If it weren’t for the charities, where would we be?

A Review of Canada’s Charitable Sector (August 3, 2023)



I think most people would agree that the charitable sector is extremely important to the welfare of Canadians, especially those in need.  As Christians, we likely see them as brothers-in-arms.  Sometimes churches even donate funds to non-Christian charities who address issues relevant to the church but are better situated to provide aid.


There has been a lot of reporting that charities are under extreme pressures as demands for their services increase, donations decline and volunteers are harder and harder to sign up.  So, let’s examine this sector to see what it is made of and how it is doing (statistically).


This review will focus on Canadian registered charities, which should comprise the vast majority of them.  If a charity issues or can issue a tax receipt for donations, then it is registered.  Most of the data for this review will come from files containing consolidated information from Annual Charities Returns (T3010s), which was downloaded from the Open Government Portal1.


In 2020, there were 84,228 charities registered with the Federal government.  Altogether, they had $302 billion in revenues, averaging $3.6 million per organization.  That year, they paid a total of $169 billion for salaries and wages, indicating they are a major source of employment in Canada.  However, you have to take the gross revenue figure with a grain of salt.  When one charity receives financial gifts and passes them along to another charity, associated or not, those gifts will be included twice in the total.  There is no easy way to determine the extent of this.


Let’s see what passes as a charity these days.  According to the Canadian Revenue Agency:

 “To qualify for registration as a charity, an organization must:

The Canada Revenue Agency considers common law (court decisions) to determine what is charitable at law.2”


For more on common law definitions of charity, see the article Is your church really a charity.


Of course, charities come in all sizes and flavours.  The government classifies them, at the time of registration, as to type using 30 different codes.  I’m not going to list them all here, but they roughly can be categorized into five groups.  (These are my groupings.)  The table below uses these groups to provide one narrow view of the Canadian charitable sector.


Number Number Total 2020 Share

of Codes  of Entities Revenues


Poverty 2 11,182 $   26.7 billion   9%

Education  6 11,117 $ 106.0 billion   35%

Religion 7 32,032 $   12.6 billion       4%

Healthcare 6   6,159 $ 127.5 billion   42%

Other       9 23,738 $   29.2 billion   10% 


Now if you ever hear someone say that religion is sucking all the charity dollars away from ‘more worthy’ causes, you can set the record straight.  Religion receives the least amount of donations among these charity groups.  Also, sadly, helping people deal with poverty is also a small percentage of donations collected by Canadian charities.  That is distressing.


As you can see, education and healthcare are the top receivers of charitable revenues, reaping 77% of total charitable revenues.  However, these are primary areas of government responsibility.  What gives?   


If you look at the top money-earners in these two categories you quickly get a picture of why they are so large.  For example, the big earners in the education group include universities, school boards, technical and vocational schools, research institutions, and art schools and societies.  The big earners in the healthcare group include health authorities, hospitals, long-term care homes, search and rescue organizations, volunteer fire departments, and Special Olympics societies.


One would be forgiven for thinking that many, if not most of those listed are government agencies.  However, decades ago governments started off-loading many of their responsibilities to nonprofit agencies.  They still receive a substantial share of their revenues from the government, but are registered as charities so they can earn tax-free revenues, and receive donations as well.  In fact, agencies such as school boards, health authorities, hospitals and some long-term care homes are so closely controlled by governments that they are consolidated into government financial reporting.  They will be included in such figures as government debt and annual deficits. 


So, if you were at first amazed that the Canadian charitable sector could rake in over $300 billion a year, now you know how.  To put it crudely, much of this sector consists of government masquerading as charity.  This means any holistic, big-picture review of the health of the charitable sector would be heavily tainted by the inclusion of large organizations few would associate with the word ‘charity.’


____________________


1. Open Government Portal, https://search.open.canada.ca/opendata/


2. Government of Canada, Factors that will prevent an organization from being registered as a charity, https://www.canada.ca/en/revenue-agency/services/charities-giving/charities/registering-charitable-qualified-donee-status/apply-become-registered-charity/deciding/factors-that-will-prevent-organization-being-registered-a-charity.html