Download the PDF report here for a full list of sources.

This 2023 State of the Sector report and CCVO’s policy/advocacy contributions are our efforts to add to the many actions, from many actors, that support the nonprofit sector. Nonprofits work tirelessly every day in this province to make it a better place for all Albertans. This report contains data, analysis, information, and a few actions that we hope are useful to nonprofits, funders, and decision-makers in their own contributions to facing the storm we are all in together.

CCVO uses the State of the Sector reports to understand how our sector is faring - and to turn that understanding into action. Too Essential to Fail, the 2022 State of the Sector report, was the foundation for a campaign for emergency funding that saw us:

• Travel to Edmonton with a nonprofit delegation for a Day on the Legislature

• Convene sector leaders and decision-makers in the first semi-annual Leaders Forum

• Identify and launch Policy Priorities ahead of the 2023 election

• Host the Premier and the Leader of the Official Opposition to respond to them

We have made good progress on 3 of the 5 priorities since then, and we need nonprofits to join us to chart a course for continuing to make headway. Right now, we have an ear with our government partners and other funders, and they want to hear from nonprofits. CCVO is launching an opportunity for Alberta nonprofits to give direct input into the immediate funding priorities for the sector and the long-term strategies for funding the sector. This effort is an important contribution that will spur much-needed funding reforms that our sector has long been calling for, and we need you to join in.  

Nonprofits are feeling the crunch in 2023. Approximately ⅓ of respondents in CCVO’s 2023 nonprofit survey report their “ability to afford standard operations” as more challenging this year. 82% of respondents saw expenses increase, and half of these respondents report that expenses increased “substantially.” Survey comments and focus group conversations reveal nonprofit leaders are even more concerned about affordability for their staff.

Behind the strain experienced by nonprofits is an affordability crisis felt by many Albertans. Statistics Canada revealed 2022 had the largest Consumer Price Index (CPI) increase in Canada since 1982 [v]. Prices remain high in 2023 but are rising at a slower rate [vi] (with the exception of gasoline). These rising costs add pressure to household budgets and to an already-strained nonprofit sector. Cost increases coincide with the end of emergency financial supports during the COVID-19 pandemic, and after many years of poverty rates trending downward in Alberta and Canada, early estimates show an uptick over the last two years [vii]. As of May 2023, an astounding 27% of Albertans were expected to access charitable services for their basic needs in the following 6 months. Nationally, 7/10 of those expecting to access charitable services for basic needs will be doing so for the first time. This includes more employed people [viii] and, according to nonprofit leaders, nonprofit staff. Albertans working in the sector earn 34% less than the average [ix], meaning they are more vulnerable to changes in the cost of living.

Vulnerable people who rely on inadequate social supports to survive are falling further behind and relying more heavily on nonprofits [xi]. Fewer Canadians are donating to charities, and support is tilting towards large nonprofits and away from smaller ones [xii]. With fixed funding streams, nonprofits are grappling with increasing expenses and can only increase staff salaries at the expense of programming. Board members and other volunteers are similarly reported to be under more strain.

Addressing the affordability crisis is crucial to attracting and retaining a qualified workforce, and the impacts of the housing affordability crisis are particularly concerning. Rising housing costs among renters far outpace those experienced by homeowners. Renters represent a growing demographic that is more than 2X more likely to live in unaffordable housing in Canada [xiv]. A new Statistics Canada report shows recent renters pay substantially more than longer-term renters, with young people and new Canadians over-represented among recent renters [xv]. Young people and new Canadians also form a substantial portion of the nonprofit workforce.  

2023 witnessed stabilizing revenues and soaring expenses among Alberta nonprofits. Earned revenue increased the most and donations the least. Insurance, staff salaries, and program operations were the most notable cost increases among Alberta nonprofits (Figure 3). 

Conversations with the sector revealed nonprofits trying to diversify revenue streams alongside rising competition for funds (particularly operational funding) and as funding requirements fail to meet community need. Some nonprofits have tried circumventing the need for revenue, developing cost neutral responses like community fridges or closets to meet needs. Others are turning to social enterprise, operating related businesses to raise revenue for their mission. Still others are trying to secure funding through sources that are not obviously aligned with their activity or mandate in order to access funds not otherwise available to them. 

These innovations are admirable, but conversations with nonprofit leaders identify them as responses to funding programs that don't meet the needs of the sector in quantity and design. Provincial funding, for example, has decreased in the last 15 years, while the population grows and inflation reaches new heights (Figures 1 and 2); and nonprofit leaders identify a disconnect between nonprofits, funders and government. They indicate they should have a role in the creation and evaluation of funding streams to ensure alignment with the needs of local communities and the realities of running a nonprofit. For example, funding objectives often do not support long-term relationship-building or core operations, leading nonprofits to seek funding that alters their activities and to deliver one-off programs that align with grant objectives. Meanwhile, nonprofit leaders state that achieving their mission is strongly dependent on relationship- and trust-building, requiring a consistent presence and consistent programming in the community. 

Nonprofit funding shrinks while population and inflation grow.

Stabilizing revenues offer a glimmer of good news, but there are caveats. While more nonprofits report revenues similar to or slightly higher than the year before, this comes after record lows. Secondly, we can assume that those responding to the CCVO survey are those that kept their doors open.

Accessing more operational funding is a top priority for the sector in 2023. Organizations need staff to maintain professionalism and accountability and to preserve bandwidth for service delivery. Staff, particularly in leadership positions, are wearing too many hats and putting in unpaid hours to keep their organizations afloat. Many commented on their lack of time to do strategic work or engage in the important task of connecting with their staff and their mission. Staff report cutting into service delivery in order to complete administrative duties. The amount of operational funding typically allowed on project-based grants varies from 0-12%, while some studies show higher success with overhead valued at 30-35% [xix]. In fact, studies analyzing the activities of nonprofits noted their budgets often ”defied plausibility,” with administrative work going unaccounted for in budgets [xx]. While this is not a new issue, it appears to have reached new heights as expenses rise and operational funding becomes ever scarcer.  

Nonprofits have a key role to play in DEI and should lead the way in setting a high bar, but they are underperforming in some areas. Nonprofit workers earn less than others in comparable jobs and on average earn 34% less than other sectors [xxii]. Female employees dominate the Alberta nonprofit sector, but Statistics Canada shows their annual wages and salaries remain lower than their male coworkers by 14% [xxiii]. The lowest average annual salaries are those of visible minority employees, who form a large portion of the nonprofit workforce [xxiv]. Other research finds nonprofit boards consistently less diverse than the Canadian population [xxv]. 

Half of our survey respondents self-reported as having “equitable policies and practices in place.” While awareness of DEI seems hearteningly widespread, equitable outcomes are not yet as evident. An Imagine Canada survey suggests awareness is not always linked with effective action. Small and medium nonprofits, as well as white-led nonprofits, are least likely “to be intentional in their pursuit of [DEI] [xxvi].” BIPOC-led organizations are most likely to do so. At the same time, BIPOC-led organizations are most likely to encounter funding challenges. 

Conversations with the sector provide interesting insights. Some asked about barriers to filling out our survey – and whether BIPOC representatives were as likely to fill out surveys. Some asked whether the sector needs to better identify what success looks like in DEI. This could be appealing across the spectrum of perspectives we heard in the sector about DEI – from those who think DEI needs to go further to those who express it has gone too far. Shared understanding and vocabulary can help folks identify where they have common ground and common values and where those commonalities diverge [xxvii]. Identifying DEI targets also helps our sector celebrate wins together. Goalposts often shift along the way; celebrating helps us understand the journey. The need to identify what success looks like, and why, was reflected in focus groups, where participants recounted instances where they lacked understanding of DEI objectives, and shared factors that may have contributed to that lack of understanding, including generation or local norms. 

These conversations underlined the importance of having data that holds our sector accountable and a workforce strategy that strives to make progress accordingly. As with last year, they also highlighted the lack of capacity nonprofits may have to lean into DEI work while putting in overtime to keep their doors open. Nonprofits need appropriate funding to be able to do this work in a meaningful way. 

VOICES FROM THE NONPROFIT SECTOR

Digital skills are expected to be necessary for all employed people, globally: the World Economic Forum estimates that by 2030, 90% of jobs will require digital skills [xxviii]. For nonprofits, digital literacy is increasingly important for fundraising, accessing sector information and support, connecting with networks, and communicating outcomes [xxix]. It is critical for individuals served by nonprofits, for example to access education and employment [xxx]. And it will be critical for nonprofits to remain competitive employers: communicating the benefits of their workplaces and accommodating the diverse needs of staff, including remote and hybrid workers. 

Few CCVO survey respondents are experimenting with the full array of digital tools available - the majority use basic, off-the-shelf technology. These findings were reiterated during focus groups with respect to clients, members, staff, or board members. Reasons cited included lack of time and bandwidth and lack of access. However, a surprising 16% of survey respondents are using or experimenting with AI technologies, despite programs like ChatGPT emerging as recently as November 2022. Alberta nonprofits also appear to outpace their corporate counterparts, with estimates that 4% of Canadian businesses are using AI [xxxii].

In Alberta and Canada, there remains a digital divide. Rural and First Nations communities, for example, are not well connected to the internet. But the digital divide is not just about access. It is also about digital literacy – the ability to engage with new technologies – and the ability to capitalize on digital opportunities [xxxiii].

Nonprofits most frequently experience challenges with digital literacy and opportunities. They also have less capacity to attract the talent that would improve their skills, in comparison with a for-profit sector that has put considerable effort into attracting and retaining tech talent. Partnerships with educational institutions through Work-Integrated Learning are one way in which nonprofit needs could be understood and met. There are win-win opportunities here: tech talent can learn about and cater outputs to social organization competencies and unique needs, while social organizations can improve their competencies [xxxiv]. Further, student engagement with local nonprofits creates opportunity for young people to develop a stake in nonprofit activities [xxxv].

Digital technology has the potential to support greater equity. For example, it has never been easier to provide information in multiple languages, which can help new Canadians access information and opportunity. AI technology also has the potential to increase nonprofit capacity and improve results, and its user-friendliness lowers barriers to entry. It is unclear whether this will give the sector a competitive advantage overall, or whether it will simply raise the bar across all sectors.

Technological advancement comes with pitfalls. Social media has become increasingly polarizing, and its use may expose more nonprofit workers to rising anger and hate. These issues point to a need to review health and safety guidelines in nonprofits and for government policy to limit the physical and mental health risks associated with overuse of electronics and social media. France, Germany and recently Ontario have taken steps to limit work-related electronic communication to work hours, dubbing them as “right to disconnect” laws. Some German companies go as far as automatically deleting emails sent outside of work hours or during holidays [xxxvi]. 

Finally, there is concern about the effects of emerging technology (such as AI) on jobs. Briefs written for the Government of Canada suggest that more data is needed to determine the benefits and drawbacks of the use of AI in the workplace. Possible repercussions range from some job loss, to evolving job descriptions, to adapting education and training for a changing job market [xxxvii]. Experts predict that new AI technology will be “labour-complementary” rather than “labour-replacing” [xxxviii].