Canada is facing a growing charity gap – a shortfall between the amount of money that charities are receiving versus their ability to meet the increased demand for their services.

For more than three decades, Statistics Canada data has been showing a steady drop in the percentage of Canadians claiming a charitable tax credit on their annual tax return. It is now below one in five Canadian adults who do so. Volunteering is declining similarly.

One might wonder if these well-measured declines are truly reflective of a problem or if people are simply shifting their generosity to other less-well-measured forms of pro-social generosity, such as direct funding to individuals (i.e., GoFundMe campaigns), giving items directly to people in need, caregiving, etc.

However, a recent study by my firm Sector3Insights shows this is not the case. The incidence and volume of generosity, when measured in a much more inclusive manner – including giving items to people in need, helping neighbours, caregiving, donating blood, etc. – is indeed declining.

But there are many ways to reverse this disturbing trend as I outline below.

The data also reveals a real concern about the lack of generosity among younger Canadian adults, which could be an increasingly serious problem as more generous Baby Boomers are replaced by Gen Xers, millennials and Zs.

There are many intertwined motivations and barriers for giving money, volunteering time, gifting items and advocating for others, but a few main facts explain the decline over time.

First, greater economic pressures – whether in real wealth and/or in feelings of economic security – are squeezing the ability of many people to be generous.

Second, religious Canadians are much more generous than non-religious Canadians for several reasons that the research explores in greater detail. As religiosity continues to decline, so does generosity.

Third, there is an ongoing shift in social values and principles, in part related to the loss of religiosity. Younger adults have a lower appreciation of social-giving norms, lower recognition that charities need their help, and are less likely to feel a responsibility to help. They are more likely to feel that government is responsible, not them.

The research is also helpful in showing that the decline in generosity is mostly not the fault of the 75,000+ charities in Canada.

Canadians overall are strongly supportive of, have trust in, and appreciate the importance of the charity sector. They recognize the need for charitable services in their communities. The level of trust can always be stronger, but there is no crisis in trust.

Canadians also strongly agree that the mechanisms and the solicitations to be generous are plentiful and simple, although the nature, content, targeting and frequency of solicitations can likely be improved by charities. Prior research by Sector3Insights shows some charities are better than others at following best practices in fundraising.

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Unless we learn from these insights and find remedial solutions, there is real cause to believe that generosity will continue to decline in Canada.

So, what immediate remedial solutions can be considered?

• The federal government should be thinking about new policies to better incentivize and measure the wider set of all pro-social behaviours, including giving and volunteering.
• Increasing the value of charitable tax credits is not likely a good option, however. That would be expensive for the public purse and it has only a limited effect. For example, Quebec has the highest charitable tax credits of all the provinces but has the lowest levels of giving. In addition, the Sector3Insights research shows that many donors do not even claim the charitable tax credit. Generosity is not explained by the tax incentive. Generosity is about culture and values.
• It is better to get Canadians to want to be generous rather than pay them to be generous, although our research indicates there is likely an opportunity to at least improve the low familiarity – especially among younger Canadians – with current charitable tax credits.
• Ottawa should also create an ongoing public campaign (akin to “ParticipACTION”) to promote greater generosity by boosting pro-social values, promoting higher social-giving norms and creating communities of generous behaviour – giving circles, social events around giving/volunteering, grassroots movements similar to GivingTuesday, etc. – at least partly to replace the waning levels and benefits of religiosity.
• It is especially important to teach and mentor young adults about charitable giving as they enter the workforce and start to earn their first significant paycheques.
• Our research shows that news channels have the greatest reach of all communication options. So, the leaders of charity organizations must nurture positive media coverage by key news outlets. We cannot afford to let negative news of a few bad-acting charities create bias among Canadians against all 75,000+ charities.
• Ottawa should develop a new “sector fund” to bring additional money to fresh initiatives to enhance charity efficiency and efficacy – programs to teach best practices in fundraising, to enhance data and research, to establish a library of what works, to help the adoption of new digital tools in smaller charities, etc.
• To avoid any cost to the public purse, this fund could tap into the $100 billion-plus held by grant-making foundations by mandating a small required annual grant from each private and/or public foundation. The level should be set small enough to be a rounding error to each foundation, but one that would cumulatively total more than $25 million annually from the 10,000+ foundations.
• To govern the responsible and transparent use of this new sector fund, the top 10 to 20 sector leadership organizations should create a new fit-for-purpose sector fund agency to receive and allocate the funds in a strategic and accountable manner for the empowerment of the whole sector.
• Additional efforts could be made by current organizations to develop online volunteering (currently low) to encourage Canadians to include charities in their last wills and testaments (also low), and encourage donors to mentor their children and grandchildren in setting greater expectations of generosity (currently low).

The status quo is letting down the millions of Canadians dependent on charitable services and is challenging the quality of life in our communities.

As 2024 begins, now is an ideal time to consider a new year’s resolution to offer two to five per cent of our income to help make a difference.