There have been many articles written in recent years about Canadians becoming less engaged in charitable giving. Coast to coast, the overall dollar sums making their way into the non-profit sector has, indeed, been in steady decline for some time.
While this may be playing out across the population as a whole, our experience and observations show a different trend: there is a marked increase in giving on the part of many of our foundation clients, who in many cases have become more generous than ever. That’s been especially true throughout the COVID-19 crisis, as our donors have dramatically boosted grants to charities.
They’re not only donating greater sums, but also becoming far more engaged in their giving. Cheque-writing—while it definitely still exists—is being replaced by an increased dedication on the part of the major donors to steward their gifts. They want to make a difference with their charitable money, understand its impact and, to the extent possible, partner with their key charities to direct it to a specified use or program.
Once engaged with a charity, they often also lend their time and extensive expertise in areas such as corporate governance, networking, fundraising, marketing and more—all to help preferred causes achieve their community-building mandates. And they have plenty of skill and experience to offer on the charitable giving front. These donors are frequently former executives or entrepreneurs who have grown businesses or run large organizations, and can bring those invaluable insights to the table to help the charities of their choice.
Why the increasing embrace of participatory philanthropy? Because today’s philanthropists hope to not only make a difference, but create a lasting legacy for themselves or their families. As we’ve written about in previous blogs, many wealthy donors hope to set an example for their children or other family members. Having kids participate in charitable activities can help instill a sense of perspective and philanthropic responsibility, while also increasing the odds that they’ll share lessons about the importance of giving back with their children.
Another reason is that major donors have become increasingly fatigued by sustained outreach on the part of non-profits. Put simply, individuals making big gift(s) are inundated by requests for donations via email, phone calls, through live events, over social media—you name it. The push to be more involved and quantify the results of their philanthropic work means that donors are becoming more resistant than ever to that constant solicitation. They’re choosing to be more selective and targeted in their work, partnering with non-profits that service causes of greatest importance to them—everything from climate change to support for underprivileged children to improving health in the developing world, and a plethora of others in between.
As such, momentum across the donor advised fund (DAF) industry has been growing steadily in recent years, while charitable donations from high net-worth individuals have been increasing in lockstep. Whether philanthropists choose a separately registered private foundation or opt for a Canada Gives Foundation account, they’re turning to charitable giving vehicles that not only meet their tax needs, but offer more control over their philanthropy, along with the opportunity to generate a greater impact as they partner with charities to create meaningful, lasting change.
In other words, major donors are taking a more business-like view of their charitable giving work and how they spend their money. Charities would be wise to pay attention to the trend and cater to those preferences accordingly.
Now, a word of caution. Greater engagement is wonderful, but donors must be cognizant of Canada Revenue Agency rules that limit their input into how donations are managed once in the hands of the recipient non-profit organization. A donor can’t be in charge of the program to which they’ve contributed, for example, nor can they attempt to force a charity to follow their strategic/operational/financial guidance. Some donors with private foundations have attempted to manage grants too rigidly, only to raise the ire of CRA and face various sanctions.
By working with Canada Gives, philanthropists benefit from third-party involvement that creates a buffer between them and the charity. Leveraging the grant application process, philanthropists can vet charities, learn more about their programs, and direct funds to specific programs before making multi-year donation commitments, then obtain feedback on the results. We’ve even helped our more active donors develop assessment criteria, providing them with a more strategic and dynamic framework to manage their philanthropy.
In the end, wealthy donors feel better about contributing to causes (often multiple charities in a calendar year) when they can quantify impact and the ensuing community benefits. So, the wealthiest Canadians have not become less generous. Instead, they’ve grown more interested in becoming involved in their charitable giving and having a deeper understanding of the value of their work, all so they can commit further and broaden that aforementioned legacy.
As we emerge from the coronavirus pandemic and the charitable sector begins the long road to recovery, it’s a trend not only worth noting, but one that non-profits should leverage to achieve their life-changing mandates.
The Canada Gives Team