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New Study: Ongoing impacts of the COVID-19 crisis on the charitable sector

New Study: Ongoing impacts of the COVID-19 crisis on the charitable sector

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Nearly a year into the pandemic, how does the COVID-19 crisis continue to affect charities’ ability to carry out their mission?

While most charities have been able to adapt and innovate to continue to offer services and programs to their communities since the onset of the pandemic, the situation remains challenging. For the vast majority of organizations, the constraints and uncertainty of the pandemic, paired with social distancing mandates, are driving significant shifts to organizational priorities. Nearly a year since the onset of the pandemic, the COVID-19 crisis continues to have a significant impact on demand, capacity, and revenue, and is influencing staffing decisions and volunteer contributions.

The crisis is dramatically changing how many organizations operate. Findings from our second COVID-19 Sector Monitor study show the ongoing effects of the pandemic on the charitable sector.  

 

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Summary of key findings

There is a growing gap between demand and capacity.Many charities are experiencing higher demand, while at the same time grappling with staff and volunteer shortages. Organizations are being stretched to do more, and the increased pressure is taking a toll on employees. 

  • Close to half of charities are reporting higher demand, a sharp increase from the initial surge reported early in the pandemic.
  •  A significant number of charities experiencing increased demand have to meet it with fewer staff members and, in particular, fewer volunteers.
  • 31% of charities currently have fewer paid staff than they did prior to the pandemic. Hours worked by paid staff, however, appear to have partially rebounded. 
  • 60% of charities are reporting a decline in their number of volunteers and 58% a reduction in volunteer hours.
  • 50% of charities are reporting that their staff’s ability to maintain an appropriate work/life balance and avoid burnout has decreased.

Despite a slight improvement since the spring, the financial situation of most organizations remains fragile. Organizations are also unevenly impacted, depending on their revenue model.

  • Over half of charities are reporting a decline in revenues since the onset of the pandemic, with an average decline of 43%.
  • Revenue from donations and earned income has declined for most charities, while support  from the government has tended to increase.
  • 75% of charities are reporting a decline from at least one type of donation since the beginning of the pandemic. Event-based fundraising is seeing the most pronounced decline.
  • To offset the losses, organizations are drawing on reserve funds, acquiring debt, selling assets, and reducing expenses related to their paid and volunteer staff.

Support measures introduced by the federal government are playing a significant role in preserving employment within charities. A significant number of charities are reliant on programs - the CEWS in particular - to operate at their current level.

  • 42% of charities have received some form of support from one or more of the following  programs: the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Commercial Rent Assistance (CECRA),  and the Canada Emergency Business Account (CEBA).
  • 53% of charities with paid staff have applied for CEWS and the support is helping keep, on average, 54.8% of paid staff positions for these organizations.
  • Charities that did not apply for the various support programs cited the belief that they would not meet the eligibility requirements as being the most prevalent barrier

Organizations are adapting, innovating, and demonstrating resilience, but their long-term sustainability may be at risk.

  • Charities are making investments to meet higher demand and adapt to provide services to the populations they serve and fulfill their missions.
  • 78% of charities have increased innovation and experimentation.
  • 67% of charities have been prioritizing work that addresses immediate challenges over work that builds or maintains their long-term organizational capacity.

The diversity of the sector is being challenged. Some groups have been particularly affected by social distancing measures and revenue shortfalls, which threatens the diversity of programs and services offered to communities. 

  • A significant proportion of arts, culture, and  recreation organizations are reporting declines in both demand and capacity. They are also over twice as likely as other organizations to have temporarily suspended their operations.
  • Smaller, community-focused organizations (serving a single neighbourhood, town, city, or rural municipality) are more likely to report decreased capacity. In addition, smaller-sized organizations are more likely to have temporarily suspended their operations.
  • Charities serving multiple groups/populations (seven or more) are more likely to see demand growing faster than organizational capacity.

Charities are reporting a more positive situation than in the early stages of the pandemic; however, they are also more likely to be pessimistic rather than optimistic when forecasting their financial situation over the near-term.

  • A significant fraction of charities are concerned about their long-term viability. Only about a third believe they are sustainable, in the sense of being able to operate indefinitely in current conditions.
  • Close to a third believe they can operate for longer than a year but will have to cease operations at some point.16% believe they will not be able to operate longer than a year if trends continue, and about as many are unable to say how long they will be able to operate for.
  • Charities are roughly three times more  likely to believe that their financial situation will worsen over the next three to six months than improve if current trends continue. Only about half are ruling out  layoffs and/or reductions in paid staff hours.

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About this report

Findings are based on a national survey of 1,089 charities conducted between November 3 and December 2, 2020. This research follows Imagine Canada’s first COVID-19 study, conducted in the early days of the pandemic. In addition to these topline findings, the research report contains detailed information by organization size, sub-sector and principal source of revenue. The study focuses on registered charities because it uses data from T3010 information returns to weight responses so they are more representative. Read the full report for additional insights.

Why this research matters

Services provided by charities are vital to helping our communities through the COVID-19 crisis and ensuring a strong recovery. Understanding the impacts of the pandemic on the capacity of charities to deliver services, and the related effects on their operations, revenues, and workforce, will help inform decision-making of sector leaders as well as provide context around what is needed for a healthy recovery. Beyond providing essential services to millions, Canada’s nonprofit sector is a critical engine of economic growth and jobs. Nonprofits and charities account for 8.5% of GDP and employ 2.4 million Canadians, of which 70% are women.

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