Who is funding the churches of Canada?
Sources of Funding for Religious Organizations (June 1, 2023)
We previously looked at charitable giving in Canada on a macro scale. Let’s delve into some information about charitable giving specific to religious organizations.
First, let’s look at the scale of the issue. According to Imagine Canada1, the Canadian charitable and nonprofit sector contains around 170,000 organizations; 86,000 of which are registered charities. This sector contributes 8.7% of Canada’s gross domestic product, employs around two and a half million people, and engages around 13 million volunteers. A search of the Canada Revenue Agency’s registered charities listing yields over 31,000 religion-oriented charities2. Accordingly, 36% of all registered charities are religious in orientation.
With respect to the funding of religious organizations, we should first recognize the big one because it is easy to forget about. The largest single donor to religious organizations, as with other charities, is just about always the government. Combined federal and provincial tax credits available for donations above $200 per year differ from province to province; ranging from 33% in Nunavut to 49% in Quebec, using 2017 rates3. It would be wrong to think that the total of a person’s annual giving is a personal financial sacrifice. A lot of it comes back to them at tax time.
Also, governments at all levels give a lot of money to charities. For example, in 2015 charities received $168.5 billion from governments in the way of grants and transfers. Whereas large portions of these go to nonprofit health and education organizations, religious and other charities get a share as well.
In addition, significant tax relief is provided to members of the clergy, enabling churches to keep salaries lower than what other charities have to pay. These amount to a tax-free portion of each clergy member’s salary of up to one-third of their earnings. This could be generalized to say a portion of all clergy salaries are funded by the government (one-sixth, assuming a 50% marginal tax rate). I can’t think of any other profession that, as a whole, gets such a tax break.
As noted in a previous article, 41% of total personal (non-government) donations in 2013 went to religious charities. We also saw that primary donors (those in the top 10% of givers) rule the roost in philanthropy. Nation-wide, they gave around two-thirds of all donations.
However, in religious organizations, this figure is around 80%. Specifically, the top 10% of church givers account for 80% of church givings revenues. We also learned that around half of primary donors are high on the religious scale, meaning that somewhere around 5% of Canadian donors provide a significant majority of the funding for religious-causes4.
How about tithing in the church? Whereas a number of individuals may meet this metric, it is definitely not the norm on a national scale. We can see that people who attend religious services at least weekly give a higher percent of their household income than low-attending and non-religious people. But, on average, it is not a full tithe. Just as with all donations in Canada, giving to religious organizations demonstrates the same trend whereby folks in the lowest income group give a greater percent of their income than successively higher income groups. The lowest 20% of religious earners gave around 4% of their income while religious earners in the top 20% gave less than 1%4.
One way to interpret this information is that churches suffer from donation precariousness. With a small cohort of top donors providing such a high percent of total church revenues, the church’s future is heavily weighted towards how these people behave. Not surprisingly, top donors are heavily weighted towards older folks, so specific risks to church finances include death, infirmity and dissatisfaction in this age group.
Since we are on the subject of risk, we should look at the primary reasons that top donors give for not donating more. The higher scoring reasons are personal in nature (e.g., they are happy with what they already give, they can’t afford more). Of more concern is that 32% of primary donors who said they limited their giving to some organizations because they did not think their money would be used efficiently or effectively4. The most frequent concern expressed (61%) was that the organization was unable to adequately explain where or how their donation would be spent.
The message here seems clear. If churches want to keep their big donors giving, they need to be very clear on what they are doing and how donated dollars are spent, as well as demonstrate due care in making sure the funds are managed wisely.
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1. Imagine Canada, Canada’s Charities & Nonprofits,
https://www.imaginecanada.ca/sites/default/files/Infographic-sector-stat-2021.pdf
2. Government of Canada, Charities Directorate,
https://apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch?request_locale=en
3. Government of Canada, Revenue Agency,
https://www.canada.ca/en/revenue-agency/services/charities-giving/giving-charity-information-donors/
claiming-charitable-tax-credits/charitable-donation-tax-credit-rates.html
4. Statistics Canada, Charitable giving by individuals,
https://www150.statcan.gc.ca/n1/pub/89-652-x/89-652-x2015008-eng.htm