Charities hit with layoffs, shortfalls

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This article was published 11/05/2020 (2119 days ago), so information in it may no longer be current.

The depth of financial pain the pandemic has inflicted on Canadian charities is chronicled in a report that reveals one-third have had to lay off staff and others have reduced working hours as they cope with a dire drop in donations.

Almost 70 per cent of charities have had a huge drop in revenue — 31 per cent, on average — since the pandemic hit in March.

The finding is in a report by Imagine Canada, an umbrella group for Canadian charities and non-profit organizations. It surveyed 1,400 charities and found that 30 per cent have laid off staff and 27 per cent have instituted reduced work hours. More than half said layoffs are possible.

Among the hardest hit are arts and recreation groups, such as camps, and groups that don’t have secure government funding.

Bruce MacDonald, president and CEO of Imagine Canada, called the budget hit, “unbelievable” and said “the effect is widespread and deep.”

He said 45 per cent of groups expect their financial situation will be worse in three to six months, and only one-quarter say they have sufficient reserves to keep operating that long.

The financial crisis of 2008-09 was the last time something of this magnitude hit the sector. But at that time, the damage was limited, with just 32 per cent of charities reporting a drop in revenue. The average drop was less than one per cent.

Christian charities are in the same predicament, said John Pellowe, CEO of the Canadian Council of Christian Charities.

Although the organization has not finished surveying its 3,450 members, he has heard some groups are struggling.

Initially, the hardest hit initially were churches, which had a drop in donations early in the pandemic when they were closed.

“But they report they are catching up now,” he said.

For many, the challenge is the cancellation of spring fundraising events, which raise a significant amount of revenue.

“Groups are trying to figure out how to convert to online fundraising, he said.

The good news is supporters of churches and church-related organizations “seem to be sticking with their donations,” he said, even if donation amounts are smaller.

The question, he said, is how long that level of giving can be sustained. “It depends on how long the crisis goes on,” he said.

Rick Frost, CEO of the Winnipeg Foundation, said the all revenue streams have been hurt, including regular donations, ticket sales and fundraising events.

“It’s a steep loss of revenue” for three-quarters of groups in the city, he said.

That’s resulted in layoffs and adjustments to programs.

The foundation has advocated that groups have a diversified range of funding, not just government funding, but the pandemic has thrown a wrench into that advice. Groups that have secure government funding are doing much better than those that depend on other sources of revenue, Frost said.

“Those groups are in much better shape.”

Most charities don’t have a large financial reserve and are not well-positioned to weather the crisis. “They are well into the period of treading water,” he said.

Frost and MacDonald say some groups may be forced to close and others will merge.

“There will be some consolidation,” Frost said. “Not every group will be able to survive.”

It will encourage greater collaboration, said MacDonald, “propelling conversations about reinvention. Everyone knows they will not return to do things the same way as before.”

It may change the “disdain some donors feel for overhead, administrative expenses and healthy reserves,” he said, noting how donors have sometimes penalized groups by not giving if they have large reserves.

“Hopefully, this will change the mindset of donors and funders, who have been too narrow and short-sighted to not let groups have rainy day funds which give them the ability to withstand disruptions like a pandemic.”

He said the pandemic has revealed there is no federal department, minister, agency or secretariat with a mandate to promote the interests of the charitable sector.

The pandemic shows the need to have someone at the cabinet table “fighting for the non-profit sector.”

faith@freepress.mb.ca