Mega-merger of Canada’s biggest cancer charities: Canadian Breast Cancer Foundation joins Canadian Cancer Society

October 28, 2016 - updated February 4, 2017

Canadian Cancer Society and Canadian Breast Cancer Foundation announced intentions to merge. Charity Intelligence does not anticipate this merger will raise social impact.  The most obvious gains for donors may come from better cost efficiencies. Charity Intelligence recommends Canadian donors wait and see how this merger unfolds and for cost reductions to materialize.

This is a big Canadian charity merger. Canadian Cancer Society is the 4th largest Canadian charity measured by donations and public support from special fundraising events. In F2016, Canadian Cancer Society received $142.4 million. Canadian Breast Cancer Foundation was among Canada’s largest-40 charities with annual donations and funding from special events at $35.7 million. Combined, Canadian Cancer Society will reclaim its #2 rank with pro-forma donations and funding of $178.0m behind only World Vision Canada.

With 278 Canadian cancer charities at last count, consolidation is generally a good move. The more obvious need for consolidation is among the smaller charities where there is duplication. There is less operational overlap between Canadian Cancer Society and Canadian Breast Cancer Foundation. Canadian Cancer Society is a multi-service “one stop shop” running programs for Canadians with cancer, advocating for legislative changes (tobacco labeling, tanning beds) and funding research in all cancer areas. Canadian Breast Cancer Foundation’s strengths are in corporate fundraising with a narrower focus on granting to breast cancer research.

Despite Canadian Cancer Society being 4-times larger, Canadian Breast Cancer Foundation takes the top job in the merger. Lynne Hudson formerly President and CEO of Canadian Breast Cancer Foundation is now President and CEO of the merged Canadian Cancer Society, effective immediately. Before joining Canadian Breast Cancer Foundation in September 2015, Hudson spent 8 years with Plan Canada, and has an MBA and an engineering degree.

The timing of this merger and new leadership may cause delays. Canadian Cancer Society has just consolidated its provincial chapters under one national organization. Typically, after such consolidations, managements focus on optimizing operations rather than launching into another strategic initiative. The economies of scale from consolidation have yet to emerge.  

Merging strong consumer brands is tricky. Canadian Cancer Society and Canadian Breast Cancer Foundation have the two biggest brands in the cancer sector – and these brands are distinctive. The pink ribbon logo and the yellow daffodil are well known by Canadians. Canadians also support CIBC’s Run for the Cure (organized by Canadian Breast Cancer Foundation) and Relay of Life (organized by Canadian Cancer Society).

Given the strength of these charity brands, Charity Intelligence does not anticipate any cost synergies in fundraising. Charity Intelligence expects future fundraising costs to remain around $67 million annually. On current donations, this is 38% of total donations and special events.

The amalgamated charity has significant opportunities to reduce administrative costs. On a pro-forma basis administrative costs will be an estimated $28 million. CCS Board Chair Robert Lawrie anticipates cost savings of $15 million. More cost savings will be required to put the new amalgamated charity in an operating cash surplus.  Without cost reductions, on a pro forma basis, the merged charity spends 52% on fundraising and administrative costs, a level well above Charity Intelligence’s reasonable range and double the Canadian large charity average of 26%. CCS also has set the goal of reducing staff to 850. Both charities together had a staff of 1,187 at the end of their respective fiscal years 2016, to a reported 900 at present. Lawrie intends to amalgamate Canadian Cancer Society with more cancer charities. One aspect to watch is CCS's unfunded pension liability and retirement benefits. 

The merger is expected to be approved in February 2017.

 


 

PRO FORMA

CCS -CBCF Charity

Canadian Cancer Society (CSC)

Canadian Breast

Cancer Foundation (CBCF)

Fiscal year end 2016

 

 

 

Overhead ratios

 

 

 

Administrative costs

as % of revenues

14%

 13.4%

 15.9%

Fundraising costs

as % of donations and fundraising events

38%

38.2% 

27.1% 

 

 

 

 

All figures in $000’s

 

 

 

Donations

95,317

86,051

 9,266

Special events

82,729

56,337 

26,392

Total funding from donors

178,046

142,388 

35,658 

Government funding

13,399

 13,350

49 

Lotteries (net)

7,712

7,712 

-

Investment income

4,179

3,996 

183 

Other income

5,865

5,632 

233 

Total revenues

209,201

173,078 

 36,123

 

 

 

 

Cancer program costs

75,786

 67,829

 7,957

Cancer research grants

57,040

43,091 

13,949 

Administrative costs

28,372

22,661 

5,711 

Fundraising costs

67,654

54,438 

13,216 

Cash flow from operations

-19,651

 -14,941

-4,710 

 

 

 

 

Funding reserves

96,242

103,487

46,517

There figures are based on F2016 financials. Funding reserves for CCS include unfunded pension liabilities and retirement benefits of $53.8million.

For donors looking to donate to cancer charities, Charity Intelligence published Cancer in Canada that has a wealth of information about high impact giving opportunities. Breast cancer is the most funded cancer receiving 28% of all Canadian cancer funding while representing fewer than 10% of cancer deaths. Canada's Big Four cancer killers are pancreatic, stomach, lung, and colorectal. These cancers account for 46% of potential years of life lost (PYLL) to cancer in Canada. Yet these 4 cancers receive only 15% of government research funding and only 1.6% of charity funding. Canadians donate 151 times more to breast cancer charities.

For Charity Intelligence report and rating on Canadian Cancer Society

For Charity Intelligence report and rating on Canadian Breast Cancer Foundation

Kate Bahen

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416.363.1555

 

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