Budget spending aimed at boosting the struggling charity and non-profit sector

Charities to gain from Employment and Social Development Canada programs and general social spending

Budget spending aimed at boosting the struggling charity and non-profit sector

Among those standing to gain from the federal Liberal government’s 2021 budget include many in the charity and non-profit sector, some of which are struggling due to COVID.

Deputy Prime Minister and Minister of Finance Chrystia Freeland presented the budget to the House of Commons on April 19. Included within is the establishment of a “Black-led Philanthropic Endowment Fund,” in a two-year $200 million commitment to Employment and Social Development Canada (ESDC). Another $100 million will go to the ESDC’s Supporting Black Canadian Communities Initiative, which funds Black-led non-profits.

To help support economic recovery, the budget also allocates another $400 million, over two years, to establish a temporary Community Services Recovery Fund at the ESDC.

“I think there's definitely struggles out there, but the struggles aren't universal,” says Adam Aptowitzer, a tax lawyer focused on the charity and non-profit sector. “The organizations that rely on wealthy funders, predominantly, my understanding was that their 2020 pledges were kept, and their 2021 pledges were reduced.”

“The smaller organizations like local churches that depended on people that were immediately harmed by COVID were – not surprisingly – hurt right away, especially those without any particular savings.”

While the federal government does not have a perfect record at understanding the needs of Canadian charities, “there’s undoubtedly some groups that will benefit immensely,” says Aptowitzer, who practices in Ottawa at Drache Aptowitzer LLP.

Outside of charities and non-profits, the budget’s big spending on other social programs will have knock-on effect on the sector, says Mark Blumberg, partner at Blumberg Segal LLP, in Toronto. 

“It's a big spending budget… that has an impact on charities also,” says Blumberg, whose practice involves advising non-profits and registered charities. “Generally at a high level, when you have a government investing in social programs and social safety net, that is very helpful for the society and the beneficiaries of charities. Charities are going to end up with less pressure on them to have to deal with what may otherwise be overwhelming problems.”

With charities and non-profits representing around 12 per cent of Canada’s GDP and worth around $260 billion, the ESDC’s $400-million recovery fund is not a relatively large sum, he says.

“There are many charities who have suffered tremendously,” says Blumberg.

After the “constant push” for charities to pursue more business opportunities, it is charities with business enterprises which are experiencing the greatest challenges, he says.

“In Canada, the UK and other places, those charities who were dependent on business income are the groups that have actually done some of the worst out of all charities.”

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