On the air with CBC News we discussed how inflation, higher food prices and shelter costs may affect donations this Giving Season 2022 and how charities will be able to cope.
We’re optimistic and take the dire headlines in stride. Canadians have always risen to challenges in the past. When covid hit in March 2020, there were catastrophic estimates that projected donations would drop 37%. That didn't happen. Actually giving increased 2%. We’re in a giving boom driven by demographics, rising prosperity and Canadian generosity. Giving is part of disposable income which tracks gross domestic product. The economic forecast is that Canada’s GDP grows 3% in 2022 and stabilizes at 1% growth in 2023. Giving should track along these lines.
For the 2022 Giving Season, we ask Canadians to consider giving more to smaller, local frontline charities rather than rich, national big-brand charities. We're concerned that it looks like donations to smaller charities dropped 1% compared with a 12% increase in donations to large charities.
2021/2022 update from charities in our database*
10% increase in overall donations for March 2022 and 2021 year ends. This increase in donations is more than the 7%-8% increase in inflation.
In response to covid, Canadians shifted their giving to food banks and shelters.
46% increase in donations to foodbanks
15% increase in shelter donations.
Cash and investments held by charities increased 21%. (We define funding reserves as the cash and investments a charity holds less bank debts and mortgages). This increase in funding reserves tells us that charities didn’t spend all the additional donations received in previous years. Some money was banked for the future. This gives some charities the financial ability to meet increases in demand or higher prices.
Worried about small local frontline charities
But in the numbers, the increase in donations was not across the board. Donations to large charities increased 12% whereas donations to smaller charities with revenues under $5 million dropped 1%.
One of the less known issues is how rich some charities are. Donors are familiar with looking at overhead costs and cents to the cause. Yet most donors are less familiar with looking at a charity’s balance sheet. Looking back at our 2020 data, 131 charities had more than three years of program spending in the bank. This is 16% of the charities we analyze. Seventy charities, 9%, had more than five years. For your giving to do the most good, it needs to go where there is a current need.
As always, we urge Canadians to give intelligently. Do your homework and look to switch some of your giving to small, local frontline charities. If you need any help, we’re always here.
*Data is drawn from the 450 (out of 803) charities in our database with updated financial data for years ending 2021 (or 2022 if available).
Learn more
Funding reserves why "Excessive fundraising by charities is not a joke", Opinion piece for Calgary Herald September 2020
These findings are similar to our mid-summer update July 2022
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Legal disclaimer: The information in this report was prepared by Charity Intelligence Canada and its independent analysts from publicly available information. Charity Intelligence and its analysts have made endeavours to ensure that the data in this report is accurate and complete but accepts no liability.
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