Charities need millennials to start giving. But do millennials have anything to give?

Charitable organizations are relying on a dwindling pool of higher-income donors. Experts say that the sector needs to connect with the younger generation — but it can be hard to convince millennials to give when many don’t have the means
By Kevin Spurgaitis - Published on Aug 14, 2019
inside a Habitat for Humanity ReStore
Increasingly, charities are looking to diversify their fundraising, as Habitat for Humanity did when it created its chain of home- and building-supply retail outlets, Habitat ReStores. (facebook.com/HabitatforHumanityGTA)

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On a typical day in most Ontario cities, you’ll find fundraisers buttonholing passersby on behalf of charities. Grocery-store and pharmacy cashiers asking customers at the checkout for charitable donations of a dollar or two. Activists drumming up financial support on the blogosphere, and friends and family members soliciting funds over Facebook and Twitter as they prepare to walk, run, or even grow their facial hair in the name of a given cause. And that’s all before dinnertime.

On the face of it, such philanthropic messaging seems to be working. Canadians give generously, contributing more than $14 billion every year, according to Statistics Canada. Still, the worrying news for charities is that proportionately fewer people are giving than in previous decades. Less than 25 per cent of all tax filers — or nearly 6 million Canadians — reported charitable donations on their tax returns in recent years.

In other words, while the population in Ontario and the rest of Canada continues to grow, the number of donors simply isn’t keeping pace. Charities, as a result, are relying on a dwindling pool of givers, often older ones with deeper pockets: people who earn $80,000 or more a year now account for half of all donations. Charity experts now caution that the sector must come up with new ways to connect with people, especially younger ones.

But economic realities can make that a tough proposition. According to the latest Manulife Financial survey, one in three Canadians says that their spending growth outstrips their income growth. Millennials, in particular, have more difficulty paying down debt on their own — nearly half of those who are indebted and between the ages of 20 and 34 report that they’re carrying credit cards with a balance.

“Without question, raising money from a large number of people is now difficult [for charities],” says Ken Wyman, a professor emeritus in Humber College’s Fundraising Management graduate program. For more than 40 years, Wyman has helped grassroots groups raise millions of dollars — most notably as the national coordinator of fundraising and publicity for Oxfam-Canada, the international development charity. Today, he consults for non-profit groups.

When Wyman started out in the charitable sector, he says, he could send out a letter to people who had never given before and experience a 5 per cent response rate. These days, he says, charities are lucky if they have a 1 per cent response rate when they try to reach people who have never contributed previously. “Typically, we view these as loss leaders, in the same way that a supermarket may offer a discount on bread or eggs, hoping that they’ll build up some new customers,” he says.

What’s more, donor renewal is getting worse, he says, particularly for organizations concerned with humanitarian emergencies. In fact, he notes, it’s not unusual to see well over half of the people who give once fail to give a second time around.

Overall, giving is simply “flatlining,” according to Marina Glogovac, president and CEO of CanadaHelps, which has its own online donation platform and has helped other Canadian organizations move their fundraising onto the internet. Donations are barely keeping up with inflation, making this “one of the most challenging times for charities ever,” she says.

A 2018 report from Imagine Canada and the Rideau Hall Foundation revealed that, while people continue to give more in sheer dollar terms, the number of people giving has declined fairly steadily since 1990.

“What’s happened is that there has been this real concentration of older, wealthier citizens who are increasing their gifts — which is great news — but to a certain degree, it’s masking this overall decline,” says Bruce MacDonald, president and CEO of Imagine Canada, a national charitable body. “It’s a bit disconcerting … for all charities in Canada.”

That’s because up to 30 per cent of individual Canadian donations are at serious risk of exiting the charitable sector in the next 10 to 15 years, according to Imagine Canada. And its chief economist foresees a social deficit — basically, the gap between the rising demand for services and the ability of society to pay for them — of upwards of $23 billion by 2025.

“It’ll manifest itself when your adolescent son or daughter shows signs of mental-health distress, and when you call, the answer is, ‘I’m sorry, intake is closed for the next six months,’” MacDonald says. “Or when small and rural communities’ organizations just simply close their doors and leave.”

Nevertheless, he remains hopeful that the sector can evolve. “All of these societal changes are taking place, but we actually do have time to adjust and adapt … to this relatively seismic shift in funding that’s coming.”

Hoping to reverse the downward trend in donor numbers, the federal government in recent years has tried to sweeten the tax pot for givers by increasing incentives and deduction limits for gifts to charities and foundations. Between 2012 and 2018, for example, first-time donors could take advantage of a “super credit” that gave them an extra 25 per cent tax credit on top of the existing federal and provincial credits. The country’s charitable sector received another boost in 2013, when then-governor general David Johnston announced the launch of My Giving Moment, a campaign encouraging Canadians to raise their charitable contributions.

There’s certainly no shortage of organizations vying for their dollars. Today, there are more than 85,000 charities — employing some 2 million people and involving 13 million volunteers — registered with the Canada Revenue Agency. More robust than the retail trade industry, the charitable and non-profit sector represents more than 8 per cent of the country’s GDP, according to Statistics Canada.

Still, it’s no longer enough to shake a tin and count on newer patrons to support charities. The existing philanthropy infrastructure, along with its best practices, strategies, and methods, was set up for baby boomers and the generations that preceded them. As such, it urgently needs to be reconsidered, charity experts say.

Crowdfunding, for instance, provides an alternative route to giving. Facilitated by social-networking sites, the more than 400 crowdfunding platforms are an extension of what people have been doing for centuries: forming large networks in which small amounts of money and other resources are pooled in support of family, friends, and the surrounding community.

But its long-term role in professional fundraising remains uncertain. The problem with crowdfunding, according to Glogovac, is that it’s so random and individualized that it seldom addresses systemic problems. “Fundamentally, if you give to a GoFundMe campaign for somebody in need while having you’re morning coffee,” she says, “you’ll certainly feel good. But you may only be supporting an individual.”

What’s actually needed to build a sustainable donor base, Wyman says, is a robust set of revenue activities: “Charities desperately need to diversify [their fundraising] and look at all possible donors and all possible ways of appealing to them.”

The sale of products or services is one way. For example, Habitat for Humanity created a chain of home- and building-supply retail outlets, called Habitat ReStores, that accept and resell new and used materials. Much of what is sold at a ReStore would otherwise end up in a landfill. Instead, the profits go directly to supporting Habitat for Humanity’s affordable-home projects in Ontario and the rest of the country.

Another growing area of fundraising is legacy giving. Charities are busy developing campaigns to encourage people to remember them in their wills and bequests. “People can look at an entire life of giving, and charities can have pools of funds in endowments that were left by their most loyal supporters,” Wyman says. “Even people who can only give relatively small amounts of money may find that, when they go, they are able to leave a much more substantial amount to their favourite causes.”

Since 2001, the Toronto-based Future Possibilities for Kids has worked to build the confidence and leadership skills of more than 5,000 youth in underserved communities across the Greater Toronto Area and other parts of Ontario. According to executive director Rickesh Lakhani, smaller charities such as his should be asking themselves, “What can we do that an organization 10 or 100 times our size isn't able to do,” and then testing, experimenting, and innovating in that direction.

“Charities that are smaller in size,” he says, “have the ability to be very nimble and responsive. They shouldn’t let their size, their reach, or their resources limit their mindset.”

The organization receives support from the province and the federal government, as well as from corporations and foundations. Still, Lakhani says, it needs to “invite and excite” individuals to support its causes, so it runs a series of special events. And during its annual giving campaign, the organization engages its own program volunteers — most of whom are young professionals — to better highlight the local nature of their work.

“The key change was moving from asking [program volunteers] to give to asking them to share their own success stories,” he says. “They’re so central to our programs and have been able to raise significant funds, even if they’re not in a personal financial position to contribute a large amount themselves.”

For the vast majority of charities, young people have never been the primary donors, according to charity experts. The real questions, they say, are whether the financial situations of millennials and younger cohorts will stabilize and improve and whether they’ll age into being more charitable.

Their volunteerism and activism around certain causes are good starting places, MacDonald notes. “[Millennials] are already showing signs that they’re energetic and want to be engaged,” he says. “So charities must understand that this starting point for young people is fundamentally different than it was for their parents or grandparents, while ensuring a real connection with them is made before they’re ready to make financial contributions more consistently.”

Glogovac points to the need to try different approaches. This partly means optimizing digital strategies through desktop and mobile websites and e-newsletters — “all of the ways that you need to engage people today.”

The evidence clearly shows, Wyman says, that charities can’t continue depending entirely on multimillion-dollar contributions from individuals or families and must also focus on encouraging many people to make small yearly contributions. “One of the challenges for charities moving forward,” he says, “is to learn the various motivations of donors” — personal connection to a cause, family tradition, communitarianism, or religion.

But diversifying fundraising costs money — and roughly half of all Canadians already feel that charities overspend on fundraising, according to the Muttart Foundation, which monitors the sector. Donors want their dollars to support a given cause directly instead of going to staffing, marketing, and overall infrastructure.

Wyman acknowledges that “people feel that charities should somehow just wait for people to wake up one morning and decide to send them some money.” But that’s not the way it works, he says: “For large brand-name organizations, like the Hospital for Sick Children, people may say, ‘Oh, I know somebody who has cancer or heart disease’ and send off some money. But, for the many smaller charities, people don’t [lend their financial support] unless they’re asked.”

Wyman continues: “It doesn’t seem unreasonable for charities to spend a small amount of money on staff, infrastructure and reminding people to do good with their resources … That’s not an evil process.”

According to CanadaHelps, most Canadian charities are relatively small, with about 80 per cent generating an average of $500,000 a year in revenue. An estimated 90 per cent have fewer than 10 staff members — half of which are volunteers. And, in order to let donors know that their money has been put to good use, such organizations have to spend more of it.

Imagine Canada urges organizations to post their list of board directors, their audited financial statements, and their impact reports online. In recent years, it also created a standards program. It has now accredited more than 250 charities on good governance, accountability, and transparency. The idea is that, when Canadians see the seal of approval, they’ll know that an organization has exposed itself to independent third-party verification.

“One hundred per cent of the most important people in our lives have benefited from the services of this sector, whether they received sports coaching, music lessons, hospital treatment, or higher education,” MacDonald says. “Taxes alone will not provide enough of these things that we, as Canadians, have said that we want. That means that we all need to do our best to nurture this ecosystem, perhaps not by giving consistently to every cause that solicits, but maybe our top two or three.”

Glogovac urges people to remain optimistic — and to keep giving. “A lot of people feel helpless today. They’re saying, ‘What can we really do?’ But I would encourage people to hang on to their passion and help charities to change things systemically,” she says. “Of course, it’s hard and needs constant investments, but we have to continue believing that it’s possible.”

Correction: An earlier version of this story suggested that the federal government offers a "super credit" for first-time donors. In fact, the credit was offered between 2012 and 2018. TVO.org regrets the error.

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