Who provides the money to charities?

One might think in Canada, with all its emphasis on social programs, that the government provides a larger percentage of funding to nonprofit organizations that does the United States. According to Charity Village, that’s not true. In Canada 31% of revenues to charities come from government; US governments provide 57%.

The differences don’t end there. Canadian charities rely on fees for service (51% of revenues)  more often than their US counterparts (31% of revenues). Revenues from philanthropy in Canada are 9%, compared with 12% in the United States. 

Who knows what the benchmark should be, but Charity Village reports the following: “The global average of civil society sector revenue breaks down as follows: government contributions contribute 35% of revenue, fees and charges contribute 53% of revenue, while philanthropy contributes only 12% of revenue.”

So what does it all mean? First, philanthropy is currently not the major financial fuel for charities, which is probably important to keep in mind. Relationships with governments and their various granting streams are probably more important for most service providers than focuing on growth in revenues from donors.

Second, in Canada, hard economic times which result in government cutbacks to charities will impact service recipients to a greater extent, given the already high dependence on user fees and a lower rate of revenues of philanthropy compared with the United States or worldwide.

One current unknown is if the above data includes health care in the equation. If not, Canada’s data would look different that that of the United States (i.e. universal healthcare compared to market driven healthcare).

Implications for Canadian charities:

1. Get more adept at your relationships with governments is probably the first priority or work to ensure those organizations that represent you (associations, Chambers of Voluntary Organizations) are doing that.

2. While your own capacity to solicit donations from individuals may not be strong, work on relationships with United Ways or, if appropriate to your “field” with federated fundraisers.  For some organizations it might be possible to take advantage of some of the new ways to fundraise that meet the needs of younger people who tend to raise money and mobilize volunteer support in non-traditional ways (I will write more about that another time).

3. Explore ways to leverage new technologies, many of which are free or low cost, to handle communications and operational functions. Not only will technology help decrease costs in the long run, they provide new – and often better – ways to connect, communicate, and engage your constituents. Collaborative use of technology is another option.

If you want to know more about how to think about, plan for, and execute some of these changes, let me know. (Email)

One thought on “Who provides the money to charities?

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