5 The secor is in many ways similar o he small business
secor of he economy and makes a similar conribuion o
jobs and growh I also faces similar problems mdash for exam-
ple wih financing as well as wih invesmen in innovaion
and produciviy improvemens
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6 The jobs he secor creaes are good ones requiring skills
and educaion levels somewha higher han he Canadian
work force in general People enjoy high levels of job sais-
facion The secor is also a good firs employer for graduaes
and new Canadians
7 The rapid expansion of he secor and he jobs i has brough
wih i have been financed by a combinaion of income
earned by he chariable secor from he sale of member-
ships and services from governmen funding and from
donaions from individuals
8 Donaions from individuals have shown a endency o
weaken and governmen conribuions are in decline as
a resul of fiscal pressure
9 Canadarsquos chariies are a a financial crossroads Wih radi-
ional revenue sources declining chariies are increasingly
looking a ways o finance heir nonprofi aciviies hrough
business income mdash boh in areas direcly relaed o heir
chariable missions and in areas ha are no
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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6 The jobs he secor creaes are good ones requiring skills
and educaion levels somewha higher han he Canadian
work force in general People enjoy high levels of job sais-
facion The secor is also a good firs employer for graduaes
and new Canadians
7 The rapid expansion of he secor and he jobs i has brough
wih i have been financed by a combinaion of income
earned by he chariable secor from he sale of member-
ships and services from governmen funding and from
donaions from individuals
8 Donaions from individuals have shown a endency o
weaken and governmen conribuions are in decline as
a resul of fiscal pressure
9 Canadarsquos chariies are a a financial crossroads Wih radi-
ional revenue sources declining chariies are increasingly
looking a ways o finance heir nonprofi aciviies hrough
business income mdash boh in areas direcly relaed o heir
chariable missions and in areas ha are no
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
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9831459831509831569831549831519831409831579831399831569831459831519831501
Chariable organizaions are no like oher firms inhe economy
The charity sector will never be like other sectors In-
deed its special role means we donrsquot want it to be
It is driven by a sense of mission and passion mdash few are
involved to maximize profits improve share prices or
earn as much as they can 1
Neverheless i is useful from an economic poin of view o
regard chariies as being in many ways analogous o firms
Each chariy uses inpus mdash labour (voluneers and paid saff)
capial maerial and energy mdash o produce oupus in pursui of
is goals and objecives Operaions are paid from a number of
sources including memberships governmen grans and con-
ribuions and donaions from corporaions and individuals
The secor as a whole consiss of a large number of generally
quie small eniies which provide valuable bu ofen diffi-
cul-o-measure services from povery alleviaion o culure
and recreaion
The comparison wih privae secor firms is useful bu no ex-
ac mdash chariies pose special problems from an economic poin
of view Chariies are mission-oriened ofen saffed largely or
in par by commied voluneers and do no make a profi by
definiion In he absence of profi and share value (he marke
economyrsquos effecive way of comparing apples and oranges) i
is difficul for economiss o develop a way of measuring he
performance of one chariy compared o anoher or of chari-
ies compared o oher valuable economic aciviies In addi-
ion he services provided by chariies end o be difficul o
983089 How do we Drive Producivi
and Innovaion in he Chari
Secor Dan Corry Lecure
hosed by he Royal Sociey
for he encouragemen of
he Ars Manufacures and
Commerce 983096 May 983090983088983089983092
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1132- 11 -
While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -
The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1332- 13 -
The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1632- 16 -
ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -
983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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measure in dollar erms mdash povery reducion improvemens in
lieracy reducions in recidivism he provision of ars culure
and recreaion and myriad oher services are highly valued
bu ofen inangible in naure This makes he oupu of chari-
ies difficul o measure and o compare o oher marke-based
aciviies such as providing haircus or producing auos for
example Key indicaors of economic performance such as
produciviy and innovaion can also be elusive2
Bu he chariable secor in Canada is simply oo large and
significan NOT o be looked a hrough he same lens as oher
economic acors Indeed he secor is iself seeking o improve
is abiliy o speak he language of economics and posiion
iself appropriaely as a source of jobs innovaion and growh
in he modern Canadian economy 3 Taking an economic per-
specive opens up a wide range of quesions of fac and analy-
sis mdash wha is he srucure of he secor Is i labour or capial
inensive Is i a source of (good) jobs and growh How does i
fi ino broader developmens in he global knowledge econo-
my Where does is revenue come from and wha does his say
abou he oulook for he secor
The purpose of his paper is o ake a balanced look a he
Canadian chariable secor from an economic poin of view
aking he same approach ha an analys looking a any secor
would ake mdash be i semi-conducors or naural resources I will
aemp o presen a general picure of Canadian chariies as an
economic secor using exising daa and analyses
The second secion of he paper focuses on srucure
bull he role and scope of he chariable secor in he economy
as compared o oher ypes of economic aciviy
bull he chariable secor as a service secor
bull he chariable secor as a small business secor
983090 Governmen shares many
of hese elemens and
poses some of he same
challenges o economiss
983091 The appoinmen of a Chief
Economis by Imagine
Canada is a good example
of his
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 832- 8 -
bull he chariable secor as a source of innovaion and
produciviy growh in he economy and
bull he chariable secor as an employer of saff and voluneers
The hird secion urns o sources of revenue and he financial
susainabiliy of he secor Secion four hen lays ou some
preliminary and broad policy implicaions Subsequen papers
are planned o look a wo specific areas he policy landscape
facing chariies going forward and he growing ineres in
social impac invesing
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983156983144983141 983154983151983148983141 983137983150983140 983155983139983151983152983141 983151983142983156983144983141 983139983144983137983154983145983156983137983138983148983141 983155983141983139983156983151983154983145983150 983139983137983150983137983140983145983137983150 983141983139983151983150983151983149983161
2
There has been rapid growh in organized volunary aciviy
in boh developed and developing economies over he pas few
decades Because of his ldquoassociaional growhrdquo he secorrsquos
share of employmen and income is growing boh here in
Canada and elsewhere in he world4 This growh has naurally
caugh he aenion of economiss and policy makers seeking
o undersand he role of he secor in boh an economic andsocial conex
A Johns Hopkins Universiy sudy of eigh differen counries
shows worldwide growh of he nonprofi secor oupacing he
growh of GDP in each of eigh developed economies wih he
excepion of he Czech Republic In Canada he nonprofi secor
is growing a 64 annually compared o 56 for GDP
21 Charitable Sector Contribution to GDP andEmployment is Large and has been Growing
FIGURE 983089
Average annual
growth Nonprofit
vs aggregate GDP
Source
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
983092 The Rise of he Nonprofi
secor Leser Salamon
Foreign Affairs July 983089983097983097983092
-6
-4
-2
0
2
4
6
8
10
12
8-CountryAverage
Ca na da Jap an U ni te d St at es Cz ec hRepublic
Be lg iu m T hai lan d N or way Au st ral ia
Nonprofit GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1032- 10 -
Today in many counries (including Canada) he chariable and
nonprofi secor is a major acor ouweighing he conribuions
o income and employmen of many of he secors people gen-
erally hink of as driving economic aciviy and employmen
In 2003 he secor employed jus over 2 million people Of
hose people approximaely 13 million were employed in he
core 5 chariable secor 6 These figures accouned for abou 13
and 85 of he oal workforce in Canada respecively
The oal chariable secor conribued 81 of GDP in 2008
while he core chariable secor conribued 33 ha same
year7 When compared o oher imporan secors of he eco-
nomy he nonprofi secor employs nearly as many people
as he manufacuring secor in Canada and more people han
any one of consrucion agriculure foresry and he uiliies
FIGURE 983090
Employment Share of
Different Sectors 983090983088983088983091
Source
National Survey of
Nonprofit and VoluntaryOrganizations Statistics
Canada 983090983088983088983091
CANSIM table 983090983096983090ndash983088983088983088983096
Statistics Canada
983093 Where i is useful o do so
his paper disinguishes
beween he core chariabl
secor and he broader
chariable secor The broa
secor includes universiie
and hospials he core
secor does no In mos
discussions of he secor in
he press and he academic
lieraure he broader
definiion of he secor is
more frequenly used
983094 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983095 CANSIM ables 983091983096983096ndash983088983088983088983090
and 983091983096983088ndash983088983088983094983092 Saisics
Canada
0
2
4
6
8
10
12
14
16
Manufacturing CharitableSector
CoreCharitable
Sector
Co nstru ct io n A gr icu lture Fo restryFishing Mining
QuarryingOil and Gas
Utilities
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 1232- 12 -
The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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While chariies operae in a number of fields some of
which are goods producing he chariable secor is largely
a service secor8
FIGURE 983091
GDP contribution
of different sectors
(including volunteer
contributions) 983090983088983088983096
Source
Satellite Account of Non-
profit Institutions and
Volunteering Statistics
Canada 983090983088983088983096
CANSIM table 983091983095983097ndash983088983088983091983089
Statistics Canada
State of Global
Civil Society and
Volunteering
Johns Hopkins
University 983090983088983089983091
22 The Charitable Sector Shares Many of the
Characteristics of the Broader Service Sector
of the Economy
FIGURE 983092
Contribution of Core
Nonprofit Sector by
Area of Service 983090983088983088983096
Source
CANSIM table 983091983096983096ndash983088983088983088983090
Statistics Canada
983096 The service secor broadly
encompasses hose
indusries ha do no
produce angible oupu
ransporaion and
sorage communicaions
wholesale and reail rade
1047297nance insurance and
real esae (FIRE) and
communiy business and
personal serv ices (CBPS)
Lagging Produc iviy
Growh in he Service
Secor Mismeasuremen
Mismanagemen or
Misinformaion Dinah
Maclean Research
Deparmen Bankof Canada
Manufacturing EnergySector
CharitableSector
Oil and Gas CoreCharitable
Sector
AgricultureForestry
Fishing and
Hunting
Utilities0
2
4
6
8
10
12
14
0
5
10
15
20
25
C u l t u
r e a n
d
R e c r e
a t i o n
O t h e
r E d u
c a t i o
n
a n d R
e s e a
r c h
O t h e
r H e a
l t h
S o c i a
l S e r v
i c e s
D e v e
l o p m e
n t
a n d H
o u s i n
g
F u n d
r a i s i n
g G r
a n t m
a k i n g
a n d V
o l u n t a
r i s m
R e l i g
i o n
B u s i n
e s s P
r o f e s
s i o n a
l
A s s o
c i a t i o
n s a n
d U n i o
n s O t h e
r
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The service secor is he fases growing componen of ad-
vanced indusrial economies The growh of he chariable
secor reflecs he growh in he service secor in general In
Canada for example he share of goods-producing aciviy in
he economy has fallen from 35 in 1997 o 30 in 2013 mdash he
coninuaion of a rend o a more service-dominaed economy
which has been observed since abou 1960
Daa on employmen published by Saisics Canada reveals
ha abou 78 of working Canadians are currenly employedin he service secor (wih abou 10 of working Canadians
employed in he chariable secor) Because mos chariies fo-
cus on service delivery hey end o be quie labour inensive 9
Many service industries deliver personalized serviceshellip
on average about one third of operating expenses in
the service industry goes toward paying salaries and
wages The share is even higher in industries reliant on
highly trained employees wages account for 54 in
the accounting and book keeping industries and 47 in
engineering services10
Service indusries end also o employ more women han men
In 2014 55 of employees in service indusries were women
FIGURE 983093
GDP Contribution of
Goods-producing
and Service Sectors
983089983097983097983095ndash983090983088983089983091
Source
Statistics Canada
CANSIM table 983091983095983097-983088983088983091983088
983097 The degree of labour
inensiy is ypically
measured in proporion
o he amoun of capial
required o produce he
goodsservices he higher
he proporion of labour
coss required he more
labour inensive he
business htpwwwinvesopediacomermsl
laborinensiveasp
983089983088 Canada Yearbook 983090983088983088983094
Saisics Canada
983090983088983088983094 htpwww983092983089
sacangcca983090983088983088983094983088983089983094983091
ceb983088983089983094983091_983088983088983088-enghm Thi
places he amoun char iie
wih heir highly educaed
work forces spend on
wages and salaries in an
appropriae conex
0
10
20
30
40
50
60
70
80
20132012201120102009200820072006200520042003200220012000199919981997
Goods-producing
Service
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The healh care and social assisance indusries employ an
especially large number wih 18 million women occupying
82 of jobs in he field11
The labour inensiy of he secor has led o concerns abou
produciviy growh and he rise of he knowledge economy
which will be explored in a subsequen secion
Chariies are small businesses albei wih some special
characerisics Boh he chariable secor and he small busi-
ness secor consis of a large number of small eniies Daa
from he NSNVO12
shows ha in 2003 here were 161227 chari-ies and nonprofis in Canada The majoriy (54) employed
no paid saff Only 2 had paid saff of 100 or more
Irsquos a similar sory in he small business secor which is dom-
inaed by a large number of small firms13 he vas majoriy of
which (98) employ fewer han 100 paid saff Less han 2
employ 100 people or more
23 The Charitable Sector has Much in
Common with the Small Business Sector
FIGURE 983094
Charities by number
of employees 983090983088983088983091
Source
National Surveyof Nonprofit and
Voluntary Organizations
Statistics Canada 983090983088983088983091
983089983090 Naional Survey of Nonprofi
and Volunary Organizaion
Saisics Canada 983090983088983088983091
983089983089 Saisics Canada CANSIM
able 983090983096983090ndash983088983088983088983096
983089983091 Key Small Business Sai sic
Indusry Canada Augus
983090983088983089983091 htpwwwicgcca
eicsie983088983094983089nsfeng983088983090983096983088983092
hml
100+25 to 99
54
26
8
6
4 2
None
1 to 4
5 to 9
10 to 24
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Boh secors are characerized by significan risks o success
and coninuiy Barriers o enry are relaively low and barriers
o success are relaively high Therefore here is a significan
rae of enry and exi in boh he chariable and small business
secors for a variey of reasons including bankrupcy illness
reiremen or he fulfilmen of mission
FIGURE 983095
Businesses in Canada
by size 983090983088983089983090
Source
Key Small Business
Saisics Industry Canada
FIGURE 983096
Net business entrants
983090983088983088983088ndash983090983088983088983096
Source
Firm dynamics Firm
Enry and Exi Statistics
Canada 983090983088983088983088ndash983090983088983088983096
Small (1ndash99)
Medium (100ndash499) Large (500+)
9822
164 014
0
5000
10000
15000
20000
25000
30000
200820072006200520042003200220012000
Goods-producing
Service
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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ldquoProductivity isnrsquot everything but in the long run it is
almost everything A countryrsquos ability to improve its
standard of living over time depends almost entirely
on its ability to raise its output per workerrdquo
Job creaion and economic growh remain core objecives for
governmens and ldquohe fases way o boos produciviy and
economic growh is o innovaerdquo 15 I is ineviable hen ha
produciviy issues will generae a significan amoun of policy
and research aenion Wih he absolue size of he chariable
secor and is rapid growh quesions abou produciviy and
innovaion are in many ways difficul o answer
The chariable secor is essenially a service secor and
Over the past three decades the rapid growth of the
economyrsquos service sector and the increasing interest
in the sector on the part of both scholars and policy
makers have helped give currency to three perceptions
about service industries The perceptions are that
(1) the service sector is composed entirely of industries
that have very low rates of productivity growth
(2) service industries are highly labor intensive and low
in capital intensity and (3) shifts in employment to the
service producing sector have been a major reason for
the slowdown in productivity growth over the past
10 to 15 years16
Funding for innovaion is difficul Boh he small business
secor and he chariable secor are dominaed by small firms
mdash and he availabiliy of resources o spend on research and
developmen (RampD) is ied o he size of businesses Large
24 Productivity and Innovation in the Charitable Sector
mdash Paul Krugman The Age of Diminished Expectations (1994)
983089983093 Indusr ial Research and
Developmen Inenions
Saisics Canada 983090983088983089983090
and calculaions by
Indusry Canada
983089983094
The service-producingsecor some common
percepions reviewed Rona
E Kuscher and Jerome
A Mark Monhly Labor
Review April 983089983097983096983091
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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businesses accoun for fewer han 02 all employer business-
es bu accouned for over 50 of all RampD expendiures in 2009
(Figure 10) Small businesses make up 98 of all employer
businesses on he oher hand bu accouned for only 31 of
oal RampD expendiures17
In addiion chariies may exhibi oher characerisics ha
make innovaion difficul
Changes in the market and new opportunities mdash often
the result of new technologies mdash drive economic pro-
gress Social organizations are slower to adapt since
their revenues are less sensitive to changes in demand
need and performance and their market is often seen
to be their funders rather than the constituencies or
causes they serve Funding models are based on avoid-
ing risk rather than experimenting with new approaches
that might increase effectiveness Fresh ideas emerge
through the creation of new organizations but they
enter a crowded marketplace and are often unable to
demonstrate convincingly their superior efficacy For
established organizations technological innovation is
frequently viewed more as a problem than as a source
of creativity18
FIGURE 983089983088
Percentage of total
expenditures on RampD
by firm size 983090983088983088983097
Source
Industrial Research and
Development Intentions
Statistics Canada 983090983088983089983090
and calculations by
Industry Canada
983089983095 Ibid
983089983096 On No Leting a Crisis Go
o Wase Tim Brodhead
The Philanhropis
Vol 983090983091 No 983089 983090983088983089983088
Small (1ndash99)
Medium(100ndash499)
Large (500+)
31
18
51
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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As chariies posiion hemselves as an imporan economic secor
as a source of jobs and growh o be encouraged and suppored
by governmen quesions of innovaion and produciviy will
become more and more pressing
In many ways chariies are seen as good places o work where
well moivaed and well educaed people wih a sense of mis-
sion of waning make a difference can find meaningful and
fulfilling employmen Beyond his hough here are a hos
of more boom-line pracical quesions abou he desirabiliy
of working in he secor How do wages and benefis in he
chariable secor compare o oher employers Does a periodof employmen in he chariable secor increase an employeersquos
markeable skill se producing a resume ha is aracive in
he broader economy Is HR capaciy in he secor adequae o
arac and mainain he necessary work force
The work force in he chariable secor is well educaed relaive
o he general levels of educaion in he work force wih more
han 90 of employees having some pos-secondary educaionand some 71 having a college diploma undergraduae or
graduae degree
25 The Charitable Sector as a Place to Work
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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FIGURE 983089983089
Education level of
nonprofit employees
Source
Towards a Labour Force
Sraegy for CanadarsquosVolunary and Non-profi
Secor HR Council for
the Voluntary and
Non-profit Sector 983090983088983088983097
While he chariable labour force is well educaed and
herefore mobile hisorically he secor pays less han mar-
ke wages o mos of is full-ime employees The someimes
dramaic gap is said o be jusified by he psychic or nonndashmon-
eary rewards afforded by he work or by he high level of mo-
ivaion and commimen demonsraed by many who work in
he secor In a recen survey by he HR Council for he Volun-
ary amp Nonprofi Secor an impressive 96 of respondens said
hey were somewha or very commied o heir organizaion19
Organizaions are beginning neverheless o experience diffi-
culy aracing and reaining saff The lack of job securiy due
o irregular and shor-erm projec funding limied opporuni-
ies for advancemen wihin organizaions long hours (usually
unpaid) and someimes poor personnel pracices are cied
as reasons for his difficuly Surveys of younger employees
and job seekers also sugges ha expecaions are changing
enrans ino he labour marke wan a beer balance beween
work and personal lives which is a odds wih he ehos of
selfless service ha permeaes many chariies In he same HR
Council Survey nearly half of employers who ried o recrui
saff in he pas year said i was ldquodifficulrdquo or ldquovery difficulrdquo
983089983097 Toward a Labour Force
Sraegy for Canadarsquos
Volunary and Nonprofi
Secor HR Council for he
Volunary and Nonprofi
Secor 983090983088983088983097
Some Post-secondary
College Diploma
Undergraduate DegreePost-graduateDegree
Grade Schoolor some High School
High School
311
263
188
141
85
12
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -
983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -
The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -
Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -
Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2032- 20 -
Aenion o HR managemen can be under-resourced in boh
he small business and he chariable secor
Research conducted recently by Framework Founda-
tion reveals that of 197 courses offered by Canadian
post-secondary institutions on voluntary sector manage-ment only 22 (according to the course descriptions)
address such human resource issues as engaging
training and managing staff and volunteers On the
other hand one-third deal with fundraising and financial
management More attention needs to be directed to
how the community sector engages and trains a new
generation of volunteers who have different and more
demanding expectations but also much to contribute
20
FIGURE 983089983090
Professional
development
opportunities for
nonprofit staff
Source
Towards a Labour Force
Sraegy for Canadarsquos
Volunary and Non-profi
Secor HR Council for
the Voluntary and
Nonprofit Sector 983090983088983088983097
983090983088 Brodhead opci
0
10
20
30
40
50
60
In-houseTraining
Paid TimeOff for
ProfessionalDevelopment
Paymentof Some
All Fees
In-houseCareer
Counselling
In-houseMentoring
JobShadowing
UnpaidTime
Off forSelf-Study
Other None
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2132- 21 -
983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -
The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -
Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -
Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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983154983141983158983141983150983157983141 983142983151983154 9831399831449831379831549831459831569831379831389831489831419831519831549831439831379831509831459831629831379831569831459831519831509831553
Like any economic eniy for profi or nonprofi he charia-ble secor needs revenue o finance is operaions and fuure
susainabiliy and o inves o increase produciviy Unlike
mos for-profi firms hough chariies face a disconnec
beween sources of revenues and cusomers or cliens In he
privae secor i is cusomers who judge wheher producs or
services are adequae and heir decisions deermine wheher a
firm succeeds or fails There is lile or no conflic beween he
aphorism ha he cusomer is always righ and he old adageha he person wih he gold ses he rules In he chariable
secor i is funders who provide he revenue while cliens
are somewha passive beneficiaries of funding decisions by
governmens and donors
Chariies and nonprofis are funded by a variey of sources
Chariies sell memberships and some goods and servicesreceive money from governmens o deliver governmen pro-
grams and prioriies and receive donaions from individual
households and businesses
For he broadly defined chariable secor governmen ransfers
are he mos imporan source of revenue mdash reflecing he role
of universiies and hospials in achieving governmen objec-
ives in healh care and educaion
31 Sources of Funds for Broad and Core Charitable Sectors
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -
Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
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The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2232- 22 -
The breakdown of he various sources shows a high degree
of sabiliy over ime wih some indicaion ha he role of
governmen is declining slighly which is also rue of inves-
men income (reflecing he recession afer 2008) and ha
here is some sofness in donaions from individuals The core
chariable secor is much more member- and donor-driven
while governmen ransfers play a sill significan bu less
prominen role
FIGURE 983089983091
Sources of revenue
for broad charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983092
Sources of revenue for
the broad charitable
sector 983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
32
78
7121
51
Sales of Goods amp Services
MembershipFees
Current Transfers fromHouseholds amp Businesses
Current Transfersfrom Governments
Investment Income
0
10
20
30
40
50
60
200820072006200520042003200220012000199919981997
Sales of goods
Investment income
Membership fees
Current transferfrom governments
Current transfer fromhousehold amp businesses
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -
Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -
Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2332- 23 -
Wih respec o rends he decline in he role of governmen
is more apparen for he core chariable secor The weakeningin invesmen income and donaions from individuals is also
more eviden
FIGURE 983089983093
Sources of revenue
for the core charitable
sector 983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
FIGURE 983089983094
Core nonprofit revenues
983089983097983097983095ndash983090983088983088983096
Source
Statistics Canada
CANSIM table 983091983096983096ndash983088983088983088983089
133
209
171
36
451
Sales of Goods amp Services
Membership Fees
Current Transfersfrom Households amp
Businesses
Current Transfersfrom Governments
Investment Income
200820072006200520042003200220012000199919981997
Sales of goodsamp services
Investment income
Membership fees
Current transferfrom governments
Current transferfrom householdamp businesses
0
5
10
15
20
25
30
35
40
45
50
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -
Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2432- 24 -
Donaions accoun for 13 of all income for core chariies and
nonprofis bu donaions have a value o chariies ha is ou of
proporion o heir relaive size21
Donations may only contribute some 11 of charitiesrsquo
revenue but their value lies in their being (mostly) unre-
stricted unlike most of the money provided by govern-
ments foundations and corporate donors This source
therefore underwrites much of the operational costs of
organizations in the sector 22
Chariies receive donaions from boh corporaions and house-
holds wih he majoriy being donaions from householdsThis secion will focus on donaions from households Dona-
ions by Canadians o chariies have generally racked GDP
wih donaions as a percenage of GDP seady a roughly jus
under 05 of GDP However since 2007 he level of donaions
has fallen noiceably o 0439 of GDP This amouns o a
subsanial proporion of wha Canadians give each year
I is emping o aribue his decrease o recession and eco-
nomic uncerainy beginning in roughly 200708 Howeverhe ldquogrea recessionrdquo has been relaively mild in Canada wih
32 Donations
FIGURE 983089983095
Donations as a
percentage of GDP
983089983097983097983095ndash983090983088983089983090
(minus tax shelters)
Source
CANSIM tables 983089983089983089ndash983088983088983090
and 983091983096983088ndash983088983088983094983092 Statistics
Canada Charities
Directorate Canada
Revenue Agency
983090983090 Broadhead op ci
983090983089 CANSIM 983091983096983096ndash983088983088983088983089
Saisics Canada 983090983088983088983096
040
042
044
046
048
050
052
054
056
058
060
2012201120102009200820072006200520042003200220012000199919981997
Percentage of GDP
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2532- 25 -
GDP increasing slowly bu seadily over his period This
means changes in he underlying behaviour of donors mus
be examined
More roubling he percenage of people who file axes and
who claim chariable donaions is also on he decline The
percenage of people who file axes and claimed chariable
donaions is down from 257 in 1997 o 2238 in 2012A larger drop has been observed in men han women bu
fewer members of boh sexes are claiming donaions
The populaion of hose who end o donae he mos is geing
older From 1997 o 2012 he percenage of donors beween
he ages of 55 and 64 increased by 7 from 14 o 21 The
percenage of donors above he age of 65 also increased by
3 from 23 o 26 These increases came a he expense ofyounger groups of donors The percenage of donors aged 35 o
44 decreased by 8 while he percenage of donors aged 25 o
34 decreased by 2
FIGURE 983089983096
Percentage of taxfilers
claiming donations
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
16
18
20
22
24
26
28
30
32
2012201120102009200820072006200520042003200220012000199919981997
Male
Total
Female
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2632- 26 -
These rends sugges ha chariies are failing o arac young-
er donors who are enering he workforce for he firs ime
There are a number of possible explanaions for his phe-
nomenon Religious insiuions play a very large role in he
chariable secor and place a significan emphasis on chariy
bu Canadians are becoming increasingly less religious Young
professionals may also feel ha chariies are no doing a good
job and are failing o innovae If chariies fail o innovae
people migh perceive hem as old fashioned and ineffecive
which would make hem less likely o donae I is also possible
ha people feel ha he ax reamen hey would receive for
donaing is no a sufficien incenive
Despie he poenial issues wih donaions chariies sill
receive he majoriy of heir funds from he governmen
Governmen funding represens a subsanial porion of he in-
come for chariies in he form of grans and reimbursemen for
delivering services Of he oal funding for he core chariable
secor for example 15 comes from provincial and erriorial
governmens 55 comes from he federal governmen and
08 comes from municipal governmens23
FIGURE 983089983097
Percentage of
donors by age group
from 983089983097983097983095 to 983090983088983089983090
Source
Statistics Canada
CANSIM table 983089983089983089ndash983088983088983088983090
33 Government Funding
983090983091 CANSIM able 983091983096983096-983088983088983088983089
Saisics Canada 983090983088983088983096
0
5
10
15
20
25
30
2012201120102009200820072006200520042003200220012000199919981997
0 to 24
25 to 34
35 to 44
45 to 54
55 to 64
65+
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2732- 27 -
The role of he federal governmen is saisically small relaive
o he provinces reflecing he predominan role of provincial
governmen in healh educaion and social services Bu he
role of he federal governmen canno be underesimaed mdash i
is he level of governmen which deermines he ax reamen
of he donaions under he Income Tax Ac for example I is
also he level of governmen responsible for overall economic
policy affecing he growh of GDP and employmen and here-
fore of he capaciy of people o donae I is also he funder of
huge ransfer programs such as unemploymen insurance old
age securiy and pensions The generosiy or lack of i of hese
broad social programs goes a long way o deermining he role
chariies need o play in meeing he needs of sociey
The federal governmen is becoming relaively smaller in
economic erms This is in par relaed o he goal of he
presen governmen o reduce he role of governmen in he
lives of Canadians I is also par of a longer-erm rend as
governmens world-wide have encounered fiscal pressures
In fac he size of he federal governmen has been declining
seadily since 1997 as successive governmens have sruggled
wih fiscal challenges and defici conrol Overall governmenspending as a percenage of GDP declined over 3 from 1997 o
2009 wih an upick in 2010 o reflec a shor-erm increase in
expendiure in response o recession
FIGURE 983090983088
Government expenditure
as a percentage of GDP
from 983089983097983097983095 to 983090983088983088983097
SourceStatistics Canada
CANSIM tables 983091983096983093-983088983088983088983089
and 983091983096983088-983088983088983094983092
0
5
10
15
20
25
2009200820072006200520042003200220012000199919981997
Local Governments
Federal Government
Provincial amp Territorial
Government
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2832- 28 -
One response o reduced federal expendiure can be a move by
provincial and municipal governmens o ake up he resuling
fiscal room and expand heir own expendiures This in gene-
ral has no occurred in recen years Provincial and municipal
spending has remained relaively sable as a percenage of GDP
as provinces and municipaliies have had o cope wih heir
own fiscal pressures
An addiional concern is he make-up of expendiures as he
federal governmen has become smaller has spending on
social programs become relaively smaller The answer appears
o be no mdash he federal governmen has chosen o keep hings
like ransfers o individuals relaively sable as a percenage of
federal expendiure However since overall federal spending
is declining in relaion o GDP so is overall federal spending on
social programs
The picure his pains is one of a Canada which is aking on
a differen characer one in which governmen will do less and
chariies will need o do more This rend isnrsquo likely o reverse
iself soon mdash he curren conservaive governmen is expeced
o lower axes in he near fuure meaning ha governmen
FIGURE 983090983089
Federal social
services spending as
a percentage of GDP and
as a percentage of total
federal spending
Source
Statistics Canada
CANSIM tables 983091983096983088ndash983088983088983094983092
and 983091983096983093-983088983088983088983089
GDP
Federal Expenditures
0
5
10
15
20
25
30
35
40
45
2009200820072006200520042003200220012000199919981997
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 2932- 29 -
spending will likely coninue o shrink making i relaively
difficul for fuure parliamens o increase spending and he
role of governmen
While facts speak to the robustness of Canadarsquos non-
profit sector and its integral role in Canadian society
more organizations are facing increasing sustainability
challenges in the face of uncertain revenues and esca-
lating service demands driven by demographic changes
and exacerbated by the recent recession 24
The chariable secor has enjoyed rapid growh over he pas
couple of decades or so oupacing he rae of growh of he
economy and of he service secor as a whole Bu growh and
he jobs i generaes can only be susained if here are reve-
nue sreams o suppor i Chariies rely on he hree pillars
of governmen funding philanhropy and earned income Of
hese boh philanhropy in he form of donaions from indi-
viduals and governmen funding are under hrea because of
fundamenal changes in demographics culure and he ongo-
ing fiscal pressures encounered by governmens worldndashwide
While earned income aciviies have done well increasing as a
percenage of chariable revenues over he las few years i is
quesionable wheher hey can be expeced o fill a gap which
is emerging and which will grow as governmens cu back
on social spending This is especially rue in Canada where
chariiesrsquo effors o increase earned income are consrained by
legislaive and regulaory barriers
34 Membership Fees and Sales of Goods and Services
983090983092 Srenghening he Third Pill
of he Canadian Union An
Inergovernmenal Agenda
for Canadarsquos Chariies
and Nonprofis ElizabehMulholland Mathew
Mendelsohn Negin
Shamshir Mowa Cenre
for Policy Innovaion 983090983088983089983089
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3032- 30 -
983152983151983148983145983139983161 9831459831499831529831489831459831399831379831569831459831519831509831554
While his paper has been largely descripive some of he pol-icy implicaions of a review of he secorrsquos srucure and con-
ribuion o he Canadian economy are clear Canadarsquos chariies
and nonprofis are a large and growing par of he Canadian
economy They generae jobs and growh and provide valuable
services ha are more and more in demand In his respec
Canadarsquos economy is changing and keeping pace wih develop-
mens in oher advanced indusrial economies The growh of
he secor in Canada means ha he counry is well posiionedo be successful in he global economy of he 21s cenury
Firs his means ha effecive overall managemen of he
economy (he fiscal framework moneary policy indusrial
policy) should increasingly be sensiive o he needs of he
chariable and nonprofi secor as well as secors more radi-
ionally hough of as ldquoeconomicrdquo Of course his means ha
chariies and nonprofis need o be aware of heir economicrole and naure and inerac wih governmens on economic
policy as well as for example social and environmenal
policy issues
Second o suppor jobs and growh and value he full suie of
suppor programs available o small privae business should be
exended o he chariable secor and would produce significan
benefis o he economy in erms of jobs and growh increased
produciviy and he abiliy o innovae
Third if chariies are o be able o susain conribuions o
jobs and growh hey will need o work wih governmen o
explore opions o increase funding in wo key areas conri-
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3132- 31 -
buions from individuals (hrough improved ax reamen of
donaions) and opions o expand earned income from heir
own effors and use i for chariable purposes The laer means
addressing regulaory and income ax barriers o expanding
earned income and exploring social finance and invesmen
more broadly
Fourh as an imporan and rapidly growing secor of he
economy he secor requires and warrans beer daa collec-
ion and analysis by governmen similar o daa collecion
analysis and suppor for he small business secor
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International
7252019 Imagine canada Charities in Canada as an Economic Sector 2015-06-22
httpslidepdfcomreaderfullimagine-canada-charities-in-canada-as-an-economic-sector-2015-06-22 3232
983137983138983151983157983156 983156983144983141 983137983157983156983144983151983154983155
983138983154983145983137983150 983141983149983149983141983156983156Chief Economist for Canadarsquos Charitable and Nonprofit Sector
In 2013 Brian Emmett joined Imagine Canada in the unique role of the
Chief Economist for Canadarsquos Charitable and Nonprofit Sector As Chief
Economist Brian is tasked with measuring the impact of the sector and
bringing economic issues facing charities and nonprofits to the forefront
of public policy decision makers imaginecanadacachief-economist
The position of the Chief Economist for Canadarsquos Charitable and Nonprofit
Sector is made possible through funding received by The Muttart Foundation
Ontario Trillium Foundation mdash an agency of the Government of Ontario
Vancouver Foundation an anonymous donor and the PricewaterhouseCoopers
Canada Foundation
983143983141983151983142983142983154983141983161 983141983149983149983141983156983156Research Assistant
Geoffrey Emmett is an honours graduate of south Carleton High School in
Ottawa where he captained the basketball and rugby terms and was named
male athlete of the year He is currently enrolled in management engineering
at the University of Waterloo Other assignments have included work in
logistics for Magna International