Published in the Guelph Mercury, March 14, 2012
There are approximately 80,000 registered charitable organizations in Canada, and more than 40 per cent of them are operated entirely by volunteers.
Charities employ nearly two million Canadians, and in 2006, Canadians donated a total of $8.5 billion to charities. I found it staggering to learn that this $8.5 billion in donations, plus government funding, add up to nearly 70 per cent of charitable organization budgets.
As a Canadian, I am passionate about our country’s role in philanthropic efforts. But the unfortunate truth is that sustaining philanthropic efforts is very challenging, especially during economic downturns. While it’s part of daily life for Canadians to give to charitable organizations, it’s the easiest thing to cut back on when the economy turns bad. And during such difficult economic times, governments are also forced to cut back, and charities are then left ill-prepared to sustain themselves.
Today, government, humanitarian organizations, and entrepreneurs are trying to change the dependency charities have on personal donations and the government. Now, we are seeing the popularization of a newer model — the social enterprise. It is in this new model that other challenges Canada is currently facing may find some resolution.
Since I first gained interest in philanthropic efforts, I have been an avid supporter of Free The Children. In 2008, the founders of that organization, Marc and Craig Kielburger, launched a for-profit company called Me to We. The company sells socially responsible products and offers travelling opportunities for youth.
To date, more than $11 million has been provided from the social enterprise to Free The Children. In 2011, Free The Children was named one of Canada’s top employers for young people, and this has certainly been made possible with the support of social enterprise.
A social enterprise can be structured as either a for-profit company or a non-profit organization. It is an entity that applies business strategy to achieve philanthropic goals. For charities, a social enterprise is an opportunity to decrease dependency on government grants and personal donors. The partnership and integration of a social enterprise in charity is perhaps the greatest opportunity that philanthropic organizations have to be sustainable. In some cases, it may be the only chance for some organizations to survive an economic recession.
The Canadian Revenue Agency has indicated that charities can operate for-profit business activities if they are “linked to a charity’s purpose” and “subordinate to that purpose.”
Young Canadians are passionate about having an impact on the world, but we also want to buy homes, pay off our student debt, and put our education to work. In social enterprise lies not only an opportunity to sustain philanthropic efforts and minimize dependency, but to also employ young Canadians.
During the Great Recession, 175,000 Canadian youth have left the workforce. I have many friends who have graduated with honours degrees, master’s degrees, and teaching diplomas who are all working outside of their specialty. I also have friends who are working 12-hour days in the corporate world, finding themselves increasingly dissatisfied with healthy paychecks, despite being stimulated in competitive working environments.
Social enterprise offers the opportunity to create rewarding, sustainable, and stimulating working environments for Canada’s youth. It also has the opportunity to sustain philanthropic organizations, meaning that personal donors could save more and the government could be depended upon less.
While Ottawa works hard to identify the legal constructs necessary to support such activity, we are already seeing widespread success in social enterprise, as exemplified by Free The Children’s partnership with Me to We.
It is time for charity to be redefined and it is time for charities to be held increasingly accountable for creating dependency. Some industries and businesses require support from the government in their infant stage, but the support cannot continue indefinitely. Charities understand the role of self-sustainability, as it is often the goal of the work that charities do.
Now is the time that charities ought to apply the same methodology to their own funding, and move toward social enterprise and sustainability.