Donation challenges, CEBA repayment prospects, inflation-driven increases in demand & the housing crisis are some of the trends we’re keeping an eye on this quarter
Last year, this blog series covered a range of topics, from rising immigration numbers to the climate crisis and insurance challenges. In this first edition of 2024, we are going back to basics and checking in with some of the main issues that have been impacting the sector over the past few years: the labour shortage, increasing demand for services, and financial challenges. We also look at ways the housing crisis is impacting the sector and its workforce.
New insights on skills gaps in the nonprofit sector’s workforce
The latest results of the Canadian Survey of Business Conditions (CSBC) show that 44% of nonprofits expect labour issues to be an obstacle over the next three months. While this number has decreased from 50% in the previous quarter, it remains high.1
The survey also explored one aspect of the labour shortage - skills gaps - in depth. It asked employers what percentage of their employees were fully proficient at the skills needed for their current jobs. Only 41% of nonprofit employers reported that their employees have 100% of the skills needed by the organization (compared to 63% of government employers and 42% of business employers). Another 41% said their employees have between 80% and 99% of the skills they need, while 18% said their employees have less than 80% of the needed skills.2 The survey also provided insight into how organizations are planning to deal with skills gaps within their workforce. The results show that nonprofits are most likely to do internal training (72%), give feedback to staff (52%), provide external training (36%), and recruit new staff with the needed skills (34%).3
Unfortunately, the CSBC did not explore the specific skills employers think are lacking, but one concern we frequently hear from nonprofit leaders relates to digital/data/technology skills. A survey conducted by CanadaHelps in 2021 found a significant gap in this area, with the majority of charities surveyed rating their skill level as “fair,” “poor,”or “not aware” for 12 of the 15 digital tools they were asked about. In response to this issue, which is becoming more critical with every cyberattack and advance in AI, Imagine Canada is currently working with several partners to research the digital skills gap and develop and test potential upskilling solutions.
Demand for services a challenge as 17% of Canadians need charity support to deal with inflation
In a December 2023 public opinion poll commissioned by Imagine Canada and supported by BMO, 17% of respondents indicated that they had personally needed to engage the services of a charity or nonprofit to help with the impact associated with inflation and the higher cost of living. This has nearly doubled from 9% a year earlier. Younger individuals, those with lower incomes, and new Canadians were more likely to need help from the sector.
On the ground, this means that an animal welfare organization in BC cannot answer up to 200 calls for subsidized veterinary care each month as pet owners struggle to make ends meet. On the other side of the country, Halifax charities reported demand for holiday gifts and food hampers surged this year, with some former donors now becoming first-time recipients of their support. These are just two of the many heartbreaking stories we’re hearing about sector organizations struggling to meet the growing needs of their communities.
The CSBC asks about expectations around demand for services every quarter. In the most recent quarter, 33% of nonprofits said they expected demand to rise over the next three months.4 This is largely in keeping with the results of this question over the past two years, showing that demand has been a consistent, long-term challenge for the sector during the post-pandemic recovery period.
At the request of the Federal Nonprofit Data Coalition, the most recent CSBC included a series of questions on donations. The results show that 69% of nonprofits that typically receive donations are experiencing challenges finding new donors, 58% say that donors are not giving as much as they used to, and 49% report challenges retaining existing donors.5 Nearly a third of organizations facing these challenges have reduced or are planning to reduce the programs and services they offer, meaning that this financial challenge is already concretely impacting our communities. Additionally, 17% of organizations facing fundraising challenges have already or plan to cut staff, and 33% have already or plan to reduce spending on things other than staff; 6% report that they are at risk of closing.6
Unfortunately, many charities are bracing for more donation-related challenges; Budget 2023 proposed changes to the Alternative Minimum Tax (AMT) that will reduce financial incentives for high-income individuals to donate to charity. The C.D. Howe Institute has released an e-brief suggesting that the proposed changes could result in the overall value of charitable donations in Canada decreasing by 4% and the value of donations of publicly listed securities declining by 22%. However, given that legislation to enact this change has not yet been tabled, it’s possible that the sector can still influence the government to cancel these planned changes.
CEBA loans not expected to be a major problem for most nonprofits facing repayment deadlines
March 31 is the deadline for organizations that received Canadian Emergency Business Account (CEBA) loans during the pandemic to repay their loan and receive partial loan forgiveness. If the loan isn’t repaid by this date, recipients must begin paying interest and will lose the opportunity for partial forgiveness. Thirty-eight percent of nonprofits that took a CEBA loan have already repaid it, compared to 28% of businesses, and 85% anticipate being able to repay by December 31, 2026, compared to 65% of businesses.7 Nonprofits tend to be rather averse to taking on debt (only 22% took CEBA loans, compared to 54% of businesses)8 so it’s likely that those that did take loans were reasonably confident in their ability to repay. Whatever the cause, the looming repayment deadline for CEBA loans seems to be having less impact on the nonprofit sector’s financial situation than is the case in the business sector.
Housing crisis creating demand for parts of the sector while making life harder for the sector’s underpaid workforce
The housing crisis is an economic issue with wide-ranging social implications. Its impacts on housing, homelessness, and poverty reduction organizations are obvious. Homelessness is on the rise, and many are struggling to find housing. Many who are housed are paying more for it than they can afford, so they need support to pay for other necessities such as food and heating. Nonprofits want to be part of the solution. In December, 22 United Ways from across Ontario released a joint statement calling the sector a “built-in solution” to the province’s housing crisis. In its recent Fall Economic Statement, the federal government recognized the role of nonprofits in addressing this issue when it announced $1 billion in new funding for the Affordable Housing Fund, meant to support nonprofit, co-op, and public housing providers in the delivery of affordable housing. However, the housing market in Canada is still dominated by private actors, and there is considerable room for the role of nonprofits to grow if the government puts in place proper enabling conditions.
The housing crisis is also having a significant impact on immigrant and refugee settlement organizations. Last summer in Toronto, a coalition of Black-led organizations took action to help temporarily house a group of 300 asylum seekers, many from African countries, who were sleeping outside a homelessness organization. This was an emergency action and not a long-term solution, so the coalition called on the government to do more to support asylum seekers from African nations specifically. Additionally, many are now linking the housing crisis to recent increases in immigration and are calling for changes to immigration policy to help bring the housing crisis under control. This may contribute to anti-immigrant sentiment that could negatively impact both immigrants and the organizations that serve them.
The housing crisis is also affecting many people who work in our sector. The average annual salary of those working in community nonprofits is $38,716, compared to $57,137 in the economy overall.9 In the context of a housing supply and affordability crisis, this means that much of the sector’s workforce will be struggling to afford adequate housing. This is likely to impact the overall wellness of our workers and increase the odds that they may leave the sector in search of higher wages that will help them make ends meet.
1 Statistics Canada. Table 33-10-0726-01 Business or organization obstacles over the next three months, fourth quarter of 2023 & Table 33-10-0689-01 Business or organization obstacles over the next three months, third quarter of 2023.
7 Statistics Canada. Table 33-10-0745-01 Status of repayment of loan from the Canada Emergency Business Account and if the business or organization anticipates having the liquidity available or access to credit to repay the loan by December 31, 2026, fourth quarter of 2023.