For further information, read our in-depth analysis of Budget 2017, which examines the link between the pre-budget recommendations and advocacy carried out by the sector and the announcements made by the government.
It was released almost two weeks ago, but Budget 2017 remains highly relevant to the charitable and nonprofit sector. The sector is a significant contributor to the federal budgetary process, providing important recommendations to the government that impact many areas of Canadian life. By our count, 104 charities and 82 nonprofits made 2017 pre-budget submissions to the Commons Finance Committee. That’s more than double the number five years ago and accounts for a significant proportion of the input the Committee receives. Either working alone or in broader coalitions, the ideas put forward by the sector have had an impact.
As a whole, what does Budget 2017 mean for charities?
Our sector is greatly affected by the broader economy. Donations tend to be a somewhat constant percentage of GDP – so when overall growth is high, donations also rise. In times of growth, governments at all levels have more to invest in the programs and services we provide. Even though most of the public funding that comes into the sector is at the provincial or municipal level, those budgets are affected by federal transfers. Federal budgets are felt throughout the economy, even for those of us who don’t benefit from federal funding.
Our Chief Economist projects that demand for the broad range of services charities and nonprofits provide will continue to grow more quickly than the economy, leading to a social deficit – the mismatch of needs and revenue as organizations struggle to fulfill their missions while economic growth slows.
Smart economic growth is good for charities
A key element of long-term financial sustainability for the sector is then a growing economy and growing revenues. Smart economic growth, as in growth that is equitable, inclusive and environmentally responsible, is particularly good for charities. From this point of view, there are positive elements for charities and nonprofits if the government’s growth agenda laid out in Budget 2017 is successful. For example, we welcome the government’s commitment to ongoing efforts to invest in infrastructure and innovation. The ripple effects of such investment are felt at the community level and by organizations.
The budget continues the government’s focus on the economic health of middle-class Canadians, encouraging skills acquisition and job creation. This is a worthwhile objective in itself, but also good for an important class of donors.
The government also continues its commitment to inclusive growth, containing specific measures to ensure that underrepresented groups benefit from innovation and infrastructure programs. The budget’s gender statement (a first for Canadian budgets) attempts to ensure that the impacts of policy decisions on gender, as well as other intersecting identity factors, are recognized and tracked over time.
Budget 2017 is a lost opportunity for the sector
There are, however, also missed opportunities, for the government and for charities. We had hoped that Budget 2017 would take steps to advance the government’s commitment to a new and modern legal and regulatory framework for charities and nonprofits, but the budget was silent on this issue.
Indeed, the only measure broadly affecting the sector was confirmation that the First-Time Donor’s Super Credit will not be renewed beyond 2017. The Department of Finance estimates that the Super Credit will have generated $84 million in new donations over a five-year period. Proportionate to sector revenues – or even to the total of all donations – this is unlikely to have a great effect, but it sends a disturbing message that seems at odds with the ambitious agenda the government itself laid out for the sector.
Social goals seen through an economic lens
Perhaps the biggest observation to make from Budget 2017 is the signal it sends regarding how the government views its policy priorities. Social goals are largely subsumed within the framework of economic growth. This may seem logical, however other budgets, notably Budget 2015, dedicated a section to the charitable and nonprofit sector.
We are an important sector, that creates jobs and contributes to growth, but once again there is no mention of the role we play in the economy. Similarly, there is no commitment to the role we play in productivity, infrastructure, and innovation. Charities and nonprofits are only included within the innovation and infrastructure agenda as potential applicants to programs or innovation funds. The health of the sector and the contributions it makes to Canada are largely ignored.
Although this may be unsurprising, it’s a signal worth noting. Charities should consider this framing as they advocate for their causes with the federal government, perhaps showing how their advocacy asks contribute to innovation and the wage economy. This is not to say that social, environmental, cultural, or other policy ideas can’t succeed on their own merit, but that the chances of success are greater if links to the government’s broader economic agenda can be demonstrated.
At the end of the day charities and nonprofits are left in much the same position they were before the budget – with demands driven by demographic and cultural factors that will continue to increase faster than the economy, with an outdated and dysfunctional set of relationships with government that prevents us from doing our job, and with our contributions to jobs and growth and innovation unrecognized in policy and program development. While economic growth will help the sector, the government needs to come to grips with the looming social deficit. The demand for healthcare, for example, will soon outpace transfers to the provinces. The resulting squeeze will likely lead to less funding for organizations, and higher expectations for them to provide services. So far, the federal government has not considered the broader impact of its economic policies on charities and nonprofits. This is something we all need to work together to change.
That being said, Budget 2017 does contain a broad range of proposals and commitments that will be of great interest to individual organizations and the communities they serve. Despite the lack of overarching attention to our sector, charities and nonprofits have been actively engaged in Canada’s policy development and federal budgetary process. We invite you to read our summary of these activities and the budget measures that affect our sector most.