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For Canadian charities, innovation is one path to success
A healthy December bump eased what would otherwise have been a dismal year for Canadian charities. They will remember 2020 as a time of painful disruption, when virus-fighting measures stemmed or halted the flow of donations.
Overall giving fell 4% in Canada last year, according to RBC data. The decline masked some sharp divergences within the sector, with some organizations seeing increased contributions and others getting nothing—literally.
“I think the thing that’s going to persist is that many of these organizations to survive, they had to become online overnight,” said Kelly Schmitt, incoming CEO of Benevity, whose software helps coordinate giving and volunteering, on a recent episode of Disruptors, an RBC podcast. “There’s been no charity galas, no golf tournaments. The fundraising activity that they used to do just completely dried up.”
Charitable giving has fallen in times of recession before. It dropped sharply in the 2008-2009 financial crisis, declining more than 5% in each year according to Statistics Canada (data for 2020 is not yet available). This time around, what was an existential crisis for some was an opportunity for others to innovate—to embrace new technologies and platforms to reach longstanding supporters, and attract new ones.
The pandemic dealt an uneven blow to Canada’s charities.
Almost 42% of organizations that had received donations in 2019 got less in 2020, according to RBC data. The combined damage amounted to $60 million less in donations. Some charities did fine; 27% received zero dollars in 2020.
The biggest collective hit came in May, early in the pandemic, when giving plunged 30% from a year earlier. In December, donations rose 21% from a year earlier, as many Canadians rushed to lock in contributions before the end of the tax year.
Small, grassroots organizations are at greatest risk, according to a report from Imagine Canada, a non-profit that promotes the work of thousands of Canadian charities. They tend to have fewer financial reserves, and many of their typical donors were hit hard by the economic downturn.
The loss of live events really hurt.
Despite widespread job losses, Ottawa’s support programs ensured household disposable incomes never fell below 2019 levels. That suggests the decline in giving over the course of 2020 had less to do with financial hardship than with the absence of live events so critical to fundraising. Overnight, charities were unable to rely on tried-and-true approaches to capturing donations—door-to-door canvassing, live auctions, walks and runs, even bake sales.
YMCA Canada has asked for urgent support from the federal government, after revenues decreased dramatically due to cancelled in-person programming and fundraising events. The Salvation Army’s iconic Christmas kettle campaign also fell short of its fundraising targets in several areas as COVID restrictions limited foot traffic in public spaces and shrunk the pool of available volunteers.
Amid the decline in giving, charities are being forced to do more with less. A November 2020 survey from Imagine Canada revealed that 68% of charitable organizations have seen a decline in donations since the onset of the pandemic, even as 46% of these organizations reported an increase in demand.
Digital tools enabled some charities to thrive.
Those organizations that had a virtual presence or pivoted to online payments and fundraising fared better. Canada Helps, a national platform that accepts online donations for registered charities, captured almost 33% of the December increase in donations, according to RBC data. Employees and customers of Benevity’s corporate clients donated $500 million of their own funds through the Calgary-based firm—a 76% increase over last year.
“We definitely learned that it pays to invest in your digital infrastructure,” said Todd Minerson, country director for Movember. “We’ve been an online charity since 2010, basically, and having that platform ready and available for people to participate was a huge part of how we got there this year.”
Some charities found a way to convert live events into virtual ones with the help of apps like Strava and Zwift.
Religious and health-related charities fared better.
Religious charities and those focused on health saw their receipts increase compared to 2019. Charities with an international or educational focus were battered. Companies shifted their giving patterns too. Under Benevity, companies stepped up campaigns aimed at combatting COVID-19 or racial inequality, with average total donation amounts rising by 150% in April and 215% in June.
The digital shift hit this sector too.
As with other economic sectors, the charitable sector can benefit from the scale that digital offers: the potential to reach far more donors. One in seven people who’re asked to give at a Walmart checkout do so, according to Benevity’s Schmitt. “Once again, a big driver of donations is simply just being asked,” she said. Digital fundraising offers a more efficient way of doing that.
Benevity has facilitated $6 billion in donations and 34 million hours of volunteering. Digital platforms can also be used to encourage micro-donations, which can add up rapidly, particularly when companies match gifts, Schmitt said. “Without considering the company match that might be provided, the average donation size on our platform is in the neighborhood of $50, yet over $2-3 billion was donated through the platform in 2020.”
This RBC report uses RBC Data & Analytics’ proprietary database of anonymized card transactions by Canadian clients. The data are an accounting of merchant transactions, both in person and online. We exclude purely financial transactions such as cash advances and insurance from spending. We use RBC data as a substantive indicator of the broader market. We draw insights from a broad range of sources including this data.
Online spending volumes are estimated based on the presence of an RBC card at the time of the authorization.
Ensuring consistent identification of charitable organizations and linking them together over time is done on a best-efforts basis. As more charities have adopted online platforms, it is possible that a number of organizations identified as receiving zero donations are actually the result of a missing link as the organization adopted new fundraising approaches and online platforms.
Protecting your privacy and safeguarding your personal information is a cornerstone of our organizational ethics and values and will always be one of our highest priorities. The underlying data for this analysis was aggregated based on transaction date, region and merchant category, and cannot be used to identify any individual client or merchant. For additional information please visit www.rbc.com/privacy.
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Rannella Billy-Ochieng’ is an economist at RBC. She holds a Bachelor of Science (Honours) in Economics & Accounting from University of the West Indies, Master of Research in Money, and Banking & Finance from Lancaster University and a Master of Arts in Economics from the University of Guelph.
Claire Fan is an economist at RBC. She holds a Bachelor of Business Administration from University of Toronto and a Master of Financial Economics from Western University.
Naomi Powell is responsible for editing and writing pieces for RBC Economics and Thought Leadership. Prior to joining RBC, she worked as a business journalist in Canada and Europe, most recently reporting on international trade and economics for the Financial Post.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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