Imagine Canada concerned changes to emergency measures will put pressure on nonprofit sector

On October 21, Minister Freeland announced some details on targeted measures to replace the Canada Emergency Wage Subsidy (CEWS) and Canada Emergency Rent Subsidy (CERS), which were set to expire October 23. Imagine Canada is concerned that the changes to the emergency measures will both lessen support available for charities and nonprofits and drive up demand for their programs and services.

The changes to emergency measures included:

Extension of the Canada Recovery Hiring Program until May 7, 2022;
Creation of the Hardest-Hit Business Recovery Program (HHBRP) and Tourism and Hospitality Recovery Program to replace the CEWS and CERS; and
Creation of the Canada Worker Lockdown Benefit (CWLB) to replace the Canadian Recovery Benefit (CRB).

The Hardest Hit Business Recovery Program will be available to those that can show an average monthly revenue reduction of at least 50% over the first 13 qualifying periods for the Canada Emergency Wage Subsidy and a current-month revenue loss of at least 50%. We have received confirmation that any organization that qualified as an eligible entity for the CEWS, including charities and nonprofits, will similarly be eligible for the HHBRP provided that they meet the revenue decline criteria. Those organizations that are deemed eligible to receive support will receive a subsidy rate of between 10% and 50%, depending on the level of revenue loss that they are experiencing.

We are concerned that the threshold for these programs is prohibitive to many organizations that still require support to pay staff and cover rent and mortgage costs. Our latest research indicates that more than 4 in 10 charities are still facing declines in revenue and that among these charities, the average revenue decline is 44%. For those that are able to access the program, the minimum subsidy rate is a steep drop compared to the previous CEWS and CERS rates. The Canada Emergency Rent and Wage Subsidy have been crucially important to many organizations over the course of the pandemic, allowing many to maintain programs and services when communities needed them most. More than $4 billion has flowed to charities through the CEWS alone.

The loss of the CRB at the same time as the loss of the CEWS and CERS creates challenges on two levels. First, we expect an increase in demand for our programs and services as many of the approximately 900,000 workers who relied on the CRB, as well as those laid off in the response to the end of the CEWS, turn to our organizations for help. Additionally, we expect the loss of the CEWS may lead to layoffs in the nonprofit sector itself, challenging our capacity to deliver programs and services and leaving laid off nonprofit sector employees without the support of the CRB. As of Spring 2021, approximately two fifths of charities reported that demand for their programs and services was outstripping their capacity to deliver. This number will likely increase with the newly announced changes to COVID-19 relief measures.

Learn more:

Press release - Government announces targeted COVID-19 support measures to create jobs and growth
Backgrounder - Targeting COVID-19 Support Measures
Backgrounder - The Canada Worker Lockdown Benefit