In this excellent article by Steven Ayer, he writes that confidence in the charity sector has fallen considerably over the last two decades.   The article “Confidence in charity leaders has fallen sharply over the last two decades – what does that mean for the sector?” is definitely worth reading for anyone who cares about the charity sector and the important work that it does.

Obviously, the WE Charity scandal plus the involvement of a few charities in toxic political battles over the last decade, have had an impact on public trust in the charity sector.  However, this long-term decline is far beyond those two factors.  There are many other possible explanations, or partial explanations, for this very disturbing situation and reason to think that confidence in the charity sector is going to decline further:

  • Calls for deregulation of non-profits and charities including allowing charities to conduct unlimited non-partisan political activities, perhaps with no charitable activities at all, has definitely reduced trust in the sector. You can see the damage, especially in Western Canada.
  • Similar calls to allow charities to conduct unlimited business activities have so far not been successful.  If they are successful, it may be hard to differentiate the charity sector from the business sector and that could further undermine public confidence in charities.
  • There is a push to make it easier for charities to transfer resources to non-qualified donees who are not required to abide by charity regulations.  While this may not seem to be problematic, the way the current rules have been attacked, and the suggested replacement rules may allow tens of billions of dollars to leave charities for non-charitable activities, this will reduce the already low confidence the public has for charities and especially international development charities.  I have written more on this in this note Grantmaking in Canada can be improved immensely but eliminating structured arrangements is dangerous and a red herring to the real problems with our sector.
  • Some weak sector umbrella organizations who are silent at the most important times, or selectively silent on certain issues, have compounded the problem.
  • Private foundations hoarding about $95 billion in assets in the midst of COVID-19 probably does not help.  We have been told that it is good that private foundations ‘accumulate’ assets so when times are really tough they will have resources to respond.
  • Lack of funding of BIPOC groups and other groups did not help (for example lack of funding for Black-Led and Black Serving organizations and Indigenous Groups).
  • Negative coverage about certain charities in terms of racism and sexual harassment while resulting in numerous tweets, webinars and declarations has had very little impact on the composition of most charities or how they operate.
  • Bad behaviour in the charity sector thrives through lack of transparency/awareness and little desire to do anything about it.  People who abuse others seem to find it easy to move from one charity to another.   Those who commit fraud in the charity sector are rarely prosecuted.  In Canada, the Roman Catholic Church has not fully apologized for its role in the residential school system and has weaselled its way out of paying funds that it agreed to pay as compensation.
  • The Income Tax Act silencing the CRA from discussing how they are responding to problematic charities compounds the problems with the public thinking that the charity sector is an unregulated wild-west or at least significantly under-regulated.
  • Lengthy and expensive studies and consultations by the Senate and the Advisory Committee on the Charity Sector (ACCS) show that powerful interest groups get lots of time and access to those in Ottawa and get their issues placed front and center.   Beneficiaries and marginalized groups get much less access and even less results.   The shocking statement by the ACCS that “In all other aspects of Canadian life, the law is fully tested, discussed, debated and ultimately evolved to reflect the needs of society, but not as it relates to charities.” left me angry and speechless but it is a reflection that we need far better public policy in the charity sector and empathy (preferably justice) towards many in Canada who have been left behind by our system and society.

Some might say – who cares?  The charity sector has revenue of about $270 billion and that gives the sector funds to pay for staff, buildings, programs etc.   For most charities with revenue under $100,000, they have to use every tool in the kit to support their beneficiaries.  The next few years may be quite difficult for the charity sector as government austerity may set in and less public trust will make the work of the charity sector much more difficult.

 

A few quick thoughts:

-less trust will mean that it will be harder for charities to fundraise, especially from the general public who typically provide unrestricted funds (as opposed to major gifts that are unfortunately often restricted to narrow activities);

-less trust will mean that many people will not volunteer or will volunteer less;

-less trust will mean that the public will be less inclined to listen to legitimate charities in a ‘marketplace’ of ideas which include significant amounts of disinformation and propaganda (think of vaccine hesitancy and its cost to our country as just one example);

-less trust means that government funders, who provide about 68% of revenue to charities, may find it easier to decrease funding to charities and potentially rather find other service providers to work with (this has already happened in a number of areas – and sometimes with negative results for beneficiaries);

-less trust means that journalists in Canada are probably going to be more suspicious and critical of charities and the charity sector; and

-less trust will result in more friction between charities, their staff and their beneficiaries.

 

My suggestion is that we all put on our seat belts – as long as the charity sector and its “leaders” are not prepared to look inward and really deal with significant internal challenges of the sector – the decline in trust will continue.   This problem is not going to be fixed by a better “narrative” on the sector.  As long as charities are happy to pay dues and not expect much – they will get exactly what they expect.