Economy and COVID-19 continue to cause woes while the sector grapples with cybersecurity challenges
The year is drawing to a close. It was not quite normal, but it did mark the end of the acute phase of the COVID-19 pandemic. In May, the World Health Organization declared the end of the global health crisis, and it was the first year since 2019 that was not marked by public health lockdowns across the country.
The domestic story of the year was unquestionably rising inflation. Combined with a housing shortage, inflation has caused a cost of living crisis that has left many Canadians struggling to make ends meet. In its most extreme manifestation, this has contributed to a rise in homelessness in many areas of the country. All of this has occurred against the backdrop of an ever-intensifying and destructive climate crisis, continuing war in Ukraine, and renewed violence in the Middle East. Throughout the year, charities and nonprofits were called upon to meet increasing demand from their communities at the same time as they dealt with the impact of these multiple intersecting crises.
Read on to learn more about the macro trends impacting the sector in this latest edition of our quarterly blog series.
COVID-19: No longer a pandemic, but definitely still impacting communities
Over the past two years, widespread vaccination and the mutation of the virus to more contagious but less severe strains have allowed us to live more normally alongside COVID-19. However, the virus continues to impact our communities and is expected to do so over the fall and winter. In this context, nonprofits will likely be faced with employees missing work due to illness (including both acute COVID infections and Long COVID), managing outbreaks, and finding ways to serve vulnerable and immunocompromised individuals safely. Despite the end of the global pandemic, nonprofit leaders should expect COVID to continue to impact operations for months and years to come and plan accordingly.
Slow economic growth projections will lead to challenging times for nonprofits
Economists are debating whether we’re already in a recession, but for the average person, the technicalities don’t really matter. What is clear is that we’re in a period of slow economic growth and a cost of living crisis.
According to the latest results from the Canadian Survey on Business Conditions, 53% of community nonprofits expect inflation to be an obstacle for them over the next three months. Despite this, 62% expect their cash reserves to increase or stay the same and 86% say they have enough cash or other liquid assets to operate over the next three months. These indicators are largely unchanged since the third quarter of 2021. Similarly, only 1.6% of community nonprofits say they plan to merge with another organization in the next 12 months and only 0.2% say they plan to close, numbers that have been consistent for the past year.
What does the economic situation in the sector look like in practice? At Moisson Outaouais in Gatineau, employees of the food bank are themselves using the service they deliver. In New Brunswick, staff at a shelter report that those they serve are increasingly hopeless and are facing rising rates of crisis and violence. In PEI, the Humane Society has had to pause construction on a new animal shelter due to rising costs. In Ontario, the K-W Symphony Orchestra suddenly cancelled their season and all programming and, a week later, filed for bankruptcy. In British Columbia, one food bank is serving triple the number of people they used to, and is increasingly serving people who are employed but struggling with the rising cost of living.
Sector’s rapid digital transformation makes cyber risk ever more pressing
The nonprofit sector underwent a rapid digital transformation during the pandemic as work-from-home orders forced organizations to adjust their operations. While this has come with many benefits and efficiencies, it also brings real risk. The third quarter results of the Canadian Survey of Business Conditions give insight into the sector’s experiences with cybersecurity and plans to address cyber risk.
Over the last year, 15% of community nonprofits have experienced phishing incidents that defrauded an employee or the organization and 9% have been the victim of fake news stories or social media posts. Only 0.8% of community nonprofits reported being impacted by ransomware attacks. However, there have been several significant ransomware incidents in the sector over the past year. Affected organizations include SickKids Hospital in Toronto, the University of Waterloo and, most recently, five hospitals in southwestern Ontario. From an economy-wide perspective, PwC reports that “two-thirds of Canadian executives consider cybercrime their most significant threat in the coming year.” 8
Some nonprofits are actively addressing cyber risk, but many are not. Just over a quarter (28%) of community nonprofits told Statistics Canada that they plan to take new or additional cybersecurity measures over the next year. Among those who don’t have plans to implement cybersecurity measures, 18% feel that there is no need, 14% have already implemented measures, and 5% say cost is a barrier.
Many experts are concerned that nonprofit leaders are not doing enough to protect their organizations from cyber risks. Earlier this year, the Canadian Centre for Nonprofit Digital Resilience (CCNDR) released its vision and strategy for building the cybersecurity and resilience of the sector. The report discusses several reasons nonprofits are “behind the curve” when it comes to cybersecurity, including lack of awareness and attention, funding restrictions, planning and budgeting cycles, and outdated hardware and software. The first step in addressing this gap is education. To that end, CCNDR is co-sponsoring a webinar entitled Cybersecurity: A Proactive Approach. This free webinar will take place on January 17, so if learning more about cybersecurity is on your “to do” list for next year, get a head start and register now!
1 Statistics Canada. Table 33-10-0689-01 Business or organization obstacles over the next three months, third quarter of 2023.
2 Statistics Canada. Table 33-10-0688-01 Business or organization expectations over the next three months, third quarter of 2023.
3 Statistics Canada. Table 33-10-0711-01 Liquidity and access to liquidity over the next three months, third quarter of 2023.
6 Statistics Canada. Table 33-10-0709-01 Forms of misinformation or disinformation business or organization has been a victim of over the last 12 months, third quarter of 2023.
7 Statistics Canada. Table 33-10-0708-01 Impact of ransomware incidents on the business or organization over the last 12 months, third quarter of 2023.
8 PwC. Canadian Cyber Threat Intelligence Annual Report 2023.
9 Statistics Canada. Table 33-10-0707-01 Business' or organization's plans to take any new or additional cybersecurity actions over the next 12 months, third quarter of 2023.
