The Changing Face of Canadian

Philanthropy

Presentation to United Way of Greater VictoriaJune 26, 2013

Key Questions

What are the key trends that impact philanthropic support?

What are the trends in how Canadians are donating/volunteering?

How are charities adapting to these changes?What are the key issues for United Way?

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Environmental Trends Continued economic volatility impacting economic growth,

employment, corporate earnings. High levels of personal debt

Low interest rates and unpredictable equity markets

Globalization of Canadian corporations Canadian multinationals more outward looking Decision-making more centralized

Major government funding cutbacks/restraint

Governments haven’t articulated a position on the role of charities but want an increasing role in governing our activities:

Bill C-470 Tightened definitions around “advocacy and non-charitable

activity”

Modest new tax measure to incent charitable giving (Stretch Tax Credit)

Trends in Giving and Volunteering Continued growth in the number of charities – 60,000 to 85,000 in the

past two decades. More competition than ever Little change in charitable giving:

84% of Canadians aged 15+ donate to a charity/non-profit, down from 85% in 2004. Only 23.4% of Canadians actually claim a charitable donation tax credit Total donations at $10.6 billion, up from $9.9 billion in 2004 but flat after inflation Average donation of $446 but median amount $123 (half of donors give less than median) One quarter of “top” donors account for 83% of all donations

Individual giving still highly correlated to age, income, education and religiosity

Reasons for giving: Feel compassion for people in need (89%) Personally connected to the cause (85%) Income tax credit (23%)

Reasons for not giving: Can’t afford it (71%) Happy with what has already given (64%) Give money to people not organizations (40%) Didn’t like the way the request was made (34%) Never asked (24%)

Trends in Giving and Volunteering Corporate giving declined from $2.4 billion in 2008 to $2.26 billion

in 2010 Corporations set philanthropy budgets on a three year rolling

average of their profitability Corporations favoring sponsorship and cross promotions to derive

business benefit at the expense of traditional corporate philanthropy

Private foundation assets declined from $7.7 billion in 2007 to $5.8 billion in 2008 and granting declined from $195 million to $172 million. Has since rebounded

47% of Canadians aged 15 years and over volunteer, contributing 2.1 billion volunteer hours, the equivalent of 1.1 million full time jobs

While the participation rate has stayed stable, the number of hours volunteered has declined, from 168 hours in 2004 to 156 hours today.

Trends in Giving and Volunteering Donor perception of how organizations were using their

money is less positive: 37% of donors do not think donated funds would be used efficiently (up

from 33%) Men more likely than women not to give because they believe their

donations won’t be used efficiently

Demographic and Social Trends Canada’s aging population will:

live longer and need more income/assets for their support Be forced to put off retirement until later in life

Yet, the income divide continues to widen with many Canadians growing richer and having the capacity to make major and leadership gifts:

4.9% of families with net worth of $1 million+ in the U.S. account for 42% of all donations

For estates valued at $20 million+ in the U.S., half of the estate went to charities, 21% to heirs and the rest went to taxes

Women are continue to out live men and Increasing numbers of women are taking volunteer roles in the not-for-profit sector as donors and leaders

Traditional values about philanthropy are changing: Donors want more choice They want to clear evidence of impact/outcome They want to be engaged/involved They want more accountability and transparency They want to access information through digital and social media They want to see their contributions leveraged

How are charities adapting their fundraising? Fundamental re-tooling of resource development strategies

and programs. Moving from transaction-based fundraising to relationship-based fundraising

Diversification of revenue streams with focus on major and planned gifts – always having a pipeline of prospects and a range of product offerings

Additional focus on cause related marketing and sponsorship opportunities with corporations

Integration/alignment between fundraising programs – stop the silos

Preparedness to spend more to raise more and to stop wasting time on low hanging fruit

How are charities adapting their fundraising?Providing donors with innovative opportunities (products)

to invest and engagement/involvement opportunities

Focus on donor retention/loyalty through effective stewardship and demonstration of real impact

Connecting to prospects/donors through digital and social media

Re-thinking of traditional volunteer structures/work, but getting maximum leverage from your volunteers

Efficient back of house operations and systems

Investing in talent development and staff retention

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Trends in Canadian PhilanthropyQ Would you say the following fundraising techniques are in decline or growing in

usage?

88%

86%

82%

65%

73%

61%

56%

43%

31%

10%

12%

-2%

-2%

-10%

-11%

-14%

-15%

-28%

-23%

-43%

-41%

-57% Door-to-Door solicitation

Collection plates/boxes

Telephone solicitation

Cause Related Marketing/Sales

Direct Mail

Draws/lotteries

Events (dinners/galas/concerts)

Sporting events/Marathons

Corporate donations/sponsorship

Major Gift Campaigns

Planned Giving

Declining in Usage Growing in Usage

Note: ‘Don’t Know’ not shown

Fundraising Cost Per $ Including Lottery2a

Fundraising Cost Per $ Excluding Lottery2b

OrganizationF’111

Cost Per $5-Year CAGR3

Trend F’111 Cost Per $

5-Year CAGR3

Trend 5-Year Average4

F’11 Compared to 5-Yr Average

BC's Children's Hospital Foundation $0.40 5.1% $0.29 2.3% $0.28

Calgary Health Trust3 $0.57 17.2% $0.42 11.1% $0.33

Canadian Breast Cancer Foundation3 $0.46 7.8% $0.46 7.8% $0.44

Canadian Cancer Society – Ontario $0.54 2.3% $0.42 2.8% $0.40

Centraide of Greater Montreal3 $0.14 3.3% $0.14 3.3% $0.13

Heart & Stroke Foundation1 $0.53 -3.8% $0.42 -2.3% $0.40

Mount Sinai Hospital Foundation $0.18 1.9% $0.18 1.9% $0.16

Plan International $0.42 9.9% $0.42 9.9% $0.36

Princess Margaret Hospital Foundation $0.45 -4.5% $0.28 1.9% $0.28

SickKids Foundation $0.36 1.3% $0.27 -4.6% $0.33

Sir Mortimer B. David Jewish General Hospital Foundation $0.29 6.9% $0.29 6.9% $0.25

St. Michael's Hospital Foundation $0.23 10.2% $0.23 10.2% $0.18

Sunnybrook Health Sciences Centre Foundation $0.26 9.2% $0.26 9.2% $0.24

Toronto General & Western Hospital Foundation $0.17 16.9% $0.17 16.9% $0.15

United Way of Calgary And Area1 $0.17 3.4% $0.17 3.4% $0.16

United Way of Greater Toronto4 $0.15 1.9% $0.15 1.9% $0.14

Vancouver Foundation1, 3 $0.20 31.0% $0.20 31.0% $0.12

World Vision1 $0.22 2.7% $0.22 2.7% $0.21

SickKids Foundation Ranking 11 3 10 1 13

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#1 in Category #2 in Category #3 in CategorySource: Organization Annual ReportsNote: 1) F’10 figures for Heart & Stroke, United Way of Calgary, Vancouver Foundation, and Vancouver Foundation, because F’11 financials aren’t available. 2a) Calculated by dividing total costs (Direct, Indirect, General Fundraising & Administrative) by the sum of fundraising revenue and gross lottery. 2b) Calculated by dividing total costs (Direct and indirect, excluding Lottery) by the sum of fundraising revenue. 3) Latest available 5-Year CAGR (F’06-10 or F’07-11). Due to data availability, 4-year CAGRs Canada Health Trust (’08-’11), Centeraide (’08-’11) and Vancouver Foundation (’07-’10). 3-year CAGR for Canadian Breast Cancer Foundation (’09-’11). 4) Where data is available.

Favourable Unfavourable Little change

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Trends in Canadian PhilanthropyQ Does your charity offer options for directing gifts to specific programs?

Yes85%

No13%

Note: ‘Don’t know (2%)’ not shown

97%

94%

93%

82%

82%

80%

79%

78%

Hospital Foundation

EducationalInstitution

Religious

Health Research |Support

Humanitarian |International Aid

Environmental |Conservation

Arts & Culture

Community Welfare| Public Benefit

Sector Breakdown Charities that offer options for direct gifts to specific programs

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Trends in Canadian Philanthropy

Q How important is donor-directed funding to your charity’s bottom-line?

3%

45%

36%

12%

Not important at allNot Very importantSomewhat importantVery Important

81% feel donor-directed funding is important

15% feel donor-directed funding is not important

Uniform across sectors

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How concerned are you that donor-directed funding will favour particular donation opportunities over other areas that require funding?

Trends in Canadian Philanthropy

Q

5%

26%

46%

19%

Very concerned Somewhat concerned Not very concerned Not concerned at all

Note: ‘Don’t know/Refused’ (4%) not shown

65% Concerned

31% Not Concerned

Uniform across sectors

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Trends in Canadian Philanthropy

Yes77%

No23%

Q Does your charity use an online donation vehicle?

Sector Breakdown Charities with online donation vehicles

90%

90%

90%

84%

73%

67%

67%

66%

Hospital Foundation

Environmental | Conservation

Health Research | Support

Humanitarian | International Aid

Community Welfare | Public Benefit

Religious

Arts & Culture

Educational Institution

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Trends in Canadian Philanthropy

1%

82%

3%

41% to 60%21% to 40%1% to 20%

Q Approximately, how much of your charity’s annual total revenue comes through online donations?

Issues for United Way

Vulnerability in the workplace fundraising channelLack of investment in other fundraising channelsNot building sustainable/predictable sources of revenueBrand awareness/confusion – not enough investment in the

brandStructure of annual campaign drives transactional vs.

relationship based approach to fundraisingRetention and recruitment of top talentLack of investment in gift and estate planning

SummaryUncertain economy, greater charity competition, and greater

need for funds requires innovation and investment in fundraising/marketing

Moving from transactional donor contact to relationship based donor contact Fundamental re-tooling of the United Way Campaign

Investing in staff and systems to support fundraising and using new digital and social media channels to engage the public

Demonstrating highest standards of stewardship, accountability and impact