This Charity Law Bulletin reviews the
results of the Nonprofit Survey as reported in Cornerstones
of the Community.
B. KEY FINDINGS
In 2003, 139 million memberships were held in
the 161,000 nonprofit and voluntary organizations in Canada
- 80,000 of which were registered charities - which generated
$112-billion in yearly revenues and utilized 19 million volunteers
who gave 2 billion volunteer hours. Those were just some of
the numbers that came out of the Nonprofit Survey. But what
do the numbers reveal? Several themes were said to emerge
from the results of the survey.
Although nonprofit and voluntary organizations
in Canada tend to occupy specific niches that have been left
empty by government and the private sector, the survey indicates
that they also occupy a broad scope of activities, tending
to touch upon almost every aspect of Canadian life. In the
words of the Cornerstones of the Community report,
they are "vehicles for citizen engagement," with
a focus on community, providing public benefits. Still, clear
differences were found between organizations with disparate
revenues, those depending on government funding, and those
relying primarily on volunteers to achieve their missions.
The survey also found jurisdictional variances.
A commonality among the organizations was a
problem in fulfilling their missions and achieving organizational
objectives, thereby suggesting that despite the substantial
economic presence, many organizations may be struggling to
provide the public with all of the benefits they have the
potential to offer.
Another key finding was that larger organizations,
which are more dependent on government funding, receive the
bulk of resources. And the big are getting bigger, not only
in terms of revenue, but also in terms of volunteer and paid
staff.
Funding varies by area of activity, with "Hospitals,
Universities and colleges, and Social service" organizations
tending to depend more on government funding; "Business
and professional associations and unions, Sports and recreation,
Arts and culture, and Development and housing" organizations
relying more on earned income from non-governmental sources;
and "Religion, International, and Grant-making, fundraising
and voluntarism promotion" organizations depending more
on gifts and donations. However, while financial and human
resources vary by area of activity, many organizations reported
that even though resources are not in decline, they may still
be inadequate to fulfill the ever growing demand for products
and services.
C. KEY CHARACTERISTICS
1. How They are Constituted
As the Nonprofit Survey demonstrated, nonprofit
and voluntary organizations are unique entities. Just over
half - or approximately 80,000 - of the voluntary and nonprofit
organizations are charities registered with the Canada Revenue
Agency, which allows them to be exempt from a variety of taxes
and enables their donors to claim tax credits for donations.
This provides advantages over non-charitable organizations
in terms of their ability to attract donations, yet it imposes
a heavy burden of complying with regulations in order to maintain
their charitable status. Voluntary and nonprofit organizations
exist in a wide variety of areas such as sports and recreation,
social services, arts and culture, and development and housing.
They also include large institutions such as universities
and colleges, education and research organizations, business
and professional associations, and unions. However, charities
are limited to purposes that are charitable at common law,
and as such predominate in areas such as religion, hospitals,
grant making, fundraising and voluntarism promotion, health,
and social services.
2. Who They Serve
Unlike government and private sector organizations,
one of the distinguishing features of many nonprofit and voluntary
organizations is that they are collectively "owned"
by their members, who do not receive a share in any revenues
that are generated. Generally, membership is primarily composed
of individuals, however in some instances membership is made
of up other organizations. Although nonprofit and voluntary
organizations record 139 million members in their ranks, a
majority of the organizations report serving the general public,
or specialized groups, as opposed to providing members only
with special benefits or privileges. In fact, in only 27 percent
of organizations do members receive special benefits or privileges
from their membership.
3. Where They are Located
Fifty-seven percent of the nonprofit and voluntary
organizations are located in the provinces of Ontario and
Quebec. However, a comparison of the number of organizations
per 100,000 population found there to be the highest prevalence
of organizations in the Territories and the lowest in Ontario.
Surprisingly, Quebec's average number of organizations per
100,000 population was 40 percent higher than Ontario's, with
the average across Canada being 508 organizations per 100,000
population. Still, the organizations operating in each province
bring a unique regional variance; each province having different
focuses.
D. FINANCIAL RESOURCES
As noted above, Canadian nonprofit and voluntary
organizations reported a total of $112-billion in yearly revenues
in 2003. But the Nonprofit Survey determined that these impressive
revenues are not distributed equally among the 161,000 organizations.
In fact, it is less than one percent of the organizations
that bring in one-third of those revenues; hospitals, and
universities and colleges representing that one percent. Still,
$75-billion in total revenues are in the hands of the remaining
99 percent of the organizations.
Registered charities, representing 56 percent
of organizations, account for 63 percent of all revenues reported,
and typically have larger average total revenues than organizations
that are not registered as charities. This success is largely
attributed to the tax benefits donors receive by making donations
to registered charities.
The Nonprofit Survey separated revenue sources
into three categories: governments, which provide 49 percent
of the funds; income earned from non-government sources, like
memberships and sales of goods and services, which represent
35 percent of revenue; and revenue in the form of gifts and
donations from individuals, corporations and other organizations,
which represents 13 percent of all revenue received. If hospitals,
and universities and colleges, are excluded from the equation,
the above percentages change to 36, 43 and 17, respectively.
A majority of the government funding comes from
provincial government, providing 39 percent. Municipal governments
provide 6 percent and the federal government provides 2 percent.
Of the funding coming from government, almost two-thirds is
in the form of grants and contributions, with the remaining
revenues coming in the form of payment for goods and services
that the organizations delivered.
The Nonprofit Survey determined that larger
organizations depend more on government funding than do smaller
organizations, with government sources accounting for approximately
58 percent of total revenues for organizations with annual
revenues of $10-million or more, but only 12 percent of total
revenues for organizations with annual revenues of less than
$30,000. For smaller organizations, membership fees, gifts,
and donations, are more important sources of income, and accordingly
are subject to fluctuations in individual involvement and
donations. Investment income and charitable gaming represent
only a small portion of revenues for nonprofit and voluntary
organizations.
While Cornerstones of the Community noted
various distinctions in financial resources based on the size
of the organization, it also noted differences depending on
the organization's area of primary activity. For instance,
government was a major source of revenues for hospitals, but
religion relied primarily on gifts and donations from individuals.
Almost $4.7-billion in revenues came from transfers between
organizations, such as transfers to the national arm of an
organization.
A majority of organizations reported that their
revenues had increased or remained the same for the time period
from 2000 to 2003, however 22 percent of the organizations
reported that their revenues declined in the same period.
As expected, the Nonprofit Survey found there
to be a regional variance in financial resources, with Ontario-based
organizations receiving a greater share of total revenues
than those located in other provinces.
E. HUMAN RESOURCES
Considered to be an organization's greatest
strength, the Nonprofit Survey demonstrated that virtually
all nonprofit and voluntary organizations rely on volunteers
to some degree, with more than half relying solely on volunteers
to fulfill their mission. The survey determined that there
are over 19 million volunteers in Canada, contributing more
than two billion hours of volunteer time or the equivalent
of one million full-time jobs. From the perspective of an
individual organization, this represents an average of 14,360
hours, or 7.5 full-time jobs per year.
Volunteers serve in a variety of functions,
from delivering programs to engaging in fundraising activities.
Interestingly, a majority of the volunteers are frequently
engaged by organizations, with a minority giving of their
time only once or twice a year. Most organizations reported
that there was little change in the volunteer complement during
the period from 2000 to 2003, but organizations with 100 or
more volunteers were more likely to report an increase in
the number of volunteers.
Nonprofit and voluntary organizations employed
a total of two million people in 2003. However, as with the
concentration of financial resources, a significant portion
of these paid positions were with hospitals, and universities
and colleges. Although 46 percent of nonprofit and voluntary
organizations employ staff, employment was concentrated in
a small number of organizations, with 71 percent of the employees
working in the two percent of organizations that employ 100
or more persons. The bulk of employment was permanent, and
a significant proportion of employees worked part time.
Similar to the reports about volunteer complements,
most organizations reported little or no change in the number
of employees during the period from 2000 to 2003.
F. ORGANIZATIONAL CAPACITY
As Cornerstones of the Community noted,
the capacity of nonprofit and voluntary organizations to achieve
their missions has a direct bearing on the contributions they
are able to make to the lives of Canadians. Despite the sizable
economic presence and the large complements of volunteers
and paid staff, many nonprofit and voluntary organizations
appear to be experiencing problems in fulfilling their missions.
The areas that appear to pose the greatest problems are those
that involve recruiting and retaining volunteers, planning
for the future, and obtaining funding.
The majority of organizations reported difficulty
recruiting the types of volunteers the organization needs,
difficulty obtaining board members, and difficulty planning
for the future as problems. Close to half of the organizations
reported difficulty retaining volunteers, difficulty obtaining
funding from other organizations such as government, foundations
or corporations, and difficulty obtaining funding from individual
donors as problems.
Approximately 40 percent of respondents reported
problems with competition with other organizations for funding
or revenues, increasing demands for services or products,
difficulty earning revenues, difficulty adapting to change,
lack of internal capacity, difficulty participating in development
of public policy, and difficulty providing training for volunteers.
Less than 30 percent of organizations reported
difficulty retaining paid staff, difficulty obtaining the
type of paid staff the organization needs, difficulty providing
staff training and development, and difficulty collaborating
with other organizations.
Organizations in the lowest revenue class, who
typically use fewer resources to achieve their missions, were
less likely to report similar problems to those noted above.
However, the size of the organization was not the only distinguishing
factor when reporting problems. The Nonprofit Survey noted
that certain types of organizations were more likely than
others to report problems. For example, health, social services,
education and research were more likely to report problems
of any kind.
Problems with external funding was reported
by a substantial percentage of organizations, particularly
hospitals, universities and colleges, health, and social services,
which reported the problem as serious. As expected, organizations
reporting a decline in revenues from 2000 to 2003 were more
likely than others to report problems in most areas.
G. CONCLUSION
Cornerstones of the Community presents
an important and groundbreaking glimpse into the life of nonprofit
and voluntary organizations in Canada. The Nonprofit Survey
demonstrates that there is a clear divide between those organizations
that are relatively well resourced and those that are not.
A small number of organizations with large annual revenues
account for the vast majority of total revenues largely from
government sources, paid staff, and volunteer positions, while
small organizations on the other side of the divide depend
more on income earned from non-government sources and volunteers
to fulfill their missions.
With the critical role that nonprofit and voluntary
organizations play in the daily life of individual Canadians,
it is important to gain a better understanding of these organizations.
The Nonprofit Survey adds substantially to our understanding
of the nature and state of nonprofit and voluntary organizations
in Canada, and provides critical baseline information that
will enable the voluntary sector to focus more attention on
areas where organizations need help to improve their capacity
to fulfill their missions and meet their objectives.
Footnotes:
1"Cornerstones
of the Community: Highlights of the National Survey of Nonprofit
and Voluntary Organizations," Statistics Canada, 2004,
is available at http://www.statcan.ca/english/freepub/61-533-XIE/61-533-XIE2004001.htm.
