Federal budget makes strides for nonprofits and charities

Work still to be done on key priorities

Toronto, April 19, 2021 - Today’s federal budget laid out a series of measures that will support the nation’s charities, nonprofits and social entrepreneurs in what may be an unprecedented show of recognition for our sector by the federal government. The extension of the major emergency supports as well as a number of targeted measures for charities and nonprofits will provide much needed aid to the sector. Although charities and nonprofits were cited as partners in recovery, some of the sector’s key priorities were omitted from the budget.

The pandemic dealt a catastrophic blow to the capacity of tens of thousands of organizations essential to the functioning of communities across the country. Over half of the sector is reporting a decline in revenues, the average shortfall of those organizations being 43%. A strong, equitable and inclusive recovery will require that the government and the nonprofit sector work together strategically.

The announcement of a Community Services Recovery Fund in the form of $400 million is a welcome acknowledgement that organizations need core operating support. We will work to ensure that areas of the sector most vulnerable to the financial impact of the pandemic can access this program: community organizations that are independent, small and medium in size and serve specific populations.

The extension of the Canada Emergency Wage Subsidy, Canada Emergency Rent Subsidy and Lockdown Support as well as the creation of the new Canada Recovery Hiring Program are crucial measures that will help sustain community organizations until event-based fundraising and earned revenue can fully restart.

Programs to incentivize donations were excluded, as was mention of a “home in government” for the sector. Changes to direction and control requirements are also absent as much of the sector seeks to be able to engage in equitable partnerships. Clarity is needed on measures to disaggregate data, as it is unclear whether this advances our calls for improved sector-wide data.

Imagine Canada welcomes the creation of the $200 million Black-led Philanthropic Endowment Fund and a new $100 million investment in the Supporting Black Canadian Communities Initiative. These initiatives are important steps toward creating a more equitable nonprofit sector and reflect the important findings of the recent report Unfunded: Black Communities Overlooked by Canadian Philanthropy.

We are pleased by the commitment to study potential changes to the disbursement quota, and look forward to engaging in the consultation process.

The Government made steps toward advancing Canada’s nascent social finance market by extending the Investment Readiness program by another two years with a commitment of $50 million. This program offers support for charities and nonprofits that seek to engage in social finance. Additionally, the Government has announced that it will work with stakeholders to lower credit card merchant fees, which will positively impact organizations that rely on donations and earned revenue activities.

The Government has announced numerous measures to support small and medium businesses, notably the Sectoral Workforce Initiatives Program and the Canada Digital Adoption Program. Many of Canada’s charities and nonprofits carry out revenue generating activities while pursuing social missions and stand to benefit from these measures. Imagine Canada is seeking clarification on nonprofit eligibility and will work to ensure nonprofits are not excluded arbitrarily.

The Government announced that it will advance several measures related to the regulation of registered charities with the aim of combatting terrorism. We will review these commitments. A recent report (Under Layered Suspicion) on CRA audits shows that a host of biases lead to Muslim-led charities being unfairly targeted.

Imagine Canada welcomes today’s announcement of an investment of up to $27.2 billion over 5 years in childcare. This funding will benefit all Canadians but will especially benefit women, who make up the majority of employees in the nonprofit sector and who have shouldered the majority of additional care work during the pandemic. We applaud the Government’s commitment to use these funds to support “primarily not-for-profit sector child care providers”, who have a strong record of providing quality, affordable care.

This budget signifies progress on the acknowledgement we have sought of the role nonprofits and charities play in society. We look forward to building on the signals of support as we continue to advocate for the creation of a ‘home in government’ and broader strategic engagement between our two sectors.

The Government announced numerous other measures potential interest to our sector:

Social finance/social innovation: The Government is proposing the expansion of borrower eligibility for the Canada Small Business Financing Program to include non-profit and charitable social enterprises. They made several commitments to diversify procurement and leverage procurement to benefit equity-seeking groups. The Government also committed to studying barriers to the creation of employee ownership trusts. Finally, the Government committed to launching Social Finance Fund disbursements and deploying up to $220 million over its first two years.
Income inequality: The Government extended the Canada Recovery Benefit and the Canada Recovery Caregiving Benefit and announced their intention to reform employment insurance so it is more accessible. Additionally, the Government signalled its intent to create a $15 federal minimum wage and to enhance the Canada Worker Benefit, which reduces barriers to employment for low-income Canadians.
Arts and culture: The Government made several funding commitments to support the arts, culture, heritage and sport sector, including the creation of the $300 million Recovery Fund for Heritage, Arts, Culture, Heritage and Sport Sectors.
Indigenous communities: The Government committed $31.5 million over 2 years for the co-development of an action plan with Indigenous partners to implement the United Nations Declaration on the Rights of Indigenous Peoples.
Data: The Government will provide Statistics Canada with funding for the creation and implementation of a ‘disaggregated data action plan’. The Government also committed funding for the collection of business conditions data, which is a survey that includes nonprofits.
Youth employment: Investment of $371.8 million in new funding for Canada Summer Jobs to support approximately 75,000 new job placements in the summer of 2022. The program provides a 100% wage subsidy for youth employed in the nonprofit sector.

The above list is not exhaustive of the measures relevant for our sector - more analysis to come. See the complete Government of Canada Budget 2021 document here: “Budget 2021: A Recovery Plan for Jobs, Growth, and Resilience”.