Charities in Canada as an economic sector : discussion paper

The purpose of this paper is to take a balanced look at the Canadian charitable sector from an economic point of view, taking the same approach that an analyst looking at any sector would take — be it semi-conductors or natural resources. It will attempt to present a general picture of Canadian charities as an economic sector using existing data and analyses. Key points are as follows:

1. The charitable sector has expanded rapidly in the last two decades and is now a major sector in Canada, supporting a large number of jobs and creating significant economic growth.
2. This growth is not supply driven — created by an increase in the number of charities — but is driven by demand. As population grows, ages and becomes more diverse and as economies become richer, the demand for the services that the sector provides — health, social services, recreation, culture and so on-tend to increase. The growth of the charitable sector is thus driven by demand and value the sector produces.
3. The sector has expanded rapidly in most advanced industrial economies and is increasingly an integral part of the global service and knowledge-based economy.
4. Because the growth in the charitable sector in Canada is mirrored by similar developments in other advanced economies it provides Canada with an important and expanding set of connections to growing economies worldwide.
5. The sector is in many ways similar to the small business sector of the economy and makes a similar contribution to jobs and growth. It also faces similar problems — for example with financing, as well as with investment in innovation and productivity improvements.
6. The jobs the sector creates are good ones, requiring skills and education levels somewhat higher than the Canadian work force in general. People enjoy high levels of job satisfaction. The sector is also a good first employer for graduates and new Canadians.
7. The rapid expansion of the sector and the jobs it has brought with it have been financed by a combination of income earned by the charitable sector from the sale of memberships and services, from government funding and from donations from individuals.
8. Donations from individuals have shown a tendency to weaken and government contributions are in decline as a result of fiscal pressure.
9. Canada’s charities are at a financial crossroads. With traditional revenue sources declining, charities are increasingly looking at ways to finance their nonprofit activities through business income — both in areas directly related to their charitable missions, and in areas that are not.