Communities rely on Canadian nonprofits for essential services, and nonprofits rely on a fluctuating, unstable mix of funding sources to ensure that they are able to deliver. Often, nonprofits are delivering services on behalf of the federal government - services that the government acknowledges that the sector is better equipped to deliver than it is. Despite this, securing and keeping federal funding comes with many strings attached.  

This report reveals how administrative burdens, short-term funding models, and excessive restrictions are straining the sector - and ultimately, the individuals who depend on it. It also explores how, when federal funding works well, it can support community well-being and change lives.  

The report offers a rigorous look at five federal departments - Employment and Social Development Canada (ESDC); Women and Gender Equality Canada (WAGE); Indigenous Services Canada (ISC); Immigration, Refugees and Citizenship Canada (IRCC); and Canadian Heritage (CH) - and the policies and practices that govern their funding relationships with nonprofits. It identifies what's working, what isn't, and what needs to change. 

• Funder relationships are generally positive - but require significant, uncompensated effort from nonprofits. Three out of four organizations describe their funder relationship as positive, but maintaining this often means investing considerable staff time and energy in relationship-building - capacity that not all nonprofits have equally.
• Funder practices have a significant impact on communities. Flexible, multi-year funding, trust-based relationships, and responsive program officers enable organizations to focus on their missions. Short-term contracts, sudden funding changes, and heavy reporting requirements do the opposite.
• Administrative burden has a real cost. The organizations we spoke to reported spending 10 to 40 hours per funding application and 10 to 40 hours per month on reporting alone - with the smallest, most under-resourced organizations often bearing the greatest burden.
• Federal policy embeds a paternalistic framing of nonprofits. Government-wide financial policies describe funding to nonprofits as "financial assistance," signal self-reliance as a goal, and explicitly confirm that organizations will not receive 100% of the cost of service delivery - creating a structural gap that the sector is expected to absorb.
• Communities experience the downstream effects. Staff burnout, program discontinuity, and reduced service capacity are not just organizational problems - they are community problems, particularly for equity-seeking groups who depend on culturally relevant, locally grounded services.
• There are clear opportunities for change. From scaling good practices within departments to reforming grant and contribution policies, this report identifies 11 specific, achievable recommendations for federal funders.

Join the Fair Funding for Nonprofits coalition and add your voice to the call for federal funding reform.